Firstlinks – What to do about the growing chorus of market correction warnings?
In my recent article for Firstlinks, I explore the rising concerns about a potential market correction. Since 2022, I’ve been optimistic about stocks rising despite recession fears and increasing interest rates, based on expectations of positive economic growth and disinflation. Disinflation has historically benefited innovative companies with pricing power. However, investors like Ruffer LLP and Mark Spitznagel now warn of a severe market crash due to shrinking U.S. liquidity. While their warnings merit attention, I believe that positive growth and slowing inflation will continue to support innovative growth companies. Read the full article here for my full insights: What to do about the growing chorus of market correction warnings?
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
xiao fang xu
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Another doomsayer to ignore?:
“Berkshire’s cash pile soaring by a record $88 billion to an all time high $277 billion at the end of Q2.”
Roger Montgomery
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The record level of cash at Berkshire is the result of a significant sale of Apple shares not because Buffett is forecasting a stock market crash as many journo’s love to report. That sale of Apple shares is due to, or was perhaps in anticipation of, a ruling by Judge Amit Mehta, in the case United States of America v Google LLC, against Google, in which “the court reaches the following conclusion: Google is a monopolist, and it has acted as one to maintain its monopoly. It has violated Section 2 of the Sherman Act.” How does that relate to Apple you ask? Apple was receiving tens of billions from Google to prioirtise Google’s search engine on its devices. The deal was so lucrative that it made it uneconomic for Apple to launch its own search engine – something it had planned to do but shelved. The loss of tens of billions in guaranteed revenue from Google—which presently come at little to no cost to Apple—disincentivizes Apple from launching its own search engine when it otherwise has built the capacity to do so. We can also chart the cash balance of Berkshire Hathaway over time and that chart reveals Buffett deploying cash after crashes but little correlation between record cash levels and market corrections. So if a crash does transpire the record cash pile will be coincidental rather than reflecting omniscience.