Navigating plunging markets through this pandemic
With the coronavirus officially being declared a pandemic we bring you this special edition of our video insight discussing how we are handling current market conditions at Montgomery. Today the first order concern is the impact of the virus on populations, the second is the consequences of containment efforts on economic growth, and third are the consequences of protracted lockdowns on the cash flows of businesses.
Importantly you should know that we see market volatility as entirely normal. What hasn’t been normal is the ultra low volatility over the last couple of years. While other investors have been lulled into its stupor we’ve never been comfortable. Importantly, our analysis shows that we have tended to out perform many of our peers in challenging markets.
“And challenging markets is something I personally expect to see more of. Avoiding substantial declines is especially important for those reliant on their investments to fund their retirement. And right now, navigating volatility should be at the front of everyone’s mind.” Roger Montgomery
We encourage you to call or email us and we invite you to consider adding to your investment with us. Historically these periods are rare and they can be brief so if you are in a position to add to your investment or would like to discuss it we encourage you to begin the conversation with us, and my colleagues. We can be reached on 02 8046 5000.
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.
Michael
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Although it is bad for the US to have acted late doesn’t this mean they will peak early and recover sooner? Bad for the people who succumb to the virus but better for inverters. I’m not suggesting this is a good plan.
Michael
Roger Montgomery
:
Not sure that logic follows Michael. Unless, if by peaking early you also mean many die quickly?
Max Zan
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Hi Roger
Everyone has their own views on how the coronavirus crisis will play out. It’s my view that an Australian or even World recession is inevitable. How long that recession will last will all depend on how well the coronavirus will be contained and managed. Current share prices look attractive but I expect them to fall further as we are some way off a crisis peak – patience will be rewarded.
The coronavirus was the Black Swan event that brought the party to and end, but it could have easily been something else. When you see the Sharemarket build a big head of steam like it did over the last 13 months you know things will turn ugly at some point. When you reach the top of Mount Everest there is only one direction you can go. The fundamentals did not support the high valuations the market assigned to share prices and even stocks that have robust Business Models are now being downgraded. I doubt that the Market will return to it’s all time high any time soon as investors that have been bruised will be less inclined to pay ridiculous prices . Don’t be surprised to see value investing which suffered in recent years return.
We live in interesting and challenging times, but it’s when opportunities to buy quality stocks at attractive valuations present themselves and those opportunities don’t come along all that often.
The Investment World of recent years has changed – I believe Investors will demand a higher return going forward to compensate for risk and that means Asset prices will need to fall.
Roger Montgomery
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Really appreciate you sharing your thoughts Max. Time of course will tell.
Dave B
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How to choose Montgomery or MOGL? Australia/NZ idiosyncratic risk, small universe, 30% cash to deploy; vs global universe, 5% cash, currency risk. And are both at risk of underperforming in any relative China/commodities/AUD recovery?
Roger Montgomery
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I don’t think they’re mutually exclusive Dave. You can and probably should have both domestic and global exposure.