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Volatile world markets are telling us to stay cautious

05112018_stay cautious

Volatile world markets are telling us to stay cautious

For the last year or so, we’ve been warning readers that the extended run-up in world markets was getting closer to the end. While October’s price falls saw some of the froth blown off the top, we think this may be just the beginning of a long grind lower.

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Roger is the Founder and Chief Investment Officer of Montgomery Investment Management. Roger brings more than two decades of investment and financial market experience, knowledge and relationships to bear in his role as Chief Investment Officer. 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.

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8 Comments

  1. Maybe Einhorn is the Buffett of this bull market. Long GLRE is an interesting idea for the sceptics out there.

  2. Hi Roger,
    Thanks again for your commentary, I would add in the uncertainty from the newly imposed tarriffs between the US & China, the step up of QT to 50b per month by the fed which commenced 1st Oct combined with further proposed interest rate rises and continued ructions in the EU and it is hard to see a lot of reasons for stocks continuing to rise however muscle memory has allowed this to occur for longer than common sense would have predicted. It is worth noting that the semiconductor index SOX which traditionally has tended to lead the rest of the US markets peaked in March about 6 months prior to the current peak in September of the S&P 500. The most simple analysis on the current macro setup would indicate that at some unknown tipping point (whilst the US bond yields continues to rise), the debt accumulated over the last 10 years at ridiculously low rates is going to cause a reflexive change in the direction of asset prices that will cause a feedback loop leading to prices far lower than most analysts would likely forecast. The amount of CCC debt you mention coming due next year leads me to think more likely than not the top has already been set. Watch out below!

  3. Hi Roger

    REA Group is one Business you have always seen as resilient not matter what the housing market is doing. Over the last 52 weeks it has traded in a range of between $69.32 and $94.12 Do you see the current price ($71.94 )as a buying opportunity? Do you still hold REA Group in your Funds?

    • Hi Max,

      There are circumstances where REA could suffer. For example in a prolonged weak market and in market that suffers a very sharp sell off in property prices. Having said that we think REA owns an excellent platform with enduring competitive advantages. I cannot provide any buy, sell or hold recommendations however Max.

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