Check it OUT.
The Aussie market is around all-time highs.
Oil, uranium, copper and gold are barnstorming their way up…and taking the related Aussie miners with them.
You could call this ripping scenario a ‘stock picker’s market’.
No!
Don’t do that.
People said 2023 would be a stock picker’s market too.
And look what happened, according to a guy called Ben Smythe, writing in the Australian Financial Review recently.
He writes that last year…
‘Once again highlighting the challenges for active equity managers, with more than 75 per cent of all Australian large-cap equity fund managers underperforming the ASX200 benchmark for 2023.’
What’s going on here?
I’m not 100% sure.
You don’t become a portfolio manager of an investment fund if you’re a dill. It’s an incredibly difficult job, requiring a lot of different skills.
Markets are hard work. One reason is because they’re so unpredictable.
Case in point: in November last year the Aussie market was in the dumps. Four months later and it has rocketed up almost without a pull back.
It’s not alone, either. The US market is the same. It’s up 10% and with the lowest volatility since 2017.
Most of this barnstorming action has happened in 2024.
I suspect Aussie fund managers could have a lot more to show for their efforts by the end of 2024.
This is consistent with my experience at my small cap advisory, Australian Small-Cap Investigator.
Let me tell you…
It is staggering how different 2024 is playing out to 2023.
Last year was a tough grind.
On the flip side…
2024 has been great fun for my readers.
Let me give you some recent examples.
In November last year I recommended a stock called Avita Medical [ASX:AVH].
It’s currently up 45%.
In December I recommended a stock called Virgin Money [ASX:VUK].
It recently received a takeover offer. I told my guys to bank their 30% win.
It January I recommended a stock called Playside Studios [ASX:PLY]. It’s currently up 62%.
In February, I gave five recommendations for my special report on Artificial Intelligence.
The best one so far is up 55% already.
Of course, I don’t always get it right, not every recommendation performs like the above…small-cap stocks sit at the riskiest and most volatile end of the market…
…but nonetheless, these are cracking gains in a very short amount of time.
And yet I can’t help feel that most people aren’t just that excited about the stock market.
Maybe their mortgage rate is too high? Or their expenses are hurting them? Perhaps the Ukraine and Gaza geopolitics worry them?
I can’t tell you what the problem is.
But there’s no giddy, wild speculating going on right now. I’ve lived through those type of markets.
Those stock returns above are coming about because small caps mostly got hammered for two years.
They’re now bouncing back. My view is that it’s professional money driving the market today, and not retail punters.
That’s good news for you.
That tells me the small cap bull market my readers are riding now can continue for some time yet. I believe it could run all the way to 2027.
History shows market and economic expansions don’t go up in a straight line…and they don’t end after four months either.
Darkest before dawn
There’s a big disconnect that has to close too.
As above, most people are worried for the future. It all seems a bit tight and tough out there.
The reality is that world trade is getting along just fine. Check out his chart of shipping volumes to see that…
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| Source: CrossBorder Capital |
In fact, this outcome is what tripped up some of those underperforming fund managers in 2023.
Here’s Ben Smythe again from the AFR…
‘The start of 2023 was full of predictions of a US recession and poorinvestment market returns as interest rates soared from near zero to 30-year highs.
‘As it turned out, economic growth was strong, and the global sharemarket was up 23 per cent for the year.’
As it happens, I was one in the minor group that was bullish in 2023. Here’s me publicly laying my neck on the line in April last year…
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| Source: LiveWire |
I was a bit early there, at least as far as the Aussie market went.
But better early, than never!
Now the bull market is here. If you’re sitting on the fence, I urge you to get active.
2023 was tough, no doubt about it. But 2024 is shaping up as a barnstorming year.
What are you waiting for?
Get amongst it via my favourite plays right now.
Best,
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Callum Newman,
Editor, Small-Cap Systems and Australian Small-Cap Investigator
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