1) Remember the big market fall in January?
It’s almost been erased since the big run-up in the market began around 9 March. Again, the triumph of the optimists prevails! At least for now…
We already know one reason. Roaring commodity prices are driving huge earnings through stocks like BHP, South32, and Whitehaven Coal.
What about outside the commodity space?
Personally, I think real estate-related stocks demand attention right now.
As a bunch, they’ve been a bit neither here nor there for a while now. No doubt the heat coming out of the Sydney and Melbourne property markets took some of the gloss off the theme.
But it’s not as if there’s no appeal left in the sector.
I keep saying that every rich person is hearing the same thing from their advisor right now (if they have a brain): protect yourself from inflation with property!
And it’s true…or should be true.
We write a lot about gold as an inflation hedge here at The Daily Reckoning Australia. But property is a ‘hard asset’ — and it comes with political benefits.
Australia’s wimpy politicians don’t like messing with the sector…so on the merry-go-around we go until the big bust we’re due after 2026. Weee!
The sheer idiocy of their solutions to the affordability problems for first home buyers is hilarious — hilariously bad.
That’s unless you’re on the windfall of them continually pump priming the sector.
Naturally, stocks that monetise this stand to do well. I can say that confidently because the proof is in the buy list of my property newsletter with Catherine Cashmore. Sign up and see for yourself.
Real estate investment trusts are a classic play here.
The current inflationary environment thanks to the wild money creation of central banks is just the icing on the cake.
REITs use cheap debt to acquire property. Inflation erodes the value of the debt and lifts the value of the rents they can charge — and raises tangible property values.
What I like about this sector is that you can dollar-cost average your way in over time here. They suit the patient investor with a five-year time frame. Let Mother Nature do some of the heavy lifting for you.
We’ve already seen a big run-up in logistics stocks.
Who’s the laggard this time around? You might have guessed: offices! Naturally enough, rents here have been stuck in a time warp since 2019.
But time moves ever on…and there’s some indication that office space is being absorbed again.
I’m going to spend this month to see if there’s any opportunity here. I’ll let you know what I find!
2) This morning we sent out my latest podcast. I reckon it’s a beauty. You can check it out here.
It’s with my friend, Chris Mayer. He was a newsletter writer for about 15 years.
He established such credibility and trust with some of his readers he now manages their money in a US fund.
When did he begin? 2019! That means he had a baptism of fire as a fund manager…because COVID came along and smashed the US stock market after February 2020.
You know the rest!
If you’re interested to hear how he navigated that turmoil, and how he views today’s volatility, tune in!
But that’s just the starter course. Chris is not a ‘macro’ guy.
He’s an old-fashioned stock picker. His main game is hunting what he calls ‘100 Baggers’ — stocks that return 100 to 1.
In 2014, he and his publisher at the time spent US$50,000 to do a study on stocks that had achieved this lofty goal. He put what he learned down in a book.
The cheats version you can grab via our conversation.
As I said, tune in here and let me know what you think.
3) The mainstream press is currently in a tizz because the iron ore price has gone back to more than US$160.
The market has already priced a lot of this in.
When the market tanked in January, I told my subscribers to grab some stock in one of my favourite iron ore juniors, Fenix Resources [ASX:FEX].
This little stock is up nearly 30% in about two months. That’s a tidy move — and shows why volatility can lead to opportunity.
I have more to come on this soon! Stay tuned.
Best wishes,
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Callum Newman,
Editor, The Daily Reckoning Australia
