Three things you need to know today…

1) Everybody forgets this important point about the US…

Stocks are wobbling and the headlines are coming out to spook you, me and anyone else who tunes in.

Donald Trump’s trade war is coming to smash the world economy…or so the theory goes.

I don’t agree.

Here’s one reason why.

Almost everybody is focusing on US stock markets currently, and leading firms like Tesla and Nvidia.

What about the US property market?

Financial commentator Charlie Bilello points out…

‘The average home price in the US is up over 53% in the last 5 years, more than double the increase in wages. The widening gap between prices and incomes has led to the least affordable housing market in history.’

If you’re a US first home buyer, this sucks, no doubt.

However, anyone in the market is possibly sitting on big wealth gains…and many US homeowners are still paying the low rates from years ago.

Data from last year said 60% of US mortgages are below 4%.

And we care about this why?

70% of the US economy is consumer spending. This is also what drives the world economy, and Chinese exports.

For most Americans, US housing and jobs are more important than the stock market.

There’s also this from analyst David Goldman…

‘Here’s a back-of-the-envelope calculation of the impact of tariffs: in December 2024, the American economy imported $250 billion worth of goods, while retailers sold $650 billion in goods.

‘Imports are about 40% of retail sales. If the average tariff is 10%, and half of that 10% is absorbed by exporters to the United States, the resulting impact on the price level for imports goods would be 5%.

‘In turn, 5% of the 40% import share in retail sales is 2%. Goods comprise roughly half of the Consumer Price Index, so the impact on overall inflation would be around 1%.’

Overall, it’s not clear to me why the US economy would go into recession over Trump’s antics so far. We might get a slowdown, sure.

But the share market is unlikely to fall precipitously in this scenario.

And what do you and I do about it?

It’s perfectly in accord with investment theory to buy into the market at regular intervals. It’s called dollar cost averaging.

Some days the market will be flying. Some days it will be down in the dumps.

And while there are no guarantees in any market…

Historically, shares deliver a great performance compared to other asset classes.

Here’s the US stock market over the last 5 years to prove the point…

2) Here’s more proof for the long-term bulls…

Since 2009, US stocks have fallen more than 5%…thirty times.

The average intra-year drawdown is -16%.

Here’s another snippet from Charlie Bilello…

The Nasdaq is down about 13% since the peak this time around. So about average so far.

3) What’s one idea to consider snapping up in this sell-off?

I asked my colleague Greg Canavan this very question. He nominated US fund manager GQG Partners [ASX:GQG].

But here’s some background on the company…

GQG Partners is an American fund manager based in Florida.

This is a substantial business. They have at the time of this report, over US$160 billion under management. That should give them US$800 million in revenue in FY25. Big money!

Like all asset managers, GQG Partners makes more (or less) from the amount of money they manage.

They need to keep winning client inflows. They can do that if they continue to report great results from their strategies.

You can follow their progress via their fund under management (FUM) updates, released every month.

Why is a US fund manager listed out here?

One reason is to get close to the massive pool of Australian capital from our super fund industry.

The more money GQG can put under management…the more money they can make as a business. An Aussie firm also seeded them years ago.

The Chief Investment Officer, Rajiv Jain, has a cracking reputation as an investor…and owns millions in GQG shares himself.

Greg told me…

‘GQG trades on a single-digit PE and a double-digit dividend yield.

‘So if you don’t think this market is about to collapse, it’s a good time to buy some stock.

‘The CEO and Chief Investment Officer certainly think so. Rajiv Jain purchased 660,000 shares on market in March.

‘Jain is an active value investor. He attempted to institute a buyback scheme recently, but was unsure of the tax implications (given the shares trade on the ASX as “Chess Depository Interests”, or CDIs).

‘So it looks like he’s doing a personal buyback, while the shares are cheap.’

Makes sense to me! You might like to give the same idea some thought.

Best wishes,

Callum Newman,
Editor, Small-Cap Systems and Australian Small-Cap Investigator

PS: Don’t forget to check out this presentation from US tech guru James Altucher. Nothing Trump is doing changes what he’s talking about here: the upcoming Starlink IPO.

President Trump just bought a Tesla to show his support for Elon Musk…

There’s no ‘friend in high places’ bigger than this one.

Check out what James is saying here…

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Murray’s Chart of the Day
— S&P/ASX 200

By Murray Dawes, Wednesday, 12 March 2025

The correction is gathering steam with financials here and in the US seeing stiff selling pressure.

Despite the general malaise beneath the surface of the ASX 200 over the past year, the strength of the banks managed to keep the index aloft.

Now that the final pillar holding the market up has cracks appearing, the index is dropping like a stone.

Nothing ever moves in a straight line, but there are no signs of a bottom appearing yet.

We saw a major correction in the ASX 200 in 2022 which led to two years of range trading.

The rally we have witnessed over the past year took the ASX 200 to the key Fibonacci resistance level which is 61.8% above the range created in the 2022 correction.

Now that there are clear signs that the resistance level is holding, we can create targets back to the midpoint of the range (point of control in the chart above).

A fall to 7,000 would see another 10% drop from current levels and could set up a fabulous buying opportunity.

It may take months to get there, but the odds are increasing that a retest of the point of control will happen at some point.

Regards,

Murray Dawes,
Editor, Retirement Trader and Fat Tail Microcaps