Today’s Fat Tail Daily begins with a hat tip to my colleague Murray Dawes. You see his charts in these notes every day.

Somehow…call it black magic or some such if you will…Murray called the bottom in lithium recently…and so it’s proving (so far!).

The hottest stock on the market right now is suddenly Pilbara Minerals ($PLS).

Here’s the chart of PLS…

Murray got his subscribers on to PLS back in July. They’re up nearly 40%…in a month.

That’s a cracking return for such an established stock.

I must say, too, that Murray is on a bit of a hot streak.

He put his subscribers into Lynas Rare Earths ($LYC) back in April too and that took off like a firecracker recently as well.

Yes…a rising market helps…but there’s much more to it than that.

Take, for example, the latest results from JB HiFi ($JBH). As a business, JBH is going just fine and dandy.

But the stock sold off yesterday, nearly 9%. A recent entry into JBH wouldn’t have got you very far, as its current outlook is fully priced.

Trading and investing demand some element of surprise that the market hasn’t factored in. That’s your potential upside.

In the case of lithium, there’s been some recovery in the price…and now a sudden shutdown of a Chinese mine.

That’s giving the sector a kick…and any short sellers are scrambling to get out of the way.

Yes…upside is what we want!

This is one reason why I was so pumped for the market back in 2023. Buying in or after a bear market gives you so much potential upside!

We’re in 2025 now…and the general market is looking richly valued.

Take this from The Australian …

“Morgan Stanley continues to warn that the market’s price-to-earnings ratio remains elevated at 19.4 times forward earnings, sitting 2 standard deviations above its long-term average of 14.8 times.

“At 19.8 times, the ASX 300 PE is only 2 per cent below the peak from the post-Covid boom in 2021.”

This is why Murray’s advice can be so valuable. The market, in general, may not have 30-40% upside in FY26…but plenty of individual stocks do.

You don’t have to go crazy taking risks either. Murray’s service is called Retirement Trader.

He knows perfectly well his client base is looking for ‘alpha’ without wanting to bet their life savings on some biotech with no revenue.

You might be surprised how often very solid companies sell off…and give you a look at a cracking price.

Sticking with Murray, case in pointwas sleep apnoea firm ResMed ($RMD) back in 2023.

It did a swan dive when the market panicked over new weight loss drugs affecting its addressable market.

Here we are 2 years later…and RMD is up nearly 80% and at all time highs.

Of course, we can’t use hindsight bias here, either. RMD could have kept dropping, or gone nowhere.

This is where Murray’s years of experience counts for so much too, plus his risk management system.

Where might be an opportunity now?

One idea is GQG Partners ($GQG). Be aware that this is me sharing this idea – and not Murray.

I certainly suggest you put this on your watchlist. It’s a US based fund manager. It had a big breakout from 2023 into 2024. It’s now down about 40% since peaking around $3 per share.

It’s funds under management growth has stalled, and even went backward last month…and investors dumped the stock as a result.

However, it remains a large fund manager, and very profitable.

Right now, my colleague Greg Canavan says its trading on a P/E of 7. That seems very cheap indeed.

I certainly suggest you take an interest if you’re interested in dividends and income. GQG pays out most of its earnings.

I remember the last time the stock sold off that the management considered a stock buyback.

They held back because of some quirk of their capital structure, from memory. However, I wouldn’t be surprised if they did something similar again.

You don’t need to rush on this one. Look it over. Consider the idea. Watch how it trades. most importantly, track is monthly updates on its fund flows.

The market will be sensitive to this because of the recent ‘mini crash’. Ideally, we want to see that stabilise and start growing again.

There’s an idea for you to follow. Let’s check back in on it, later in the year.

Best Wishes,

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

***

Murray’s Chart of the Day –
Comparing Major Markets

By Murray Dawes, Tuesday, 12 August 2025

Source: Tradingview

[Click to open in a new window]

Since the lows hit in 2020 during the COVID panic, major stock markets around the world have been in a solid bull market.

US, German, and Japanese stocks are up between 124-150%. It is positive that all three markets are rising in unison.

The poor old S&P/ASX 200 [ASX:XJO] runs a distant fourth with a 74% jump. Clearly remaining exposed to just the ASX leads to poorer performance in the long run.

But while the other three stock markets are running the ASX will float higher as well.

There is now nothing but blue sky above and solid momentum underneath each market. That means stocks will continue doing what they are doing until acted on by an equal and opposite force.

There’s no doubt there are trapdoors below that can set off a chain reaction of selling if the market falls through them.

But I need to see the market falling through the trapdoor before I would react.

Second guessing the market and trying to pick a top is a fool’s errand. Instead I am cheering the market on to move into a melt-up phase where making money is like shooting fish in a barrel.

I have outlined the lines in the sand below the market where I will become concerned but will remain bullish until those levels are hit.

Regards,

Murray Dawes,
Retirement Trader and International Stock Trader