In the end, the ASX 200 went up 2% for the March quarter just gone.
The gain came in the last seven days.
Can things keep running in April?
History would suggest so. April and December are the two best months on the ASX.
But, as Warren Buffett says, if history had all the answers, then the richest people would be librarians.
For example, now we have OPEC+ sticking their oar in the water.
The oil group just announced a surprise one-million-barrel per day cut to ‘stabilise the oil market’.
Personally, were I the president of the US, I would implement a perpetual ‘F U’ policy toward OPEC and release double the amount of oil from the US Strategic Reserve for every cut they make.
Could these OPEC guys be any stupider?
They shift a product that the Western world now despises and is actively trying to make redundant.
I would have thought their best policy would be to keep their head down and grab what they can from whatever time they have left before renewables and electric cars send them into irrelevance.
And they’re trying to stick the world for more cash when it has an inflation problem?
Oil will get a boost in the short term. Long term, this decision does nothing but incentivise the West to flick these losers off as quickly as possible.
Does OPEC’s move change any thinking for the RBA regarding the next monetary policy decision?
I doubt it, but it probably doesn’t help.
The market thinks that the RBA will go on hold.
Stocks could be vulnerable to a fall, in the short term, if the RBA do put in one more rise.
However, none of this changes my game plan. I think now is a superb opportunity to be buying depressed shares all over the place.
I saw an excellent presentation on this recently.
Small caps, for example, are now in the second worst period since 2001. For 16 months they have underperformed against Aussie large-cap stocks.
I don’t doubt it for a second, either. I’ve watched it all play out in real time.
But here’s why I get excited too.
Look at how small caps can surge when the market wind gets back behind them:
|
Source: Spheria Asset Management |
It’s not as if there’s no opportunity out there anyway.
For my last issue of my small-cap advisory, Australian Small-Cap Investigator, I recommended a small telecommunications company Tuas [ASX:TUA]. It’s up a tidy 19% in less than a month.
Here’s how my monthly recommendations are tracking since last September:
September: +40%
October: +12%
November: +39%
December: +13%
January: -13%
February: +0.3%, -13%
March: +19%
I’m happy with this. As above, the general tailwind in the sector hasn’t been there.
However, individually, companies are still doing exciting things. This is where you need to knuckle down and work out who has something going for them.
If you want some more ideas on how to get started in the small-cap sector, go here now for my Top Five Bargains report.
One of the stocks in that report is related to the property market.
It was quite contrarian for me to put that down as an idea last year.
Now, it’s beginning to look a whole lot more reasonable.
See the latest on the housing market here:
‘Sydney’s house prices are poised for a sharp recovery, which is not far off, as the market continues to rise faster than expected, CoreLogic says.
‘Values jumped by 1.4 per cent in March, more than four times faster than the previous month and the sharpest increase since October 2021, data from CoreLogic shows…
‘Tim Lawless, CoreLogic’s research director, said a combination of low stock, an extremely tight rental market and additional demand from overseas migration fuelled the earlier-than-expected turnaround in prices in those capital cities.’
This is perfectly in accord with what we should expect relative to the factors that impact property.
I got that part right.
What is taking a bit longer to happen is for this apparent strength in the housing market to translate into stronger share prices in property-related stocks. Some of my personal positions here have been singed a little, when I thought the bad news of last year was well and truly battered into them.
The market is always ready to take your ego and shove it where the Sun don’t shine.
However, none of these were short-term ideas, and I’m sure in a year or two they will go green.
Another thing that Warren Buffett says is:
‘Be greedy when others are fearful, and fearful when others are greedy.’
If you want to follow the lead of the great man, don’t delay! Go here to get started.
Best wishes,
![]() |
Callum Newman,
Editor, The Daily Reckoning Australia