FNArena’s Weekly Insights – June 20 2022
In this week’s Weekly Insights:
-Not The Bottom, Not The End
-Conviction Calls
-Research To Download
-FNArena Talks
By Rudi Filapek-Vandyck, Editor FNArena
Not The Bottom, Not The End
“For people still in their prime earning years, this bear market is likely to be as bullish in the long run as it is painful in the short run. For older investors, the decline is potentially devastating.“
Jason Zweig in the Wall Street Journal, last weekend.
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As the Danish proverb goes, making accurate forecasts is very difficult, in particular about the future. Which is but one reason why I think investors put too much emphasis on forecasts and their accuracy.
A much better strategy is to identify and manage risk. This can be done by shifting allocations away from more vulnerable and volatile parts of the portfolio to defensives and cash, taking on less risk when the overall environment looks to become increasingly challenging.
Thus far in 2022, defensives have not operated as they should have, as suggested by history and the label they carry. One explanation is every new bear market differs slightly from the past, generating its own idiosyncratic framework. Another explanation is this year’s bear market is only in its infancy; there’s a lot more to come.
Six months in, assuming we can all agree the current bear market started in January, and with circa 60% of the ASX200 down by -20% or more, it is but normal for investors to start wondering whether The Bottom is in.
Maybe a macro-dissection, top down style, from the process thus far can provide us with better-than-guesswork guidance in this all-important manner?
