Hamish Douglass who is the market guru behind Magellan, says that financial markets are trading under "the greatest asymmetry I have ever seen" with the markets trading on hope without facts and that "the optimism is based on no fundamental facts". Consequently his Magellan has increased cash levels from 6 per cent to 17 per cent because of uncertainties. He reckons it is too early to predict what will happen when the stimulus expires in September , believing neither in a V recovery nor a depression but possibly something in between.
While he thinks a Biden victory would be negative for the markets as the Democrats would wind back Trump's tax cuts , he still backs Biden to win the election. Now at least we have a market man with considerable vested interests in the markets to be able to separate his finances from a far more important outcome that would affect the direction of global affairs- and unlike you and I, he has considerably much more to lose from a Biden victory.
In a incredibly lengthy article in the Weekend AFR, Jonathan Shapiro once again highlights his latest passion to caution readers that the current market madness driven largely by retail speculation mob not by the educated market players is one to stay close attention to - he is not judgmental (much less so than I am) but simply highlights the storm in the sharemarkets created by the lockdown generation. The Facebook trading forum in Australia itself has 23,700 members and he highlighted anecdotal evidence of members making more money than all the super experts, while by Mar 23 Robinhood accounts surged 70 per cent to 37.1 million. From Mar 23- Jun 5, while instos sold $6.3B worth of stocks on the ASX, retail brokers bought in $4.57B. And yes, so the more knowledgeable you are on market fundamentals, the more you have lost out not making as much in comparison to the newbies who either bought the sexiest stocks in town e.g APT and ZIP or the downtrodden travel stocks like Flight Centre and Webjet .
Except that I recalled, the last time Shapiro brought out his analyses on BIG, GSW and ISX, we know what happened not long after. Thursday market rout possibly puts both Hamish and Shapiro perspectives in better light of what is probably ahead of us and that market participants who have had it so good should sober down and take a reality check , because what is too good to be true never lasts.
As Hal Holbrook's character in Wall Street said to the young Bud Fox "Kid, you're on a roll. Enjoy it while it lasts, 'cause it never does."
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