International markets
The Bloomberg app on my phone was the first thing
I checked, to see what international markets had
done overnight. Then I read The Australian Financial
Review online, which caught me up on the news of the
previous day.
When I’m reading the financial press, I’m typically
scanning for any items that may impact stocks I own or
am considering buying. I’m also looking for potential
new ideas to research. One area I carefully focus on is
the list of stocks hitting new highs and lows (at the end
of the share tables on most days).
The new highs list (those stocks reaching their highest
price for the past 12 months) gives me a sense of which
stocks are in favour. For the past couple of years that’s
been high-growth technology stocks like buy-now-pay-
later juggernaut Afterpay, logistics software provider
WiseTech, and Appen, which provides data to companies
developing machine learning and artificial intelligence.
The new lows list (those stocks reaching their lowest
price for the past 12 months) has been my more natural
hunting ground over the years. It shows me which stocks
are out of favour (often with good reason). My focus with
this list is situations where investors may be throwing
a baby or two out with the bathwater.
On this day, stocks that caught my eye included pokerOn a
war
footing
Proper
preparation
can make
all the
difference,
especially at
the end of
the financial
year
STORY GREG HOFFMANSHARES STRATEGY
O
ne of the great lines in the classic movie
Wall Street is when Gordon Gekko is
educating Bud Fox about the market:
“Read Sun Tzu, The Art of War. Every
battle is won before it’s ever fought.”
There’s plenty of wisdom in that saying and I was
thinking about it on Friday, June 28. It was the last
trading day of the 2019 financial year and also the last
day of a family ski trip to Perisher. I started the day at
5.30am with the fire crackling beside me and the snow
canons and grooming machines working away outside
t he w i ndow.
Sun Tzu’s words imply that preparation is the key to
success in war. The same applies in financial markets.
And the trick is to combine preparation with a flexibility
of mind to capitalise on opportunities that can arise from
unexpected places. Which brings us back to my time
by the fire and what I was doing to prepare for the day.
My broad goals were to review the situations of the
seven family portfolios I oversee and to stay up to date
with where the market was and where any potential
opportunities may arise during the day.
I wouldn’t typically focus so much on a single day’s
trading but the end of the financial year can produce
some wild swings as fund managers and investors trade
shares for tax or career reasons, rather than those related
to the fundamentals. For instance, some fund managers
can cut the dogs in their portfolio at almost any price,
which can create opportunities in beaten-down stocks.
They may do this because they don’t want to show
the duds in their quarterly or annual reports to their
investors. Or, potentially, because they want the portfolio
to be “clean” for the new financial year when their next
bonus period may begin.