Free Whelan: Rip off this Band-Aid please mum
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In this Stockhead series, investment manager James Whelan from VFS Group offers his insights on the key investment themes and trends in domestic and global markets. From macro musings to the metaverse and everything in between, Whelan offers his distilled thoughts on the hot topic of the day, week, month or year, from the point of view of a professional money manager.
Something something inflation something 8.6% something slowing consumer data something stagflation something FED something 0.75% rise.
I just summarised a whole weekend of commentary in one line.
Albeit a long weekend.
We had the amazing fortune of being able to spend a Monday in the sun with family while trying to avoid the headlines coming in telling us US futures were being smashed. And then in the evening, while roasting small animals on the barbie, that Aussie futures were also smashed and we’d have to log in on Tuesday and prep for two bad days in one opening.
I’m more of a whip the Band-Aid off kind of a guy, so better to have it all out in the open so we can see what kind of gammy, gangrenous, festering wound we’re dealing with.
And going by the stench of pus and whiff of panic, what we’re dealing with is pretty grim.
Grimmer if your portfolio just sits in equities located in one country.
Grimmest if your portfolio consists of jpegs of cartoon monkeys.
The last of the people who were clinging to some hope of a recovery in unprofitable tech are now almost assuredly left in the dustbin of history.
Wait… I’m getting a message we still have one out there…
I hope that those people who were given the gift of all gifts in the free money pandemic pandemonium melt up squirrelled a bit away to invest soundly in Quality once the dust settles.
But we all know that won’t be the case.
We are a mile away from a bottom now thanks to the best inverse forecaster on the planet.
But seriously, if you look through the carnage, remember the BOFA Fund Manager Survey last month that had all the indicators for a buy signal EXCEPT ONE: Capitulation.
That’s why I was a little cautious.
We were and are owed one last final blow up, a complete absence of bidders and/or something breaking that was meant to be stable. Some algo going haywire or something like that. You’ll know it when you see it. If you see it.
The House View: let’s get it done. Inflation is rife and growth is sluggish. Un-Band-Aid this bad boy and get rates up in three easy 1% instalments. Like a reverse Afterpay for people who enjoy squeezing lemon on paper cuts.
It’s going to be bad anyway so the view is: why not just get to it and then sort it out later?
Okay. So that may be a little excessive but if we’re heading to a recession we may as well get there and start the rebuild and promise to NEVER LET STUPID FREE MONEY CONTROL OUR LIVES OR THE MARKETS EVER AGAIN.
Markets see through recessions. Markets see through the worst. Maybe most of those zombie companies that have been surviving without growth or innovation finally pack it in and the spirit of entrepreneurship can find a new renaissance.
Still long CNEW on China having to reopen eventually.
Buying copper on big dips.
Can we talk about my META (FB) puts I banged the table about last week?
Meta’s research team presented a new approach that allows generating photoreal avatars with an iPhone scan.
— 80 LEVEL (@80Level) June 14, 2022
They’re going okay too.
Stay the course and wait for the capitulation. Quality and commodities will be the safest places afterwards.
All the best and stay safe,
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