5 experts on how to make money in turbulent times

Chips, be careful and watch global small and midcap stocks

Adrian Martuccio, portfolio manager at Bell Asset Management

Adrian Martuccio of Bell Asset Management.

“I believe now is a good time to be optimistic and stand out in the stock market,” Martuccio said.

However, while the “greedy and others fear” adage sounds true right now, investors need to keep in mind that there could be more volatility and potential weakness.

“It is therefore equally important for investors to stick to a playbook they are confident they will execute in these uncertain times. It doesn’t make sense for investors to take high risk and speculate on companies they don’t understand,” he added.

Instead, he advises investors to stick with franchises that have survived the past few economic cycles. “This will help you come out of this investment cycle ‘richer’ in confidence and hopefully ‘richer’ financially when the market bottoms out, and ultimately reward you for perseverance.”

One area he sees attractive is global small and mid-cap stocks. “This asset class offers better growth than an all-cap strategy in the long run, so it typically trades at a premium.”

History Provides Lessons, Earnings Ratios Provide Clues

Alexis Wheatley, Wealth Advisor, Wheatley Wealth Management

Alexis Whitley, head of Wheatley Wealth Management.

Wheatley said the only way to really find the bottom is through the rearview mirror.

However, she added, bear markets last nine months on average and tend to drop about 36%.

In addition, there are often “catalytic events” at the bottom, such as the collapse of Lehman Brothers in 2008.

With that in mind, she said value can be found in the stock and bond markets.

“A price-to-earnings (PE) ratio between 15 and 18 represents good value,” she said.

“S’s 2023 forward P/E ratio&The P 500 is trading at 16.31, while the ASX All Ordinaries is trading at 13.35.

“Given the relative exchange rates of Europe and Japan to the Australian dollar, there may be more international opportunities.”

Term deposits and high-rated government bonds also appeared to have “fair value” as inflation appeared to be slowing and lower rate hike expectations.

It’s impossible to choose the bottom, but the net zero theme is worth a look

Blair Hannon, Head of Investment Strategy, Global X ETFs

Blair Hannon, head of ETF investment strategy at Global X.

Hannon said there is no guaranteed way to find a market bottom.

However, quality companies are starting to look more attractive as valuations start to normalize compared to the same period last year.

“With rate hikes expected to taper through 2023, we may see some confidence return to the stock market,” Hannon said.

“While the headwinds are far from over, the market has done its best to price in the ongoing concerns.

“Besides another geopolitical shock or an unforeseen black swan event, adding to your portfolio now is a much more attractive proposition than it has been in the past two years.”

He is focusing on topics such as battery technology, hydrogen, carbon quotas and green metals.

“We’re still in the early stages of growth, so as adoption increases, these areas will thrive in the coming decades,” he said.

“Looking at areas with long-term growth stories, investors can stay the course and ride out short-term market volatility.”

Keep an eye on the “fear scale”

Todd Hoare, head of equities at LGT Crestone

Todd Hoare, head of equities at LGT Crestone.

Hall said investors should not choose to bottom out, but should invest with time horizon and risk tolerance in mind.

Investors can use the VIX Volatility Index, commonly referred to as a “fear gauge,” to help understand when the market may bottom.

“A VIX close above 40 is closely related to a bottom in the stock market,” he said.

Speaking of opportunities, he said this bear market has made fixed income an “investable area” again.

“Owning a company with a 2-3% dividend yield feels attractive when the risk-free alternative is below that,” he said.

“It’s a different story when risk-free alternatives are yielding 4-5%.”

Also, there may be an opportunity to buy quality products at cheaper prices. He used Alphabet as an example.

“There have been only a handful of times since the listing that stocks have traded below the broader market, as they are now,” he said.

“By itself, this may not make Alphabet a ‘buy now’ story, but it does show that investors are asking for the lowest multiple relative to the market in its history.”

Still more room to fall, dollar cost averaging may be the solution

Helen Nan, Head of Plan For Your Future

Helen Nan, Head of Plan For Your Future.

Nan noted that some fund managers believe the market has bottomed out now, and she still thinks there’s more room for stock prices to fall.

“Prices still haven’t fully reflected the combination of recession risk and higher interest rates,” she explained.

But that means now might be a good time to buy, she added.

“Most people, especially unsophisticated investors, will sell when the market is down, but smart investors will buy when they are cheap. I call it a ‘Boxing Day’ stock sale,” she said.

One way to enter the market and avoid missing out when the market bottoms out is to average costs by dollar, she added. This is buying stocks on a regular basis, which means you buy at highs and lows to spread your risk.

“In this highly uncertain environment, diversification can be a good strategy. For retail investors, index funds or ETFs can be a good choice for diversification. Also, they can get a Diversify across time.

She said investors shouldn’t forget the fundamentals of investing — “staying the course and sticking to your long-term goals.”

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