You can’t have your cake and eat it too, but that’s exactly what we’re doing this week by increasing our exposure to risk assets as the second wind of the QE3-inspired rally takes effect and by increasing our exposure to long-dated fixed income as the market realises that money printing is not only unsustainable, but so very 2011.
It’s all in a day’s work however as to be a smart investor you have to be at ease with contradictions. On days when the news is bad, you have to be fine if the market chooses to rally. On days when the news is good, you have to be OK with a bearish reaction.
Indeed, it’s within the inherent contradictions of the market, and the gaps between economic reality and investor greed or fear – John Meynard Keynes’s animal spirits – where the best opportunities appear. And it’s in the space between short-term thinking and long-term planning, price discovery and value appraisal, where the real money is to be made.
This week we continue with our theme of spotting the next drivers of growth by profiling a number of technology stocks, including a telecommunications giant everyone’s familiar with, but few really understand. We also take a look at another inherent contradiction: that between housing credit and housing demand, which Leith van Onselen examines in typically minute detail.
Elsewhere, Chris Becker examines a number of new trade ideas and Greg McKenna explains our move up the yield curve for Australian income securities. We also have our usual data wrap, portfolio performance update (see above) and lots, lots more.
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