Emma Fisher: The consumer isn't broken, the ASX isn't boring and volatility is your friend

A standard tandem bike configuration has a Captain and a Stoker. Generally, the larger and stronger of the two is the one who rides up front, while the rear brings the extra push and power.

The Australian market is widely known to be the most momentum-driven market in the world, and alongside a media landscape that often perpetuates a hive mind of narrative thought, the two forces together push and pedal each other along, in perfect symbiotic harmony.

This is no compliment because frankly, no one looks sensible riding a tandem bike. But if the market is moving more dramatically and quickly than ever on baseless narratives, and reality is pointing in the opposite direction, then how do investors jump off the ride? How do they pressure test the narratives, work out what is less wrong and identify where the real opportunities lie?

For Emma Fisher, Deputy Head of Equities at Airlie Funds management, that comes with working from the fundamentals. A recurring theme in our conversation was about the stories in the market most out of line from reality. It felt like mythbusting, investing style.

Working from the value of a company and their future cash flow as an anchor is exactly where investors can find opportunity in the volatility.

Our job is to value the company and the cash flows we think we'll make over time. And that assessment should have a pretty long shelf life - but the volatility is increasing. So if you think of valuation as an anchor… if you have a good and fairly accurate view of the value of a company, and that will be proven right in time, then it should be your market."

The consumer is more resilient than you think

On the current reporting season, Fisher argues that media narratives about an imminent, consumer-led slowdown in Australia are overstated. "I don't think it tallies with the data that we're seeing. I wouldn't be surprised if the consumer is more resilient than people think," she says.

She notes resilient employment, regular pay rises, and household budgets that appear less stressed than sentiment and headlines would suggest. This has led to an apparent mispricing in which consumer stocks have been "obliterated" while bank share prices have barely moved. 

"So one of these two things is wrong. The truth is probably somewhere in between."

She expects a "meeting in the middle," with overly pessimistic consumer names and under-discounted banks converging as reporting season unfolds.

The ASX Trojan Horse

An opportunity for Australian investors lies in accessing the US through ASX-listed companies with significant US exposure.

Fisher sees the United States as the "global bright spot," driven by a broad capital expenditure cycle extending well beyond data centres into electrification and grid rebuilds. This is reinforced by a business-friendly environment and protective tariffs, particularly in steel. Together, these elements are building a "wall" around the US economy.

Getting inside that wall is how Australian investors can access this strength, through ASX-listed companies such as BlueScope, James Hardie, News Corp, ResMed, and Aristocrat, all of which are in the Airlie Australian Shares Fund.

The exception is healthcare, where Fisher sees a "great squeezing" underway. US insurers are compressing profits across the industry and the effects are working their way through manufacturers. She points to CSL and Cochlear as examples.

In defence of boring

With the end of the financial year came headlines lamenting how poorly the ASX performed against its global peers. The KOSPI, for example, grew an eye-watering 178% in FY26 and not long afterwards unwound spectacularly, with a 40% drawdown from its June peak, in a dramatic enactment of Newton's third law of motion that no doubt many ASX-exposed investors watched in morbid fascination.

Fisher defends the ASX as a source of steady capital and income growth that avoids the extreme boom-bust dynamics of markets like the KOSPI or the NASDAQ. "It's not going to do a plus-40 year like the NASDAQ might, but it equally won't do a minus-30 year like the NASDAQ might." 

With that in mind, she advocates the ASX as a vehicle for owning high-quality international businesses and has weighted her portfolio accordingly.

When the market engineers a sell-off

Returning to US-exposed stocks, when I asked Fisher about BlueScope (ASX: BSL) and James Hardie (ASX: JHX), both of which featured in Airlie's latest fund update, she cited them as prime examples of a changing market structure.

The rise of hedge funds, quant strategies, and passive investing is increasing volatility and creating non-fundamental dislocations. 

"There are just fewer and fewer shares trading hands these days that are driven by a decision made by people like me, trying to value a business on its future cash flows," says Fisher. "You shouldn't lament that. You should have a mindset that that's going to give you great opportunities."

In November last year, both BlueScope and James Hardie were kicked out of an international index (“which frankly, I didn’t even know they were in,” she says). Both stocks fell between 15% and 30%. 

Fisher explains the tactics used by hedge funds who predict which companies will be deleted from an index. “They then short it into the deletion knowing that passive funds then have to sell it and they can cover their short.”

This forced selling enabled Fisher and her team to repurchase James Hardie around $26, which has since rebounded roughly 50% as fundamentals reasserted themselves.

Fisher believes these non-fundamental events are not going away any time soon. Intrinsic valuation, she says, acts as an "anchor" and investors with strong, resilient views on long-term cash flows are in a good spot to exploit dislocations like this.

Corporate profits have more cushion than you think

On the macro front, Fisher pushes back against “misery narratives” in the media about falling house prices and Australia facing a sharp economic downturn, arguing that the economy benefits from two under‑appreciated stabilisers - strong commodity demand and a floating exchange rate.

"We don't tend to have enormous recessions. The recession plays out through the exchange rate. So that cushions us from a lot of volatility in our own economy."

While acknowledging serious long-term issues like Australia’s weak productivity and distortions created by continual fiscal stimulus funded by commodity windfalls, she believes these factors currently cushion the economy rather than precipitate a near-term crisis.

Commodity revenues like iron ore repeatedly exceed conservative forecasts and get pushed out into the broader economy, a buffer effect that countries like New Zealand or the UK simply don't have.

She therefore expects conditions to remain "slow but not go backwards," with corporate profits more resilient than recession-focused narratives suggest.

"This is not the basis of a strong dynamic, entrepreneurial, encouraging economy,” Fisher said. “It's the opposite of that. And one day it will be a very big problem, but I don't think it will be a problem today."

Buy and hold

Setting aside all the volatility and momentum moves, if the stock market were to come to a standstill and close tomorrow for the next few years, then which ASX stock on the ASX would Fisher be happy to hold in her portfolio?

She doesn’t skip a beat in nominating Sigma Healthcare (ASX: SIG).

"It's not optically cheap or anything, but I think the best earnings compounders are proven retailers that are midway through a store rollout."

She expects Sigma to open at least another 45 Chemist Warehouse stores in Australia and 30–40 in New Zealand over the next few years, with optional upside from international expansion into the UK and Ireland.

"Meanwhile, the single store economics in their home market should have improved over that period. It has a function of greater scale. So that's a business that should be able to grow the bottom line, at least high teens for the next couple of years."

Fisher also emphasises Chemist Warehouse’s rare appeal to both male and female shoppers, particularly against competitors like Priceline who skew female, noting too that it has the highest sales per square metre in the category.

“And it gets the rare male dollar. It's hard to get the male dollar in Australia. They love it,” Fisher concludes. 

Somewhat in unison, we both said: “Wall-to-wall proteins!”