Gerrish: The correction is done, we're positioning for what comes next
The Market Matters lead portfolio manager talks the recent recovery, Trump, gold, and why he thinks there's plenty of opportunities.
While some investors are still deciding to be bullish or bearish, others are already looking two steps ahead.
For Market Matters' James Gerrish, there's plenty of reasons to be cheerful.
He thinks the aggressiveness of equities rally suggests this isn't a dead cat bounce, it's much more sustainable, especially if trade negotiations between the US, China and the rest of the world continue to progress.
History, and the data, suggests better times are ahead.
"When the volatility index spikes above 50 as it did at the start of April, the returns to the S&P 500 are positive on a 12-month basis 99% of the time," says Gerrish.
And the lesson for investors from the tariff chaos is the value of remaining calm.
"If I've learned something in markets over 20 years it's not to shy away from market volatility."
"The clear message is you've got to look through short-term volatility. That's how medium-to-longer term returns are generated. Running for the exits when these sorts of things happened is not the way to go. And I think the recent bounce in the market has certainly shown that to be true."
Advancing Australia
The ASX 200's natural defensiveness means it fared especially well during recent market turmoil, says Gerrish, and could continue to do so as trade tensions dissipate.
I'm pro-Australia, I think we're in a really good position to benefit from the improving trade outlook.
If you had just been following the Wesfarmers (ASX: WES), Transurban (ASX: TCL) and Woolworths (ASX: WOW) of the world, you wouldn't have even noticed the wider market correction.
But he does believe the time has come to trim from defensives and move back into cyclicals.
They've targeted high quality growth stocks with structural tailwinds that arguably overcorrected. Names like Pinnacle Investment Management (ASX: PNI) and Sandfire Resources (ASX: SFR).
They've also bought up Hub24 (ASX: HUB), which had retraced from $85 to around $56.
The gold standard
Gerrish says the self-inflicted damage done by Trump towards the US dollar and bonds has made the gold trade even more attractive.
"I'm a long-term gold bull. What's played out from the Trump administration in terms of tariffs has made the US dollar less appealing. It's made US treasuries less appealing from a safe haven perspective. And that plays into gold's hands."
But he gets nervous about crowded trades and arguably nothing looks more crowded than gold right now.
As a result they've pared back most of their exposure, but are ready to buy back up if there's any sign of weakness.
For more detailed insights on all of the above, as well as Gerrish's expectations for the ASX 200 in 2025, check out the full video above.
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Tom is a Content Editor at Livewire Markets, having worked as a writer and editor for 10 years, specialising in investing and personal finance.
He has previously worked at Finder, FourFourTwo and Man Of Many covering everything from film to football.
He has a Masters in Media Production and a Bachelor's in Journalism.
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Tom is a Content Editor at Livewire Markets, having worked as a writer and editor for 10 years, specialising in investing and personal finance. He has previously worked at Finder, FourFourTwo and Man Of Many covering everything from film to...
Expertise
Tom is a Content Editor at Livewire Markets, having worked as a writer and editor for 10 years, specialising in investing and personal finance. He has previously worked at Finder, FourFourTwo and Man Of Many covering everything from film to...
Expertise
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