This bull market is now one of the oldest on record, yet reasons to be wary of it are growing. We sat down with Matthew Haupt, Portfolio Manager at Wilson Asset Management to get his perspective on how much longer investors have left to make hay.
Matt told us that: “We're getting very close to the end. It's something we're really watching closely, looking at all the lead indicators trying to look at flows and switching between asset classes. We are getting close to the end... but we still think there's upside.” In this short video and transcript he discusses how much longer he thinks is left of this bull market and the key short-term risk in the market right now.
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“The biggest risk we're seeing at the moment is around trade policy. I think this will be a dominant feature in September, so we're going to go through this period of noise. It's highly likely Trump comes out with an additional $300 billion of tariffs on China.
We think this will be the last round of tariff negotiations, but it's going to cause a high degree of volatility in the markets. Again, emerging markets will come under pressure. We think September's going to be tough as far as trade goes.
I think that's the biggest risk in the near-term that we can identify, but after that, we are late-cycle, and it looks like the leading indicators are peaking around here. Generally when they peak, you have a period around eight to twelve months before the equity market peaks.
We think you've still got another 12 months of this rally or the bull market to happen, but we're getting very close to the end. It's something we're really watching closely, trying to look at all the lead indicators, trying to look at flows and switching between asset classes.
We are getting close to the end, but we still think there's upside. We think people should hold in for the ride and navigate through this volatility in September and get that rally into the end of the year, which we think will play out.
You find with high PE stocks there's a lot of momentum behind them. You have all these buyers, quant buyers buying them, but there's a bit of a vacuum. If they start to come off, there's not a natural buyer at these levels. Value guys won't buy it. Momentum guys won't but it, so the fall can be quite quick and dramatic. It's an area where quants are still playing around in.
Those stocks are still going up, but it's an area where we really don't want to play in. We'll try and look for fundamentally cheap companies that are growing at an acceptable rate and have good dynamics around it. Those expensive stocks we're happy to leave them to other people and miss out on the short term because we think medium to long-term they'll be off. A lot.”