TOL - 22nd Dec, 2023
The lead indicator for Dion Hershan's best trades (and two high quality stocks for the "slow grind" ahead)
The secret to constructing portfolios with a strong stomach is to be "brutally self-aware", says Yarra Capital Management's Dion Hershan.
Two years ago, on a trip to Perth, Yarra Capital’s Dion Hershan was pitched the case for lithium stocks by his Uber driver. Hershan says it was a cliché moment and a classic example of a ‘ringing the bell’ sign. On the flip side, there are moments when deciding to invest causes your stomach to churn and your hands to quiver.
“Some of the best ideas I’ve had in my career were when my stomach churned and my hands trembled when I put the trade on. That’s often a good lead indicator.”
Recent investments in fallen angel ResMed (ASX: RMD) and an overweight position in the beaten down REITs sector are two examples Hershan provides of how Yarra is taking long-term counter-consensus thinking.
This counter-consensus thinking also applies to the companies Hershan and his team are cautious about, which include large parts of the ASX20, including resources and banks. Hershan says that while these companies may not fall out of the top 20, their best days are likely behind them.
In this episode of the Rules of Investing, Hershan talks about the lessons from working inside the most successful global hedge fund, why he is cautious about the outlook for blue chips and the companies he thinks represent the best long-term opportunities for the slow grind that lies ahead.
Listen and Follow
Timestamps
- 0:00 - Introduction
- 3:06 - How Dion caught the investing bug
- 4:40 - Lessons from working at Citadel
- 8:35 - Why macro matters for Australian equity investors
- 11:08 - The raging debate taking place at Yarra Capital
- 14:30 - How much pain will consumers feel in 2024
- 17:29 - Why you should be complacent about blue chip stocks
- 22:05 - The best opportunities Yarra is finding on the ASX
- 24:57 - A fallen angel that Yarra thinks can rebound
- 26:52 - The thesis for being overweight REITs
- 36:00 - What investors are getting wrong in markets today
- 37:15 - Lessons from an early win
- 38:32 - Two stocks Dion would be happy to back if the market shut for 5 years
Supplementary Material:
Equities
Avoiding the blue chips heading for small cap status
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Equities
Five themes on our shopping list
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This was the final episode of The Rules of Investing for 2023. The podcast will return in early 2024.
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The Rules of Investing is one of Australia's top investing podcasts. We interview the leading investment minds from Australia and overseas to better understand their processes and philosophy. After launching in October 2017, there have been over 150 episodes published - you can access all content on Livewire Markets, Spotify and Apple Podcasts.
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To catch-up on previous episodes of the Rules of Investing, click here.
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4 topics
2 stocks mentioned
1 fund mentioned
1 contributor mentioned
Livewire Markets
The Rules of Investing is one of Australia's top investing podcasts. We interview the leading investment minds from Australia and overseas to better understand their processes and philosophy. After launching in October 2017, there have been over...
Livewire Markets
The Rules of Investing is one of Australia's top investing podcasts. We interview the leading investment minds from Australia and overseas to better understand their processes and philosophy. After launching in October 2017, there have been over...
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