The market has fallen through November lows to touch levels not seen since 2016. Tune in to this thematic discussion in which Matthew Kidman asks Tobias Yao and Arden Jennings if this really is a dip, or whether it’s time to run for the hills?

Tobias and Arden cite the ongoing trade wars, the FOMC meeting (18-19 Dec), and the February 2019 reporting season as key catalysts ahead. In the meantime, they share 8 strategies to manage risk in this challenging market and nominate some themes and stocks that could help navigate the current market challenges. Tune in for the full discussion, or read on for the executive summary.

Risk management strategies discussed

• Focusing on liquidity and avoiding lobster-pots (you can get in, but not out)
• Maintained elevated levels of cash
• Reducing high PE names
• Reduced exposure to retail because of exposure to housing and consumer sentiment
• Exited the project-based contractors just to reduce risk in the portfolio
• Underweight bond proxies
• Some exposure to gold
• Keeping some ‘ballast’, i.e.: stocks with reliable earnings through the cycle 

Some themes to consider

• Focus on high quality and liquid names, e.g.: Cleanaway (ASX:CWY) and Smartgroup (ASX:SIQ).
• Mining services companies with strong fundamentals, e.g.: Seven Group (ASX:SVW) and Emeco (ASX:EHL).
• U.S. dollar earners, e.g.: IPH (ASX:IPH) and Mayne Pharma (ASX:MYX)
• Companies with reliable earning streams, e.g.: Service Stream (ASX:SSM)
• Locked-in revenue: E.g.: Citadel (ASX:CGL) which has long-dated contracts with government. 

Watch next

If you enjoyed that, you can also see Tobias and Arden review 5 stocks for stormy weather in the previous episode by clicking here.