Why Rudi Filapek-Vandyck thinks 60% of the ASX could finally have its moment

For much of the past year, investing in Australia has felt frustrating. Reporting season has often only made things worse.

The ASX 200 has continued grinding higher, yet many investors have watched enviously as markets like the U.S., Canada and Japan delivered far stronger returns. In fact, over the six months to 30 June, the average ASX 200 stock fell 4.5% (excluding dividends), highlighting just how narrow the market's leadership has become.

According to veteran market strategist and FNArena founder Rudi Filapek-Vandyck, there's a simple explanation.

"I think the frustration comes from the fact that only 40% of the market has been doing all the work and 60% has not contributed... If you were deeply embedded in the 60%, this market feels like a bear market."

But with reporting season about to begin, Rudi believes that could finally be about to change. In this wide-ranging reporting season preview, he shares five key insights:

1. Why the forgotten 60% of the ASX could finally have its moment
2. Why AI has become the biggest question every company must answer
3. The surprising earnings driver emerging for Australia's banks
4. Five ASX stocks he likes heading into reporting season (and five more discussed in the full interview)
5.  Why he's still holding almost 20% cash

Watch the interview below. The written summary covers the highlights, but Rudi's reasoning - and all 10 stock ideas - are best heard in his own words.

#1 – Why the forgotten 60% of the market finally has a chance

Consensus forecasts suggest the ASX 200 will deliver around 12% earnings-per-share growth this financial year, but Rudi believes investors are focusing on the wrong number.

"The market has only been carried by 40% of the stocks. So there's 60% out there that has lagged and has done largely nothing."

His bigger message is that the market could be approaching what he calls the "flip".

"The sectors that are carrying this year's profit are not the same as next year. So there is a flip coming if market expectations are correct."

As interest rates move towards a neutral or easing cycle, he expects leadership to rotate away from this year's winners towards REITs and more domestically focused businesses - potentially giving the forgotten 60% of the ASX its long-awaited chance to catch up.

#2 – Why AI has become the biggest reporting season question

Reporting season is no longer simply about revenue, profits and dividends.

According to Rudi, investors now want management teams to answer a much bigger question: what does AI mean for your business?

Companies can beat expectations, but unless they convince investors they can thrive alongside AI rather than be disrupted by it, those gains may prove short-lived.

"It's not simply, 'Look at us - we've delivered 20% growth in earnings per share.' The market will say, 'That's nice, but tell us how much of that has come from AI? How much is AI helping you, and how much is AI disrupting your business model?'

"There's an extra layer now on results. It's not simply about your dividends and what you actually achieve in profits."

#3 – The surprising reason Australia's banks keep outperforming

Australian bank valuations remain one of the market's hottest debates.

Rudi thinks investors may be overlooking a new earnings driver.

He points to lending for AI infrastructure and data centres as an emerging source of growth, while also highlighting research showing Commonwealth Bank (ASX: CBA) is among the world's leaders in AI readiness.

"Maybe that premium... is made out of more than just thin air."

It's a perspective that challenges one of the market's most widely held assumptions.

#4 – Five ASX stocks Rudi likes heading into reporting season

Beyond TechnologyOne (ASX: TNE), Pro Medicus (ASX: PME) and Commonwealth Bank (ASX: CBA), Rudi also highlights several companies he believes deserve investors' attention this reporting season.

Payment platform Cuscal (ASX: CUS) is one of his highest-conviction smaller-cap ideas.

"I think it has potential to become something special at some stage."

He also likes Breville Group (ASX: BRG), arguing it's an unlikely beneficiary of the cost-of-living crisis.

"If you go the weekend with the extra surcharges, a cup of coffee becomes quite expensive these days. The other thing also is that they are very good - they're basically more innovation oriented than most people give them credit for."

Those are just five of the companies Rudi discusses.

Across the full interview, he identifies 10 ASX stocks he believes are well positioned heading into reporting season, explaining why each has earned a place on his watchlist and what he'll be looking for when they report over the coming weeks.

#5 – Why he's still holding almost 20% cash

Despite identifying opportunities across the market, Rudi isn't rushing to put every dollar to work.

Heading into reporting season, he's still holding just under 20% cash.

"I've diversified more, taking smaller positions and not so much conviction calls... on balance, I think my cash is just under 20% again."

It's not because he's bearish. Rather, he believes markets have become more volatile as short-term money increasingly dominates trading, making it harder to hold concentrated positions with confidence.

That cash also gives him flexibility.

"If August lives up to expectations, there might be some opportunities opening up."

It's a reminder that while reporting season can create plenty of winners, it also creates mispriced opportunities. Rudi explains why he'd rather have cash ready to deploy than feel fully invested when the market begins to separate the winners from the losers.

Hit play below — it’s classic Rudi, and it’s well worth your time.