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Michael McCarthy

April 2021

Asset allocation decisions are a key driver of investment success, yet many individual investors ignore or severely underestimate their importance.

Neglected tools in your diversification kit

Investors with a solid investment plan that includes asset allocation can ride out shifts in markets, and avoid reactive responses to regular market crises.

March 2021

Redditor drfreshbatch compares both communities’ “indexes” by posting their performance, averaged out over the day.

Why the Reddit army risks ‘dying in euphoria’

Inexperienced traders may believe stocks can only go up, but history and human nature suggest a market correction or crash is a plausible scenario this year.

February 2021

Every investor is for free markets – until they take a loss.

What the GameStop campaign proved about markets and social media

Taking responsibility for decisions, and refusing to outsource them to the crowd, is a step towards better investment returns.

July 2020

Investors have sent stocks back to pre-COVID levels with little thought for the state of earnings, Rob Almeida says.

Why earnings season is so crucial for share prices

The reporting season is so important because it is the most reliable predictor of share price movements. Statistically, earnings revisions are the best indicator.

June 2020

Those who bought near the March 2020 lows could have finished the financial year on a high.

Lessons for equity investors in the new financial year

Brace yourself and learn from how you have handled the roller-coaster market since the start of COVID-19.

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Reports of re-infection and secondary outbreaks are rising.

When markets and data diverge

Investors need to remember that the impact of new information doesn’t depend on the facts themselves, but on how they change the story.

Large profits can induce overconfidence not only in hardened traders but less experienced investors.

How success can ruin portfolios

Investors sitting on substantial gains should consider taking some profit, or at least taking a break, to allow the emotional tide spurred by solid wins to recede.

May 2020

In the words of famed economist John Maynard Keynes: “The market can remain irrational longer than you can remain solvent.”

Investor hopes for a quick recovery are fanciful

The idea that economies will quickly recover to pre-crisis levels once lockdowns are lifted defies the experience of every market crash in modern history.

While banks are cutting dividends, healthcare and food suppliers may represent a higher chance of maintaining earnings, and dividends.

Four market scenarios to keep investors ahead of curve

Rather than poring over infection rates and economic damage, acknowledge the uncertainty and prepare for a range of outcomes.

April 2020

The potential for companies to slash dividends due to virus-related earnings drops means dividend yields may now mislead and trap investors.

Traders' tips on investing in uncertain times

The first rule of trading is to stay in the game and the corollary for investors is that capital preservation is highly important.

Holding gold in a portfolio can drag on returns in a strongly rising share market, but usually softens the blow when stocks stumble.

The discomforting scenario for gold investors

If market disruptions continue, this may see investors liquidating gold holdings, just because they can.

March 2020

The wild stock swings and huge volumes that characterise recent market activity indicate widespread uncertainty.

Why it's definitely not time to start buying again

Just like after the GFC, it won't be worth getting back into the market until we again see and hear despair.

An increasingly inward-looking electorate could see the November Congressional and Presidential elections drive markets over the second half of the year.

Coronavirus panic obscuring US election risk

The focus on the virus, and the economic impact of containment measures, is overshadowing the US election cycle - perhaps a larger long-term risk for investors.

February 2020

Evidence is emerging of secondary economic effects of the virus.

How to adjust your portfolio to coronavirus threat

Those who see an economic impact must decide how deeply the virus will cut.

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Focus on earnings revisions to get feel for market direction

Wondering (like many) whether shares are over-valued? We outline what to look at to help form an opinion.

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January 2020

It’s negative risk events like the coronavirus that keep investors tossing and turning.

Coronavirus a wake-up call for investors

Expect that negative market events will arise without warning, and incorporate this into your investment strategy.

The most obvious source of trade risk is the negotiation of the second phase of an agreement between the US and China.

What the trade deal means for your portfolio

Modest growth could support higher share prices in the medium to long term but watch out for savage swings in market sentiment.

December 2019

Vastly different market reactions to US growth surprises illustrate the difficulties investors face.

Signs to watch for an imminent correction

Active investors could do well to doubt the extremes of sentiment - a practice which is is powerful under current market conditions.

November 2019

When market fear is high, so is the VIX.

Clues for investors in volatility index

The level and direction of the VIX often gives vital clues to where an index is headed.

Knowing when to exit a share holding is as important as the decision to buy in.

When to sell out of a stock

Knowing when to exit a share holding is as important as the decision to buy in.

Original URL: https://www.afr.com/by/michael-mccarthy-p4yvmm