Market up 19% for five years!
by Peter Switzer
In case you’re in need of a positive shot in the arm by someone qualified to dispense market optimism, then make sure you see this website’s video of Dr Manny Pohl of Hyperion Asset Management. He sees the market rising around 19 per cent per annum!
This is what he revealed when I talked to him last night and this isn’t a guy who is frivolous with his observations.
Prodding him about the debt cloud overhanging many important economies and the likelihood that these could hurt stock markets, he conceded the point, and went back to the drivers that will give our market the legs to keep going forward.
Mind you, I think his call is even too big for me but as I regularly argue, I don’t know the magnitude of the market move but I’m pretty confident on the direction.
Manny’s fund is a long-only fund and so he buys his version of blue chip companies but if he’s nervous he can hold large wads of cash, thus reducing his exposure to the market.
He says a blue chip company has great cash flow and a strong balance sheet, which ultimately is affected by the level of debt. A final matter is the growth prospects of the company.
Out of this analysis can come a company with capital growth potential and often with a history of good dividend payments.
He likes online businesses such as carsales.com but he still likes JB HiFi, which he argues has a website that shows it can play in the online world as well as the real retail world.
He likes big mining companies — these pass the cash flow and balance sheet tests — and he likes most banks but NAB is on the outer.
Anyone wanting to know the other stocks he likes, check out the video. While I always like to know what companies smart investors like, the big take-away message for me was his optimism.
To me it says this market cycle will resemble others in the past — even given the pile of negatives out there. And it makes you come to only one conclusion — we are so lucky that China has embraced capitalism and ditched communism!
You can also be thankful that India has broken out of the vicious circle of poverty and it’s winning the Cricket World Cup last week was a suitable prize for a country that has overcome its own economic challenges and has helped the world economy when it really needed a helping hand.
Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.
Published on: Wednesday, April 06, 2011
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