During these uncertain times on the S&P/ASX 200 Index (ASX: XJO), I think it's always beneficial for ASX investors to get a look at how market professionals are investing.
One such professional is Ausbil fund manager and 40-year stock market veteran Paul Xiradis, who has recently released some market insights.
How does a fundie view the current ASX bear market?
Speaking to Powerwrap, the first thing Mr Xiradis notes is the different nature of this ASX stock market crash. Prior crashes have typically been sparked by ructions in the financial system itself (such as the GFC), but the current crash (as we all know) has been caused by an external and global health crisis. As such, the paradigm is different, and it also makes it very hard to assess in terms of long-term impacts:
"This event is different, in that it wasn't instigated by fundamentals…the resultant shutdown has upset consumer behaviour and spending patterns. It has also disrupted the working environment and work practices. We haven't seen this before at this universal scale."
Xiradis also notes the unprecedented level of monetary easing that the Reserve Bank of Australia (RBA) is currently undertaking, which includes interest rates at virtually zero and bond purchases by the RBA. Xiradis expects this paradigm to last at least 3 years, which he thinks "should support activity and extend the equity cycle as it recovers".
What about ASX shares?
In a good sign for ASX miners, Xiradis also points out the positive effects that the Chinese stimulus plan will likely have on demand for raw commodities. He sees iron ore and metallurgical coal prices remaining around their current levels, which should also help boost the Australian dollar.
In terms of the broader markets, however, Xiradis expects "a very, very tough period during the next few months," adding, "our base case is that we expect recovery later in 2020 and into 2021."
However, ASX investors shouldn't despair at this. Xiradis notes that Ausbil is still buying in this market and sees many opportunities:
"Contrary to the negative sentiment in the market, some companies offer both resilience and clear growth prospects in and beyond this crisis. We are seeing such opportunities in the online and technology space, and we are exploring these in-depth."
As for how Ausbil is constructing their own portfolios during this tricky time, Xiradis had this to say:
"So, as you'd expect, it's a balanced, diversified approach that acknowledges the challenges ahead of us over the coming months, but also maintains exposure to the best companies so that we can participate in the full recovery cycle when it starts. We think it's important not to become too defensive right now…there is potential for the shutdown to ease more quickly than in other parts of the world."
Foolish takeaway
These insights from a veteran of the ASX are very valuable, in my opinion. You can see the clear, logical and considered way that a fundie is viewing an uncertain market – and I think these traits would be very beneficial to every ASX investor right now.
