The S&P/ASX 200 Index (ASX: XJO) is continuing its fine form of recent weeks today and is up 1.24% at the time of writing to 5,457.7 points. Since the lows we saw in March, the ASX 200 has now rallied well over 20%, meaning we are in a new bull market for ASX shares once more.
But one investor not popping the champagne right now is David Pace – co-founder of Greencape Capital.
According to reporting in the Australian Financial Review (AFR), Pace is calling time on the current bullish sentiment defining ASX shares, saying "the days of market gains are numbered, and investors should prepare for another sell-off".
Calling the performance of the ASX 200 over the past 6 weeks as an "inevitable rally" over the reopening of sections of the Australian economy, Pace is worried about this euphoria wearing off as the "economic reality sets in".
"I'm not expecting the upswing to continue," the AFR quotes Pace as stating. "If we are in some form of social distancing for the rest of the year – and it might be as profound as we are currently experiencing – there are parts of the economy that will struggle."
Should ASX investors be worried today?
Mr Pace's comments should certainly be appreciated in my view. Greencape Capital has long been a successful fund manager on the ASX and Pace is certainly an experienced hand at markets.
However, Pace is not selling everything and walking away. More recently, Greencape is looking to load up on shares that Pace sees as having a high chance of coming out the other side of coronavirus stronger than before: "Our bias is backing better-than-average people in better-than-average businesses".
Pace names Aristocrat Leisure Limited (ASX: ALL), James Hardie Industries (ASX: JHX) and Sydney Airport Holdings Pty Ltd (ASX: SYD) as top stocks Greencape considers under this label.
However, Pace does dispense a word of caution: "We are cautious not to overdo it. We are wanting to see some proof statements about what the other side looks like".
"It's a sea of uncertainty right now and that's not a wonderful backdrop for putting down money unless you're getting bargain-basement prices," he added.
Foolish takeaway
Whether the markets go higher from here or we do see another market crash, I think investors should stick to their strategy regardless. In my view, investing in quality businesses but also keeping some cash on the side is a great playbook you can use to hedge your bets either way.
