Even considering how wild the past 18 months have been, the world is in a weird place right at this moment.
COVID-19 vaccinations are rolling out in the developed world, yet many countries are experiencing a resurgence in infections because of the nasty Delta variant.
Australia, after having dodged major damage for so long, is paralysed because of the third wave.
The share market has also had a wild ride, perhaps not knowing quite where things are heading.
Earlier this year, the talk was all about if and when inflation would rise due to the post-pandemic economic recovery. And if inflation rises, interest rates would too, and shares would suffer especially.
But now that debate is nowhere to be heard. The Delta variety of the coronavirus has dampened inflation talk, with speculation that central banks need to support economies for longer.
So where does that leave investors?
ASX sectors that have passed their peak
One fund manager reckons 2 particular sectors have had their run.
The Firetrail Australian High Conviction Fund stated in a memo to its clients this week that its portfolio now contains no banks or iron ore-related shares.
"We don't see compelling opportunities."
Both sectors have enjoyed a fruitful run in the past year or so. Banks benefited from the post-recession recovery, while the iron miners revelled in the high commodity prices.
Yarra Capital Management head of Australian equities Dion Hershan backed up Firetrail's view on both mining and banking shares.
Fortescue Metals Group Limited (ASX: FMG), as an example, is yielding more than 11% in dividends even though its share price has quadrupled in 2 years.
"With iron ore prices roughly three-times the 10-year average, mining companies are like ATMs at present," he said.
"But as iron ore goes from US$200/tonne (vs <US$45 to produce, including freight and royalties, etc.) to a long-term average around US$65, dividends could fall by 33% from current levels."
According to Hershan, the 4 major banks are overrepresented in the S&P/ASX 200 Index (ASX: XJO) anyway so it's best to look elsewhere.
"Both groups rely very heavily on unsustainable factors, with iron ore prices 3-times normal and bad debts at their lowest levels on record," he said.
"It's critical to look beyond the majors and be able to tactically shift where required."
