The ASX 200 has been buoyed by an RBA rate cut, recovering above resistance at 6350. I have zero confidence that this signals the start of a new up-trend.
Rate cuts normally precede a contraction and I am wary of committing further funds to the equity market at present.
My own view is that rate cuts are wasteful. If they have not worked to date, we are pushing on a string. Rather than doubling down, we need to try something else (boost infrastructure spending for example).
Cash and fixed income securities represent 46% of my Australian Growth portfolio for two reasons: (1) the potential impact of a US-China trade war on Australia; and (2) declining house prices and their potential impact on undercapitalised banks leveraged at nearly 20 times common equity (CET1).
Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.
Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.
Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.