• Christopher Hall

Wednesday's Weekly Wrap

Economy and Indices

The AU market is up +3.1% for the last month

Leading Sectors This Week

1. Health Care +5.73%

2. Consumer Discretionary (Retail) + 5.36%

3. Info Tech + 4.59%

Bottom Sectors

1. Telcos -1.3%

2. Property +0.3%

3. Metals and Mining +1.1%

Segments this Month

Small and Mid-Caps are the clear leaders; +5.1% and 5.0% respectively for the month.

There was an early lead from Emerging Companies. In the last week they have fallen back, although still above the rest of the market for the month.

Over the last six months

- Emerging Companies are up +13%;

- Small caps are up +10%

- Remainder of the market is around +2%

The best performing companies were mentioned in the most recent episode of Talking Stock.

Market Trends

Leaders lead and laggards lag.

This seems too simple, although our research continues to show that this simple ethos continues in today’s market.

Ranking all the market segments based on their share price performance and breaking the market into three equal groups, we have these three groups:

- Leaders

- Middle

- Laggards

Our research shows that Leaders continue to lead:

- The leader normally only holds the baton for approx 45 days on average, they still remain in the top third for approx 9 months.

- Laggards remain in the bottom third of the market for an average of 18 months

The investment principles to take from this research are to focus on leading companies and avoid those that are lagging. It seems simple, but that is the underlying principle behind our investment approach.

Looking at the AU market over the last six months in the chart below we can see:

- Leading groups of companies make the most of their pole position and investors are rewarded

- Laggard companies have the greatest magnitude of share price performance, albeit down. Investing in is the Laggard group is fastest way to loose money.

For more insights into the top performers, watch Talking Stock or my interviews with Rudi Filapek Vandyck .


For insights on how to use these trends and themes within a portfolio, watch The Portfolio Series here.