Aussie have cash to splash! | Term Deposits

Today I’m going to show one thing that ought to offer you some coronary heart when it comes to Australia, and the ASX.

Let me clarify…

My favorite quote when it comes to the markets comes by way of…a poker participant.

Yep, Warren Buffett has many great one liners, however my all time fav belongs to (ex) poker champ Annie Duke.

I’ll show you why you must care under…

Annie describes how to win at a recreation of “incomplete” info.

In her case, Annie was speaking about poker. But it applies simply as properly to markets.

The level? You can’t ever know all of the info. There are too many variables, hidden agendas and random influences.

How to deal with this type of atmosphere?

Annie Duke tells us too, “Reduce uncertainty to make future decisions easier for yourself.”

I really like this!

Your money is important to you. The similar is true of everybody.

Nobody desires to discover themselves riddled with angst after making a resolution that hasn’t labored out, or obtained themselves into a spot of hassle…particularly one that would’ve been averted.

That jogs my memory. I bear in mind chatting to a gent at a convention as soon as. He’d been a profitable dentist. Had a good bit of cash to hand after promoting his business.

Then all of it went unsuitable. His financial advisor was – by the sounds of it – an fool.

Our dentist obtained burnt within the bear market occurring on the time.

Instead of having fun with the fruits of his years of work, he smoked an excessive amount of money chasing supposed “outperformance”.

Nobody can predict the long run.

The downside wasn’t that his investments went dangerous – that may occur anytime. It was that, clearly, he put an excessive amount of money into hypothesis.

He didn’t make his future choices simple for himself – by going too onerous within the first place.

What’s that obtained to do with us, at present?

Our greatest risk, always, is market risk.

What I imply by that is your entire portfolio – and mine – being weak to a massive bear market. Think a 50% drawdown like 2008.

There are no atheists in foxholes, and there are no sectors or stocks that may keep away from that sort of carnage.

We could make our future choices a lot simpler…by avoiding a bear market as a lot as potential!

Easy to say, a lot more durable to do.

I’ve made the case in these notes that we’re in a structural bull market, and have been since late 2023.

On the weekend I noticed additional proof that this bull has additional to run.

It got here by way of the Australian Financial Review.

The report confirmed information that exposed Australians have more in financial savings than investments.

Check out the comparable across the world on this chart…

The article goes on to clarify…

“Research by Vanguard found that Australia is one of only a handful of leading OECD countries where there is more money being held in savings accounts than in investments (excluding money invested in superannuation)…

“One of the factors driving Australia’s high savings rate has been the advent of offset accounts on mortgages. The percentage of household assets in savings includes money held in offset accounts.”

Let me clarify the importance of this.

An enormous bull market, traditionally, can solely peak when everyone – and I imply everyone – has thrown each final greenback of cash and borrowed money into the market.

That’s half of what sends markets to extremes, normally accompanied by a “get rich” mentality driving people to herd into the “sure thing” that appears to be occurring round them.

What does the info above recommend, above all else?

It tells me that almost all people are nonetheless appearing conservatively.

They’d fairly have their money sitting within the offset or deposit account than chase the share market.

That says to me there’s loads of retail money that would nonetheless come back into the ASX.

I nonetheless don’t see a lot proof of the wild hypothesis I noticed in 2020.

This information backs up this commentary. And means that the bull market can keep working whereas these timid souls slowly get sucked in because the market rises.

It additionally tells me there’s cash to hand to buy the subsequent dip too – like we noticed in April.

Of course, keep the opposing view in thoughts too. This warning might be justified from world occasions or a nervous view of the long run.

Overall, although, I take it to imply we’re not on the sting of a massive bear market.

There’s nonetheless an excessive amount of warning, or apathy, to signal a massive market “top”.

I’ll keep accumulating shares till I see proof in any other case.

***

Source: Metal.com

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Lithium costs have spiked greater on Monday in China on the back of more regulatory disruption to provides.

Reuters reported that ‘Contemporary Amperex Technology (CATL) has suspended production at its lithium mine Jianxiawo, in China’s Jiangxi province for at the least three months’.

It’s mining allow expired on 9 August.

Chinese authorities have considerably elevated scrutiny of mining operations as half of a nationwide effort to handle environmental issues, useful resource management, and industry consolidation.

Lithium stocks in Australia have flown greater this morning on the back of the news. Many lithium stocks have massive short positions energetic, so my guess is there can be some short masking occurring at present.

News like this may lead to short-term strikes which are subsequently reversed.

The provide/demand dynamics in lithium stay bearish and this news could help to ease the oversupplied scenario for the second. But it received’t lead to an undersupplied market.

Since that is primarily based on Chinese authorities coverage we must always stay cautious of turning into too caught up within the hype.

But after such a long drawn out bear market in lithium we’re seeing constructive indicators that the worst could also be behind us.