Report on the Growth and Innovation forum, 30th January 2018

Wednesday, Jan 31 2018 by

Yesterday I attended this event at the Business Design Centre, London and thought readers might be interested in knowing some of the presentation points.

For those who have never attended, it's a "Shares" magazine event, sponsored by Cenkos and AJ Bell which brings together retail investors with small caps. More detail here

  • Small Caps consistently outperform the main indices
  • It is believed they will become more attractive over the coming months to fund managers as they (defensively) try to diversify away from main indices to mitigate risk of a bear market
  • The staggering growth of the Electric vehicle market (and consequent investing opportunities) was the theme of one presenter from Shares. Despite possible  disruption to incumbents he highlighted that many were adapting well to the new market opportunity. He thought the following were worth looking at: Ab Dynamics (LON:ABDP), Johnson Matthey (LON:JMAT), Ricardo (LON:RCDO) (suppliers and services), Draper Esprit (LON:GROW), Nexus Infrastructure (LON:NEXS) (Charging points) and Glencore (LON:GLEN),  Bacanora Minerals (LON:BCN), BHP Billiton (LON:BLT) and Kaz Minerals (LON:KAZ) (Commodity suppliers for batteries) were highlighted. 
  • AJ Bell presented a top 10 signs of gauging whether the market will crash. 1. Sentiment/confidence as measured by the volatility index (VIX); 2. a "blow-off top" when the market peaks; 3. Earnings Momentum slows; 4. Market concentration (when exposures are  concentrated in relatively few stocks); 5. a move to defensive stocks; 6. M&A activity very high; 7. New listings high including more 'rubbish' stocks; 8. Real interest rates go above 2%; 9. Credit spreads; 10. Yield curve. I didn't understand the symptoms of the last two but I'm sure others here can tell me. In summary he thought the score was 7:3 in favour of the bull market but warned things could change rapidly. 
  • Shares Mag also presented an overview of UK tech stocks worth looking at. £AFM accesso Technology (LON:ACSO),  GB (LON:GBG),

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2 Posts on this Thread show/hide all

Howard Marx 31st Jan '18 1 of 2

Franis, thanks for the write-up. Re AJ Bell's risk-list

* Yield curve flattening  - if 10 year government bond yields are falling faster than 3 month government bond yields, this can be indicative that government bond investors think a recession is near.

* Credit spreads - if yields on corporate bonds are rising relative to the yield on government bonds of the same maturity, this is indicative of credit investors rising concerns regarding a recession &/or financial distress.

It's clearly informative to discover what investors in the bond/credit markets are thinking, especially given to tendency for Equity investors to display manic-depressive behaviour at times (the Ben Graham 'Mr Market' analogy).

PS which were the three measures on AJ Bell's list that were flashing red currently?

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fwyburd 31st Jan '18 2 of 2

In reply to post #307273

Thanks Howard, that was a very clear explanation.

He was rushing at the end but "blow off top" and (I'm pretty sure) earnings momentum and M&A (highest in Jan 2018 since yr 2000) were the three.

He also showed a great graph of household worth in the US vs GDP which showed household worth well ahead of GDP, which was another red flag.

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