Australia on wrong side of global growth
Investors must work harder and think smarter about the outcomes they want in these abnormal investment times, says Chad Padowitz, chief investment officer of Wingate Asset Management , an international equities manager based in Australia.
He says that global bull markets are running out of steam and entering a period of subdued returns with higher volatility. Australia is on the wrong side of global growth for the first time, while the US economy is growing and Europe is doing better than it has in the past few years.
Padowitz says that low interest rates are driving sharemarkets higher. "Sharemarkets are supported by low interest rates as there is nowhere else to invest."
The almost non-existent interest rates in countries such as the US and the UK are easing the pain for investors, says Padowitz. The last time in history that money was so cheap to borrow was in 1690. He says while there is speculation that the US will raise rates in the second half of this year, there have been 21 monetary easing actions around the world in the past few months.
He recommends that investors be patient and take advantage of the cycles and the dislocations of values. One unloved sector is mining equipment. Within the sector are marked-down companies with long-term service contracts and stocks of critical parts that will benefit from demand when mining companies need to replace their equipment. Two US-based companies that Padowitz recommends are Joy Global and NOV.