Five huge predictions that could hit your wealth
Could CBA halve in value? Is the AI boom only just beginning? Five of Australia's top investors shared the big predictions shaping their portfolios and the market outlook.
Fund managers are a competitive bunch, so you don't often see them in the same room. After all, it might mean letting slip a great idea they don't want to give away.
Finance website LiveWire corralled some of Australia's best into the Art Gallery of NSW this week for a live audience of over 300 people.
The presenters manage billions for everyday Australians. Some of that money might even be yours.
Funds management is never an easy job, but especially now.
Rate hikes are hitting consumers and rattling property, inflation is pressuring bond markets and oil lurks dangerously around US$100 a barrel.
There were five key takeaways for you and me.
1. Don't look to the banks for capital growth... and watch out CBA
The economic backdrop is turning against the banks.
Property is falling, mortgage rates are rising, and credit growth is now going backwards. That puts pressure on bank earnings from multiple directions.
No one made a contrarian case to hold or buy them.
Last year CBA reached a valuation that made it the most expensive bank in the world.
Value investor Dougal Maple-Brown said it has a long way to deflate.
If Maple-Brown's view proves correct, CBA's share price could ultimately fall by as much as 50% from its peak. It would only need to trade at the same price-to-earnings ratio as the other big three banks to get there.
It could even get worse.
The firm's exposure to banks is at its lowest level in 40 years.
This is a major issue for many Australians because Bell Potter data shows financials are still the biggest holdings for most.
2. Property to stay under pressure as the Aussie consumer gets squeezed
If you have a contrarian streak, now might not be the time to let it out when it comes to Aussie property or derivatives of it, like the retail and building sectors.
Damien Boey of Wilson Asset Management warned the real estate slide is eroding Australia's financial buffers. James Hawkins of L1 Capital said the state of property is "much worse" than people think.
There is also the issue of the RBA rate-hiking cycle, which may not be done until mid 2027.
There's no potential relief in sight here for quite some time.
3. AI is a 'boom, not a bubble'
If there was one man who electrified the room, it was Nick Griffin of global investment firm Munro Partners.
He brings one unshakeable conviction to everything: AI is the transformative shift of the next decade.
You and I "are going to have to deal with it" in one way or another. That's because the capital expenditure happening here is "getting into everything".
That's not all. You, me and everyone else are now going to Claude and ChatGPT directly, and bypassing the old platforms, weakening business models as we go.
You will empower AI agents with this shift. As a consequence, as a group, we're ramping up compute demands on the global AI infrastructure, measured in token use, which is going parabolic.
Griffin's view is that even this is probably only about 5% of what the world will eventually use as AI encroaches into every industry. You already know the beneficiaries: semiconductors, the cloud, power and cooling.
He adds that this trade is not over. The hyperscalers are generating the revenues to justify the gigantic buildout. The demand for AI is essentially infinite at this point.
Hence the upcoming blockbuster IPO of Firmus on the ASX. It's also why, in Australia, "resources outperform banks".
4. A new resource boom not dependent on China
Even if AI demand wasn't going parabolic, resources would offer a compelling proposition.
More than a decade of underinvestment is colliding with rising demand from deglobalisation, decarbonisation and defence spending.
The voice of experience came out here, with 40-year veteran Daniel Sullivan saying the outlook was "phenomenally positive".
He lived and invested through the China boom, and is seeing the same signals.
The bottleneck this time? Critical minerals.
Ben Griffiths argues Australia is on the verge of an enormous gas boom to feed the rapidly growing electricity demand.
The natural resources sector is one of the few parts of the market that can bypass Australia's domestic economy and tap into the powerful global forces building now.
5. Farming cows in the 21st century, and more like it
Blackbird Ventures is a venture capital firm that takes specialised bets in high-risk areas.
One was a $3 million initial investment into Canva. You might know it. Canva turned into a billion-dollar unicorn.
Blackbird Partner Samantha Wong talked about another success: a company called Halter.
They built a collar for dairy cows. It runs on solar and AI to do the work of a 19th-century cowboy.
Sound fantastical? It began that way.
Her point: new business can come from unexpected combinations and it may not be obvious that it's going to work for a long time.
Both Canva and Halter remained uncertain prospects that, in hindsight, can get forgotten.
The biggest returns, however, will always come from new ideas that break open new markets.
Don't give up on them too soon.
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