Question on sentiment & AD8/DUB

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Question asked 04/02/2022

Question on sentiment & AD8/DUB

Hi James, Loving the insights! When you are neutral the ASX I'm guessing that means it could go up or down? Would that mean that you should hold off buying stocks until you get confirmation at above 7200 that it's bullish? Or, are the individual stocks you are buying bullish regardless of the index falling further? I noticed you're buying Audinate and Dubber. Would they be classified as "tech stocks" and be possibly thrown into the mass exit box due to interest rate rises? Or, are there certain tech stocks that will rise regardless, even if they aren't sitting on huge piles of cash to fund themselves? I keep reading or hearing that unprofitable businesses will suffer the most (dropping the most on the charts) and some may go bankrupt during a market crash like the one many are predicting in the next year or so. Do you think this correct? Thanks, Kim

Answer

Hi Kim,

What we mean by neutral towards the ASX is more around the risk / reward being unappealing at this point in time and we perceive better opportunities exist elsewhere. However by definition we do like individual stocks and sectors as the market doesn’t move as one, in either direction.

We have bought Audinate (AD8) and Dubber (DUB) for our Emerging Companies Portfolio and as you say they definitively have a tech component to them which has seen them correct further than expected but inline with our view that the Tech Sector is looking for at least a short-term low means we are giving them a little more room.

Lastly people have been predicting a market crash ever since 1987 and many of these doomsday merchants have lost lots of $$ in the process. As opposed to predicting whom will / won’t survive an aggressive market downturn I would simply rather focus on buying quality companies at the right valuation that will be around in years to come.

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Dubber (DUB)

LAST UPDATED 04/02/2022 16:46

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