7 July 2020
Have Australian investors mistaken their strategy all these years? As markets emerge from the “Corona Crash”, it’s evident that high growth stocks continue to be the best performers. For those expecting a great rotation whereby cheap, dividend-paying businesses would finally be prized for their cashflow generation in an uncertain economy; that theory never materialised.
To quantify this point, a recent study found that software stocks worldwide gained 21.41% from 14 February to 12 June. Meanwhile, capital-heavy banks, commodities, and industrial businesses – the backbone of domestic portfolios – are down ~25% (see below chart). That’s an outperformance gap of over 40%.
This begs the question: should investors change tack and load up on the Afterpays and Altiums of the world? Here, Ben Clark of TMS Capital and Roger Montgomery from Montgomery Investment Management discuss this topic and share their approach to growth investing as well as 7 stock ideas offering growth at a reasonable price.