Expert analysis on what the RBA will do next Tuesday, July 8

FundMonitors.com

July 2025

Chris Gosselin, CEO of FundMonitors.com, speaks with  Nicholas Chaplin, Director and Portfolio Manager at Seed Funds Management and Renny Ellis, Director & Head of Portfolio Management at Arculus Funds Management.

With the RBA widely expected to cut rates next week, the discussion explores whether inflation, GDP weakness, and labor market strength justify a move--or argue for patience. Both managers weigh the risks of overstimulating the economy versus acting too late, in the context of local and global dynamics.

FOMC: projections highlight heightened uncertainty in rate outlook

Nikko Asset Management

June 2025

Funds operated by this manager:

Nikko AM Global Share Fund , Nikko AM ARK Global Disruptive Innovation Fund , Nikko AM NZ Cash Fund , Nikko AM NZ Corporate Bond Fund , Nikko AM Core Equity Fund (NZ) , Nikko AM Global Shares Hedged Fund (NZ) , Nikko AM KiwiSaver Scheme Balanced Fund (NZ) , Nikko AM ARK Disruptive Innovation Fund (NZ)

How A Second-hand Car Salesman Taught Me About Stock Market Psychology

Marcus Today

June 2025

I used to work for a second-hand car salesman called Alex who specialised in Classic Cars. Jaguar XKs, E-Types, Aston Martins, AC Cobras, Trans-Ams, Austin Healeys, anything that an investment banker would impulse purchase (or at least, used to, in the 1980s). The name of the game was a lesson in stock market psychology.

There are two things you had to do right: buy the car and sell the car. But of course, things were different in the 1980s, and the big advantage for a good salesman like Alex was that the "true value" of Classic old cars didn't really exist. There was no internet in those days, and for a second-hand car salesman, the ignorance of his customers was bliss.

It was much like the stock market today, people purport to put a 'value' on a stock but ultimately they rely on a lot of rubbery assumptions which means the valuation is not 'truth' it is simply a negotiating tool in a sale and all that really matters in the end is the price someone is prepared to pay and the price someone is prepared to sell. Making money trading Classic Cars was the same as making money trading stocks; it was all about taking advantage of other people's emotions by creating fear in a seller and selling into a buyer's euphoria.

Buying First - Create Fear

Buying first. For Alex, the main game was to create 'depression' and to do that, you had to know your stuff or at least sound as if you did, and Alex had developed a 'naked script' he could pretty much rely on whatever the car. Confronted by an emotional amateur selling their pride and joy Alex's job, indeed his amusement, was to beat them down from a "Glorious example of a Classic Car" to a rusty old lump of crap owned by a deluded fool.

In the second-hand classic car market, the skill is to generate fear. In the stock market, the money is in recognising it, recognising the points of maximum fear or euphoria.

Selling Was Easy - Wait for the Stars

As far as selling was concerned, that was easier, in fact it was so easy Alex could delegate it to a Muppet like me. All he did was re-spray and re-chrome and tell us to wait for an investment banker with a bonus in their back pocket and (the expression was) "Stars in his eyes" to come along, be blinded by the shiny paintwork and new chrome and pay a lot more than the metal millstone had actually cost. And if someone came in with an Austin Healy owners Club T-Shirt and opened with the comment that "the next thing to go will be the tie rod ends", we were told to simply usher them politely off the showroom floor with a smile. You don't have to sell. Eventually, someone with "Stars in their eyes" always turned up.

The Stock Market Is Just Like a Car Yard

Making money in stocks is the same. It is not about fundamental value, as hordes of finance industry automatons would have you believe; it is about taking advantage of other people. People with stars in their eyes who have inflated a bubble, and people consumed by fear, dumping stocks at any price. It's about inaccurate pricing, not accurate pricing. It's about timing. It's about selling stocks as a bubble bursts and buying them at peak distress. It's about exploiting the herd, not joining the herd.

As the Wolf of Wall Street says, investors are sheep, and sheep are for slaughter. Be the Wolf. Be Alex.

DISCLAIMER: This content is for general information purposes only and does not constitute personal financial advice. Please consider your own circumstances or seek professional advice before making investment decisions.

Funds operated by this manager:

Marcus Today Equity Income SMA, Marcus Today Growth SMA

10k Words

Equitable Investors

June 2025

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Apparently, Confucius did not say "One Picture is Worth Ten Thousand Words" after all. It was an advertisement in a 1920s trade journal for the use of images in ads on the sides of streetcars...

Fund managers liking Europe over US; ASX defence thematic flying high; defence spend growth v AI capex; Australasian M&A flying but Aussie business conditions flagging as government spend drives economy; global M&A multiples; hedge funds back in favour; "Trump Always Chickens Out" (TACO) and the path of the effective US tariff rate.

Fund managers' positioning v. history (net % overweight)

 

Source: Bank of America Fund Manager Survey June 2025

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Relative price action of ASX defence-exposed stocks & VanEck Global Defence ETF (DFND)

 

Source: Equitable Investors, Koyfin

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Global defence spending 2020-2024

 

Source: Franklin Templeton, International Institute of Strategic Studies

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Impact of higher defence spend on level of EU real GDP

 

Source: European Commission

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Big Tech's capital expenditure driven by AI investment ($US billion)

 

Source: Financial Times

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Australasia M&A in USD by quarter

 

Source: WSJ, LSEG

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Australasia M&A in USD by sector

 

Source: WSJ, LSEG

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NAB business survey show Aus business conditions declining

 

Source: IFM, NAB

 

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Median global buyout entry multiples (purchase price / EBITDA)

 

Source: McKinsey, @MebFaber

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Hedge funds experience strongest quarter of net flows since 2021

 

Source: with.intelligence

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"Trump Always Chickens Out" (TACO) stories on the Bloomberg terminal

Source: Bloomberg

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The shifting effective tarrif rate on US imports (percentage points)

Source: Apollo Global Management

June 2025 Edition

Funds operated by this manager:

Equitable Investors Dragonfly Fund

Disclaimer

Past performance is not a reliable indicator of future performance. Fund returns are quoted net of all fees, expenses and accrued performance fees. Delivery of this report to a recipient should not be relied on as a representation that there has been no change since the preparation date in the affairs or financial condition of the Fund or the Trustee; or that the information contained in this report remains accurate or complete at any time after the preparation date. Equitable Investors Pty Ltd (EI) does not guarantee or make any representation or warranty as to the accuracy or completeness of the information in this report. To the extent permitted by law, EI disclaims all liability that may otherwise arise due to any information in this report being inaccurate or information being omitted. This report does not take into account the particular investment objectives, financial situation and needs of potential investors. Before making a decision to invest in the Fund the recipient should obtain professional advice. This report does not purport to contain all the information that the recipient may require to evaluate a possible investment in the Fund. The recipient should conduct their own independent analysis of the Fund and refer to the current Information Memorandum, which is available from EI.

Hedge Clippings | 27 June 2025

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