The S&P/ASX 200 (ASX: XJO) finished lower over the five days while US markets struggled to another negative week.
Here are my three key investor takeaways from the week.
Money on the sidelines
My first takeaway leans on the comments of ‘Coppo’, the well-known stockbroker in investment circles. In his daily newsletter, he highlighted that as much as $84 billion could be looking for a home on the ASX in the next six months.
The combination of takeovers, share buybacks and special dividends suggests investors will be flush with cash. One of the less appreciated events in markets is the fact that the institutional investors who own a company being taken over are ultimately forced to reinvest that capital into the equity market, which should see some support if the market continues to weaken.
Death of forecasting
The week’s unemployment rate continues to evidence the great divide between the real world and the financial statistics.
It is abundantly clear to those in the ‘real economy’ that there is significant pain, yet economic statistics continue to show incredibly low unemployment rates and a strong economy.
There remains a consensus among ‘experts’ that spending will snap back quickly after lockdowns, but I wouldn’t be so sure.
Reinvesting in yourself
Bramble’s (ASX: BXB) double-digit fall during the week once again highlights the issue of short-term management and a focus on dividends.
The CEO who had been in place for five years admitted to focusing too much on short-term performance targets, leading to higher dividends and buybacks, and not reinvesting in the company. A lesson for many Australian businesses.