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Stay Active and Buy the Dip in June
Investors would do well to take advantage of the annual market volatility in June and buy the dip, according to Emanuel Datt, chief investment officer at Datt Capital.
“Australian markets typically fall in June as investors rationalize their portfolios by selling shares from a capital loss position to harvest tax losses to offset other forms of capital appreciation crystallized during the year. This has the effect of potentially reducing your taxable income or gains,” Datt said.
“As tax loss season is a well-known phenomenon in Australian markets, we believe there is a very high probability of a positive July and we are positioning our portfolios accordingly,” he added.
In its small business fund, Datt Capital will look to mobilize a large amount of money and seize good opportunities to buy tomorrow’s blue-chip companies at bargain prices.
Instead of being scared by this predictable volatility, Datt says investors should follow suit and take advantage of the moment to find good companies at low prices across all sectors of the market, not just small caps.
“This is a time of year that all investors should plan for if they can,” he said.
After all, the S&P/ASX 200 (XJO), Australia’s main stock market index, has been positive by around 9% this financial year, Datt said.
While market expectations are mixed around more rate hikes this year, Datt does not expect this to influence the market’s direction.
“Interest rates have been at normalized levels for some time, so in our view potential increases will not materially affect the market and current CPI numbers are in line with our expectations,” he said.
“Our long-term market outlook is stable, with an upward trend and increased volatility,” Datt said.