Navigating the Stock Market’s Record High

The S&P/ASX 200 Index has climbed almost 15% in the past five months. Is it time to take profits?

Should I invest when the market is high?

Finding value is what I want to talk about today because it’s an interesting juxtaposition that there’s all this value in small caps, but the market is trading at record levels.

Markets around the world are near highs as investors go hunting at the big end of town. 

What do you do with the market trading at record levels is a good question. Should we be nervous? Should we start selling wholas bolas?

Here are three strategies for navigating a record high:

  1. Take risks off the table by taking profits on some big performers;

  2. Hunt for a sustainable income from tax-effective dividends;

  3. Hunt for value in growing companies, which yes, includes small caps.

Guess what? This week’s issues in Small Caps and Blue Chips involve practical suggestions in all three.

Taking Profits: BlueScope Steel (BSL) and Harvey Norman (HVN)

We’re taking profits on BlueScope Steel and Harvey Norman, both blue chips. These are well run companies yes, but they face big headwinds. It doesn’t matter how good management is, if you’re up against it, you’re up against it. We’ve also made big profits in both stocks. Harvey Norman is up 43% in the past 12 months. BlueScope is up 20% and has more than doubled over 4-years.


Generating Income: Dividends

Then there’s income, which means cash now. The banks remain a good place to generate dividends. The must-read is our Blue Chip report on Dividends. We analyse the five biggest dividend yielders in and compare them to CBA. We also analyse ANZ in this week’s Blue Chip.

Blue Chip stocks give you income fire power. That’s what they’re there for.

Should I invest when the market is high?

Then we get to my first love, which is Small Caps. We have 10 Best Buys which you need to check out.

But there is a blue chip that I think is worth buying. I certainly have. That’s Macquarie Group (MQG). I would call this a special situation. Read our research in Blue Chip. This stock is poised for explosive earnings if the taps get turned back on in the IPO market in the US. The bank has $35bn to deploy and that’s just in private equity. This is on top of its $211bn under management. It’s worth your time.

AI has indeed caught the investor imagination. I’m getting inundated by companies offering AI services. Anyone would think it stands for “always interesting”.

This week's beer! I’m going back to a Surrey Hills favourite – Wagon Driver’s Pale Ale by Beneficial Beer Co.

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Richard Hemming

Richard Hemming

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Richard is a leading market commentator and expert on ASX Small Caps provides investment opportunities in Small Caps that you won’t get anywhere else.

Under the Radar Report is licensed to give general financial advice only (ASFL: 409518). The author does not own shares in any of the stocks mentioned.

Under the Radar Report is licensed to give general financial advice only (ASFL: 409518). The author does not own shares in any of the stocks mentioned.

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