Email of the day on buying the dip
Comment of the Day

April 21 2020

Commentary by Eoin Treacy

Email of the day on buying the dip

I am adjusting my retirement income portfolio by broadening my global search for income, particularly from Investment Trusts. For the first time I am looking at Japanese markets and in particular 2 ITs, CC Japan Income & Growth and one of David’s favourites from a few years ago, Atlantis Japan Growth. I would value your thoughts on looking for income from the historically low yielding Japanese markets and your opinion of the 2 ITs: CC Japan Income & Growth only have a short history but have consistently raised their dividend over the past 4 years. Atlantis Japan Growth have altered their growth focus to some degree. I learnt from their most recent factsheet that, at the 2019 AGM, shareholders approved the Board’s recommendation to replace the redemption facility with a regular dividend paid to all shareholders on a quarterly basis set at 1% of net asset value at the close of the preceding financial year. This is an interesting approach, what is your opinion of it? Many thanks

And

I ask you, over a 12-month horizon, what are your 2 highest conviction ideas? The first from a purely technical/chart-based perspective and the second from a fundamental/macro-based view.

And

Eoin I trust this message finds you well! I have a question: I have some funds left in South Africa and I know its still early days for them in terms of the crisis, but the banking sector has been quite severely hit. I was considering buying some the banks, i.e. Nedbank, ABSA, Standard Bank and First Rand. I would love your view on that. Thanks a lot.

Eoin Treacy's view

Here are three examples of emails I have received in the last week which are important from a number of perspectives. The first is I have received more emails in the last three weeks from subscribers, than in the preceding three months. That is normal when uncertainty prevails and was to be expected.

The tone of the emails is what I find particularly interesting and it is something that needs to be highlighted to investors. Almost everyone is in the market to buy the dip. That’s understandable. It has been the go-to investment strategy of the last decade and there is no denying there have been some exceptional value opportunities in the dividend aristocrats’ and gold miners’ sectors. However, when everyone reaches the same conclusion at the same time it is usually the time to think as a contrarian.

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