Michael Day, Phil Muscat Eli, Facebook discussed on Shares for Beginners
Good I am moving back to shares for begins on Phil Muscat Eli now before we start with today's guest. I just wanted to have a quick word with you about the listener survey page on my website. I've been directing listeners to give me feedback and to get some more information about you, but what I'm finding is that I've got no way of responding to you so I'm going to be shutting down that survey and I just wanted to recklessness. If they wanted to continue the conversation, we've got a new facebook discussion, group and shares for. For beginners, all lower case one way, and we can all start chatting. There's bad seventy or eighty members there right now, and we'd love to welcome you along to learn a bit more. The other thing I just want to point out is a lot of people asking me questions as though on some kind of, but now I'm not an expert what I'd really love people to do when they contributed to. The page is to have a question. That I've answered for themselves to bring that to the group as well because we're all trying to together. Back today's podcast, I'd like to welcome out guest. He's been on the podcast before. Michael Day of Pythagoras investing good Michael I feel hey got good. Sorry to put you through all that having to listen to that. Promo, we're trying to get listeners to do some work. That's excellent. That's a good idea because that's the why we landed. You are I'm not. So Michael This conversation. We're about to have came about because we were chatting about the future. I'd been speaking with. A broker who's also been a guest on previous episodes of this podcast. We were both in furious agreement about the disastrous long-term economic effects of covid, nineteen in the lockdowns are then spoke with your Michael, and you had a more positive view about markets despite the economic repercussions in gloom. Michael. Please explain Gosh. That's a pauline Hanson reference. Look. To say that I was positive on the economy wouldn't be entirely correct, but the reality is that the stock market is not the economy and we have to understand that and separate those two concepts. Now when we were speaking, it was I was actually far more comfortable with what I'd seen of. Let's call it the other saw. And what that means is I had drawn a great amount of comfort in the prospects of recovery. And in that stock markets can draw great comfort. And Win they draw comfort shape process. Begin to rise now. I think even in that conversation I, said to you. I expect the numbers in terms of economics and earnings to fall, and I still expect that. But you've seen as I, have a bottoming of the market. which was about the twenty third or fourth of March from four thousand? Just before we got on here, we should Tom Stamp. They step aside that were recording on Tuesday June second twenty twenty second day of winter, absolutely so we were talking, wrote about the end of March, and for me I had a very good understanding of which tron was up to, and the Chinese economy was starting to come out of lockdown and. The notion I had in my mind at that moment was I could see no better place to invest in the world. But it also gave me a leading to understand what an economy would begin to look like once covid nineteen had passed. So, it gave me the confidence to be optimistic, even knowing that the economy was going to get worsens and stupid I will. So. That's why I had five Rydell level of optimism I knew in the middle of March that we couldn't see the down. We couldn't see the ABSO-, and the markets were accelerating quickly on the downside as soon as we got a grip on what was going to be. That's when markets turned, so it's really important difference to think about an economy versus a market. Now if we add to that. I'm sure you would know. But twenty six percent of the top two hundred stocks by market white is in banks. And not only that Itin sent in Maynas and thirteen percent in one company in the healthcare sector, Cold Commonwealth Serum laboratories will see so. So when not looking at a mimic of the economy, we are really looking at a very artificial instrument, so that probably explains a little bit more. Of while I was able to be more optimistic, even knowing that stock markets overshoot by that I mean they go to positive and I go to negative. So that's way we were at that stage, so even banks markle I mean. Look at the trouble that banks seem to be going into and if housing process crash that's GonNa have a terrible effect on the share. Price of banks isn't. So, I'm not a big lover of banks at the moment, the pressure that haven't mentioned this before. The pressure brought to bear from the government on the banking sector means that the banks again have to cop more bad debts. and. There's an old adage that says if you're gonNA, have a disaster. You might as well have a big one. And by the banks, estimating the house process will be down. Twenty thirty percent, and then making provision against the Prophet in one year. It seems to me that they're having a bad.