If you are a new Insider, you might have missed my newsletter last week, which preempted the major stock market correction. Notice I said preempted, not predicted. Although I read a warning a few years ago that said "if the Dow goes down two full points in two days, bail."
Now I am not advocating that strategy, but the falls at the end of the week before last certainly got my attention and prompted me to look back at the number of corrections, crashes and bear markets of the last century. On last Sunday I wrote:
"During the twentieth century, there were 30 major negative financial events. Four occurred in August. Four in September and seven in October. That means that, of all the major market corrections between 1900 and 2000, half of them took place in the same three month period (August-October) we are now in."
However, I am not going to dwell on stocks that got hit, and bounced back by the end of the week. I think it is more interesting to look at the ones who defied the correction.
I actively follow about 220 ASX listed technology stocks, and I'll go through the ones that were virtually not affected in the selloff, a bit later in this newsletter.
But if you keep in mind the historically dangerous period of the year we are now in, the following chart I created, using the ASX Technology and Information index, gives good reason for pause.
If you are fully invested in this index, the next few months could be a bumpy ride. But if you are cashed up, you may be salivating for a correction, and the bargains that might bring.
There are three scenarios that I draw from the chart above.
Purple line - worst case - an approx. 350/ 400 point correction.
Green line -200/250 point correction.
No major correction during the historic danger months this year.
I am keen to get your thoughts on any other scenarios, so shoot me an email.
What stocks were unaffected during the week's downturn?
Here's what I found. Out of the 220 or so tech stocks I watch closely:
Relatively unaffected on 5th August:
Connected IO (ASX:CIO)
Homestay Care (ASX:HSC)
Integrated Payment Technologies (ASX:IP1)
Servtech Global Holdings (ASX:SVT)
Closed higher on 5th August:
Dubber Corp (DUB:ASX)
IntelliHR Holdings (ASX:IHR)
Mobilicom (ASX:MOB) - Interview with CEO coming up soon.
Structural Monitoring Systems (ASX:SMN)
What I have been watching and reading this week
I watched a fascinating half hour interview with legendary investor, Ray Dalio.
Dalio is an American billionaire investor, hedge fund manager, and philanthropist and is the founder of investment firm Bridgewater Associates, one of the world's largest hedge funds.
He makes a fascinating argument for investing in China now.
Dalio has put together a series of charts that track the rise and fall of some of the great empires through history, starting with the Dutch. He then overlays China and the USA. The link to the video is here but below is a two minute snippet.
I also read a white paper, by the American Civil Liberties union, titled The Dawn of Robot Surveillance.
It looks at the threats posed by algorithm-based video analysis. This is essentially, where surveillance cameras connected to algorithms are no longer passively watching us, but are interpreting and identifying us by understanding what we do and with who.
It raises some big red flags about algorithms and their impact on our civil liberties. On the other hand, if you are a CEO, CTO or Marketing Manager, it's also a guide to how such tech can be positively employed in business today.
I will leave you with a quote from a futurist I like, Michael J Spencer.
Have a great week!
With technology automation in the next three decades coming faster in the 2020 to 2050 period, one thing people don’t realize is that AI-driven surveillance systems won’t just soon begin to impact our lives, they will become our lives. With a quasi basic income in place, what we do with our time will be a commodity, data will replace money as the key form of energy in our ecosystems and financial interactions. If data is the new oil, surveillance architecture is key.
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