Plenty of upside potential for the stock market says top performing fund manager


Everything you need to know about the Australian share market today in less than three minutes… from The Capital Club

What’s the big deal?

Every stock market investor’s greatest fear is a stock market crash.

There are no shortage of commentators feeding off that fear, keen to grab a headline or two in a desperate attempt to remain relevant.

Given stock market crashes are few and far between, such predictions of impending disasters get a disproportionate amount of air time.

Bad news sells. “100,000 flights land safely again today” doesn’t have a patch on “Plane overshoots runway, ends up in lake, major rescue operation underway, all passengers escape but two treated for hypothermia, plane sinks in under 30 minutes.”

So it’s refreshing to see an interview in the AFR where a top performing fund manager says he has “an unequivocal view that sharemarkets are at the start of a euphoric stage, offering plenty of upside.”

What does this mean?

The AFR article quotes legendary stockpicker Sir John Templeton who said bull markets are born on pessimism, grow on scepticism, mature on optimism and die on euphoria.

Ben Griffiths, co-founder of small and mid cap fund manager Eley Griffiths, say its hard to say stock markets are euphoric.

Although the ASX 200 has almost doubled since the depths of the GFC, it has been one of the most hated bull markets on record.

Mr Griffiths says small cap stocks often rally late in the stock market’s advance.

Although the likes of Afterpay Touch (ASX:APT) and Appen (ASX:APX) shares have been on a tear over the past year or so, they have pulled back in recent times. The Afterpay share price has fallen 24 per cent from its recent high, hardly a sign of market euphoria.

What should you do?

As ever, invest regularly into the stock market, no matter what the cycle.

We’re yet to meet anyone who definitively knows when the stock market might fall, so don’t even bother thinking about it, let alone trying to do something about it.

Small caps are a fertile ground for stock pickers. In theory, the risks are higher than for blue chip stocks, so make sure you have a diversified portfolio.

Diversification can come in the form of small cap fund, or a portfolio of 15 t0 30 individual companies. Click here to find a selection of shares to buy taken from some of the country’s top stock pickers.

Contributors to this article may own shares in some of the companies mentioned in this article. The Capital Club has a thorough disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
Bruce Jackson has 30 years of hands on investing experience. He is passionate about stock market investing, running his own portfolio and SMSF. His focus is on small cap growth stocks. You can contact Bruce at