As investors grapple with tightening financial conditions and multi-decade high inflation, equity markets across the globe have descended firmly into correction territory throughout the year. The sell-off in growth stocks has been extreme and largely indiscriminate. High-quality companies with extremely healthy balance sheets have experienced selling just as aggressively as highly levered ones that are producing negative cash flows. The Lincoln team believes this trading pattern is unlikely to continue, and fundamentals and financial health will drive the next phase in the market cycle.
We expect to see the so called ‘zombie’ companies, which have survived on cheap funding costs and an abundance of capital, fail under the weight of their own debts. And this should see investors behave more rationally – reallocating their capital back to quality stocks. That’s where our strategy will re-emerge from the carnage, as we see so many opportunities in the market today.
Watch Tim Lincoln, Co-Founder and Chief Investment Officer, and Matthew Swartz, Portfolio Manager, dissect the various themes influencing market conditions and provide insight into the management of your investment portfolios.
Information in this communication is current as of publication unless otherwise stated. It is provided for educational purposes only and may not reflect current market data or opinion. It should not be relied upon in respect to any current investment decision. Investments can go up and down. Past performance is not a reliable indicator of future performance.
The Investment Manager for the Lincoln Australian Growth Fund, Lincoln Australian Income Fund, Lincoln U.S. Growth Fund Hedged and Lincoln U.S. Growth Fund Unhedged (the Funds) is Lincoln Indicators Pty Ltd (Lincoln Indicators) ABN 23 006 715 573 as Corporate Authorised Representative of Lincoln Financial Group Pty Ltd ABN 70 609 751 966, AFSL 483167 (Lincoln Financial). Equity Trustees Limited (Equity Trustees) ABN 46 004 031 298, AFSL 240975 is the Responsible Entity for the Funds. Equity Trustees is a subsidiary of EQT Holdings Limited ABN 22 607 797 615, a publicly listed company on the Australian Securities Exchange (ASX: EQT).
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