Latest / Best of Business / Stephanie Batchelor: Milford Asset Management analyst explains 'Santa Rallies'

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Stephanie Batchelor: Milford Asset Management analyst explains 'Santa Rallies' · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks'd be follow
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  Speaker 2: Twenty two after six. Time to have a quick look
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  Speaker 2: at the market. Stephanie Bachelor from Milford Asset Managements with me.
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  Speaker 3: Stephanie, Hello, good afternoon, Ryan.
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  Speaker 2: There's a phenomenon in the financial markets. They call it
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  Speaker 2: the Center Rally. Apparently happens every year. What is it?
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  Speaker 4: Yeah, so the Center Rally refers to the share market's
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  Speaker 4: history of being really strong over the last five training
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  Speaker 4: sessions in December and the first two trading sessions in
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  Speaker 4: the new year. If you go back and look at
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  Speaker 4: every year since nineteen twenty eight, those seven trading sessions
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  Speaker 4: have delivered positive returns almost eighty percent of the time,
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  Speaker 4: and on average it's delivered a return of about one
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  Speaker 4: point six percent. So it's a nice little gift from Center.
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  Speaker 2: Is this what causes it? Because is this more just
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  Speaker 2: that most traders are actually away on holiday at this time?
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  Speaker 3: Yeah, so that's part of it. It's not really known,
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  Speaker 3: but there are few theories.
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  Speaker 4: So one is that it's a time when people get
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  Speaker 4: Christmas cash gifts or work bonuses that they then want
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  Speaker 4: to put to work in the markets, and because a
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  Speaker 4: lot of those professional investors, as you mentioned, are off
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  Speaker 4: on holiday, there are fewer trades happening, and so that
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  Speaker 4: can amplify share price movements. Others kind of think it's
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  Speaker 4: just the general holiday optimism that helps, or it could
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  Speaker 4: actually just be a bit of a self fulfilling prophecy.
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  Speaker 3: Because people know about.
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  Speaker 4: Centa rally, they invest in stocks to benefit from it,
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  Speaker 4: which in turn pushes prices higher and kind of causes
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  Speaker 4: the center rally in itself.
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  Speaker 2: We actually can't discount, Stephanie that it might actually be
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  Speaker 2: Santa at work.
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  Speaker 3: True, I hadn't thought of their one.
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  Speaker 2: Nice to learn it for some people then if they
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  Speaker 2: want to jump in at this time of the year,
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  Speaker 2: what Let's take a look back at the year that
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  Speaker 2: was though, how global markets ended up in general. Obviously,
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  Speaker 2: the US has been up heaps, Japan's been up heaps.
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  Speaker 2: Tell us the numbers, yes.
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  Speaker 4: So it's been an strong ye pretty much all around.
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  Speaker 4: So as you say, the US market has been the strongest,
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  Speaker 4: up twenty seven percent, Japan also strong eighteen percent, and
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  Speaker 4: actually China has done quite well since the government announced
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  Speaker 4: stimulus measures. So that's kind of up in the mid teens.
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  Speaker 4: And then we have New Zealand, Australia, Europe all coming
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  Speaker 4: in around nine percent and the UK's at seven percent,
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  Speaker 4: so pretty positive all round.
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  Speaker 2: What have been some of the big winners? You know,
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  Speaker 2: I'm to thinking tech stocks AI.
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  Speaker 4: Yeah, So if we look at the MSCI World that's
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  Speaker 4: the main global index, the best performing stock has been
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  Speaker 4: a company called app Lovin, and it's up seven hundred
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  Speaker 4: and sixty percent this year. So that's a technology company
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  Speaker 4: that provides advertising solutions to gaming app developers. And then
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  Speaker 4: the next one on the list is Palenteer, which is
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  Speaker 4: up three hundred and forty percent, and again it's a
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  Speaker 4: tech company. It offers software platforms to help companies better
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  Speaker 4: analyze and utilize all the data that they that they have.
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  Speaker 4: And both of these, as you say, they're considered AI stock,
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  Speaker 4: so that theme is very much alive and well. And
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  Speaker 4: another name that people might recognize is robin Hood that's
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  Speaker 4: coming in at number five, up two hundred and forty percent,
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  Speaker 4: and that's the stock trading platform that became really popular
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  Speaker 4: during COVID at.
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  Speaker 2: Love and I hadn't heard of that one before. I'm
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  Speaker 2: just googling it now really interesting company. Let's talk about
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  Speaker 2: the big bad boy of well not bad boy, but
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  Speaker 2: the big boy of the poster child of AI in Nvidia.
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  Speaker 2: How have they performed this year because obviously they've had
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  Speaker 2: a stellar run over the last four to five years.
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  Speaker 3: Yeah, they have. So it's it's still right up there.
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  Speaker 4: It's number eight on the list, so a very healthy
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  Speaker 4: up one hundred and seventy percent year to date. But
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  Speaker 4: keep in mind that's after a very strong run, you know,
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  Speaker 4: two hundred and forty percent last year, so very impressive
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  Speaker 4: growth still for that one.
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  Speaker 2: And then now where their market cap is now more
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  Speaker 2: than the next five listed a top five listed companies
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  Speaker 2: or something ridiculous like that, and the companies that haven't
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  Speaker 2: done so well steff this year.
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  Speaker 4: Yeah, So in stark contrast to Nvideo is actually another
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  Speaker 4: semiconductor company called Intel, and it used to be the
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  Speaker 4: largest computer chip maker, but it's more focused on legacy
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  Speaker 4: PC chips rather than those kind of newer hother areas
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  Speaker 4: of the market which are GPUs and that's all about AI.
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  Speaker 4: So shares of Intel are down about sixty percent this year.
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  Speaker 4: And then another name people might remember is Maderna, so
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  Speaker 4: it rolled out one of the first COVID vaccines back
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  Speaker 4: in twenty twenty and shares did really well. But of
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  Speaker 4: course vaccine sales have fallen and it doesn't have enough
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  Speaker 4: of the sort of other products or other vaccines to
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  Speaker 4: fill the gap, so shares on this one are also
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  Speaker 4: down about sixty percent this year.
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  Speaker 2: All right, Stephanie, thank you for that' Stephanie Bachelor Milfin
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  Speaker 2: Asset Management with a market wrap just coming up twenty
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