What’s your biggest takeaway from investing through the 2022 equity market volatility?
Wesfarmers is a great example. In 2019, they invested in lithium and thanks to supportive market dynamics, analysts now expect lithium to contribute 15 [to] 20 per cent of group earnings by 2026. This will be a strong tailwind as the outlook for its other businesses may become more challenging.Which companies are well-placed to thrive in the uncertain environment?As we enter a downturn, it is important to have a portfolio including companies that offer greater earnings resilience.
In addition, a feature of the post-COVID years is that analysts underestimated the impact of operating leverage and deleverage. We expect this will continue in 2023 as sales volumes slow.