January – Week 3 and 4 update

January 18, 2021

Combining Week 3 and shortened Week 4 updates.

The ASX VIX (volatility index) started week 3 under 15, but with the volatility in the US bound to have some effect on the ASX, we ended Thursday (28th Jan) almost at 16.

Volatility doesn’t necessarily show market direction (up or down) but the range of average price changes over time.

The S&P/ASX 200 VIX Index (XVI) calculates the amount of volatility expected in the market over the next 30 days.

•  High readings indicate uncertainty (bearish)
•  Normal readings suggest a slight bullish bias
•  Low readings indicate low volatility (bullish) and strong investor confidence.

Purchase entries and Watchlist updates for members are at the bottom of this update.

On to the latest CEO insights.

CEO Insights by Sector

Travel & Aviation

“While it’s good news that domestic travel is coming back strongly, international travel will remain largely off the cards until vaccines are rolled out.”

“It’s also unclear what the economic recovery will look like. So while we expect 2021 to be a lot better than 2020, we’ll be a long way off the kind of trading conditions we enjoyed in 2019.”

Alan Joyce, CEO, Qantas

“We have pushed forward with a few projects that take advantage of the empty terminals, like a refresh of our international retail precinct”

Geoff Culbert, CEO, Sydney Airport

“I am fairly pessimistic. Very pessimistic for travel and tourism.”

Graham Turner, Flight Centre

Local Economy

“This year we’ve seen business, government, environmental groups, unions and the broader community co-operate as never before,” she said.

“If we can keep this level of co-operation going, we can start to solve some of the big issues we’ve struggled with for decades and position Australia to emerge stronger for the future.”

“Sensible micro-economic reforms have the potential to pay dividends for future generations.”

Jennifer Westacott, CEO, Business Council of Australia

“The Treasurer has laid out a strong framework to pay down public debt by focusing on growing the economy through productivity-boosting reforms.”

“Sensible micro-economic reforms have the potential to pay dividends for future generations.”

Steve Johnson, CEO, Suncorp

“We also expect that the first half of next year may be the toughest economically, and so even though the outlook is very positive, we need to be prepared for a range of different scenarios”

Matt Comyn, CEO, Commbank

“As employment here continues to pick up and exceed expectations, we should see household spending increase and confidence return, which benefits the domestic economy”

“However, uncertainties exist, and we have seen how quickly outbreaks can take hold.

“Some sectors will inevitably do it tough until all restrictions are removed, or the threat remains of restrictions being reinstated, including interstate and international travel.

“We still have challenges to address in boosting investment and productivity, which I hope federal and state governments will now turn their attention to.”

Scott, Wesfarmers

Mining & Metals

“Lynas is one of only a few Australian companies whose sales are 100 per cent outside Australia”

“We are already seeing demand coming back in key markets as a result of the huge stimulus provided by governments globally, with many using this opportunity to address key policy areas.

“Some key areas include investing in resilient and diverse supply chains, investing in advanced manufacturing capability, and investing in product categories that respond to sustainability challenges. All these policy areas are good for our business.”

Amanda Lacaze CEO, Lynas Corp

Strategy in January and beyond

One of our strategies and themes this year is to accumulate and increase our positions in our existing company holdings as corrections play out.

We’ve made 3 purchases in existing companies in Week 3 and another purchase in Week 4.

Purchases detailed below for members.

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