In an update, Dale Gillham, chief analyst, said he was concerned by trades he was seeing from retail investors in a bearish market.
The ASX 200 had lost 6% over the past month to 8 June while the All Ordinaries was down 6.2%. Since the start of the year, the ASX 200 was down 11% and the All Ords was down 13%.
In the short term, this was worse than other global markets with the S&P 500 and FTSE 100 down 5% and the Dow Jones down 4.6%.
Gillham said: “It is still too early to tell if the index has stopped falling.
“What is alarming is that retail investors are ignoring the warning signs and buying buying stocks hoping and, I dare say, praying for them to rise, as there is movement in many speculative stocks as these investors chase short term returns.
“We are also seeing movement in technology, as well as other stocks that have been hard hit by the downturn as investors continue to speculate. As we know, anything can happen but all too often these investors get burnt.”
He recommended it would be better for investors to take a cautious and patient approach as he struggled to see how the All Ords had reached its bottom yet.
Gillham also questioned why gold stocks had fallen so heavily, potentially a factor against investors using gold as a hedge or defensive assets.
“Since 1 January 2022, the All Ordinaries Index is down just over 12%, while gold is only marginally down, which doesn’t support the argument for gold to be used as a hedge although it has been more defensive than holding direct shares.
“If we look at the 10 largest gold stocks in 2022, we see falls of between 3.37% for Perseus Mining up to 40.5% for Evolution Mining with the average fall just over 22% and all are looking like they will fall further.
“There appears to be no identifiable reason as to why gold stocks are falling so heavily and why gold isn’t falling by much but if you have been looking at gold as a safe haven or hedge, you may want to rethink your strategy.”
