Summary
Phil Anderson presents a daily learning exercise: pick one stock from the ASX new highs list each day and study it in depth, paying attention to economic rent collection and competitive moats. He uses Fletcher Building Ltd (ASX: FBU) as a case study to reinforce the rule that a stock trading below its monthly moving average should never be bought, and argues that the current 18.6-year real estate cycle is repeating on schedule, making building sector stocks worth watching.
Key Claims
- Cross-studying real estate and stock market cycles together gives investors the best read on cycle position — confidence: high
- During Fed/central bank expansion mode, new lows on the market can be ignored; only new highs warrant attention — confidence: high
- A stock trading below its moving average (any timeframe, especially monthly) should never be bought — confidence: high
- FBU was effectively un-buyable from 2017 through to late 2020 under the moving average rule — confidence: high
- The current 18.6-year real estate cycle has repeated “like clockwork” consistent with the prior 11 cycles Phil has studied — confidence: high
- Governments globally were unwinding prior post-crisis banking regulations as of March 2021, consistent with mid-cycle expansion — confidence: medium
- FBU returning to its prior chart highs by the next cycle extreme is presented as a plausible (not certain) scenario — confidence: low
Mex Pete References
None.
Stock Picks / Signals
- ASX: FBU (Fletcher Building Ltd) — implicit watch/interest signal; price was above monthly moving average as of March 2021, making it eligible for consideration under Phil’s rule. No explicit buy signal issued. Stop loss mentioned as a required component of any position taken. No specific price target given.
- Building sector broadly — flagged as a sector of interest given multiple building companies appearing on the ASX new highs list in the weeks prior to this email.
Predictions / Forecasts
- FBU returning to prior chart highs (circa 2017 peak levels) by the time of the next 18.6-year cycle extreme is raised as a plausible scenario, explicitly framed as illustrative rather than a firm forecast.
- Implied broader market forecast: continued bull market, consistent with mid-cycle expansion phase of the 18.6-year real estate cycle.
Notable Quotes
“I NEVER bother with new lows when [the Fed is in expansion mode]. Just something I learnt along the way that’s been helpful to me.”
“You see how you should never think you’ve missed out on the bull market, right? I just wait till the market tells me something and then I have a look at it. With the real estate cycle uppermost in mind.”