The Ophir High Conviction Fund (ASX: OPH) released its April report this morning and provided investors with an update on its portfolio and its market view.

Have share markets gone too far?

Ophir notes that share markets have rebounded very strongly from their March lows.

This is despite the impending release of “the worst economic data the world has seen since the Great Depression” over the next few months. This data will include the “sharpest falls in GDP, the highest unemployment and the largest contraction in corporate earnings in many countries.”

However, the fund manager believes things are very different to the 1930s.

It explained: “Unlike the Great Depression though, it is our opinion that this crisis is likely to be much shorter, though there will likely be some lasting impacts on consumer behaviour.”

The fund manager warned that it is difficult to predict how the market will react to the upcoming economic data. However, as it is a long-term focused investor, it isn’t being put off and remains heavily invested.

Furthermore, it notes that this crisis is “as much about ascertaining what long term changes we might see in consumer buying behaviour as it is about avoiding the immediate losers.”

Which leads us on to Ophir’s portfolio update. The Ophir High Conviction Fund’s investment portfolio returned +12.1% during April.

Key drivers of its return were payments company Afterpay Ltd (ASX: APT), artificial intelligence company Appen Ltd (ASX: APX), and gold miner Evolution Mining Ltd (ASX: EVN).

This was offset slightly by the underperformance of shares such as private health insurer NIB Holdings Limited (ASX: NHF) and medical device company ResMed Inc. (ASX: RMD).

Ophir notes: “Both Resmed and NIB Holdings suffered some payback in April for being two of the only 25 stocks in the ASX300 that went up in March. Both have been significant outperformers since the onset of COVID-19.”

Should you be investing in the share market?

I think Ophir is spot on with its assessment. Over the next few months we are likely to see some horrific economic data, but I remain confident the recovery will be far swifter than the Great Depression.

In light of this, I think investors ought to continue investing in the share market. And particularly companies which are continuing their growth unabated during the pandemic such as Afterpay and Appen.

More reading

• 3 ASX 200 pandemic winners and 3 losers
• Buy these 4 ASX shares to survive the pandemic
• These ASX shares booked the biggest gains last week
• These ASX 200 shares are up over 1,000% in just 3 years
• ASX 200 Weekly Wrap: New ASX bull run continues

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO and Appen Ltd. The Motley Fool Australia has recommended NIB Holdings Limited and ResMed Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) is continuing its fine form of recent weeks today and is up 1.24% at the time of writing to 5,457.7 points. Since the lows we saw in March, the ASX 200 has now rallied well over 20%, meaning we are in a new bull market for ASX shares once more.

But one investor not popping the champagne right now is David Pace – co-founder of Greencape Capital.

According to reporting in the Australian Financial Review (AFR), Pace is calling time on the current bullish sentiment defining ASX shares, saying “the days of market gains are numbered, and investors should prepare for another sell-off”.

Calling the performance of the ASX 200 over the past 6 weeks as an “inevitable rally” over the reopening of sections of the Australian economy, Pace is worried about this euphoria wearing off as the “economic reality sets in”.

“I’m not expecting the upswing to continue,” the AFR quotes Pace as stating. “If we are in some form of social distancing for the rest of the year – and it might be as profound as we are currently experiencing – there are parts of the economy that will struggle.”

Should ASX investors be worried today?

Mr Pace’s comments should certainly be appreciated in my view. Greencape Capital has long been a successful fund manager on the ASX and Pace is certainly an experienced hand at markets.

However, Pace is not selling everything and walking away. More recently, Greencape is looking to load up on shares that Pace sees as having a high chance of coming out the other side of coronavirus stronger than before: “Our bias is backing better-than-average people in better-than-average businesses”.

Pace names Aristocrat Leisure Limited (ASX: ALL), James Hardie Industries (ASX: JHX) and Sydney Airport Holdings Pty Ltd (ASX: SYD) as top stocks Greencape considers under this label.

However, Pace does dispense a word of caution: “We are cautious not to overdo it. We are wanting to see some proof statements about what the other side looks like”.

“It’s a sea of uncertainty right now and that’s not a wonderful backdrop for putting down money unless you’re getting bargain-basement prices,” he added.

Foolish takeaway

Whether the markets go higher from here or we do see another market crash, I think investors should stick to their strategy regardless. In my view, investing in quality businesses but also keeping some cash on the side is a great playbook you can use to hedge your bets either way.

More reading

• Webjet share price jumps 25%: Is it good value?
• Is the Woolworths share price a buy?
• 3 ASX 200 pandemic winners and 3 losers
• ASX 200 storms 1.2% higher: Cochlear reports 60% sales decline, Webjet jumps 22%
• 3 ASX 200 shares to watch this week

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Is this ASX 200 share market recovery “fool’s gold”? This ASX fundie thinks so appeared first on Motley Fool Australia.

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