5 crowded trades to avoid in 2023

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This article was first published for Livewire Markets on Thursday 19 January 2023 It’s the dream: find a successful company that’s either recently listed, is about to IPO, or has so far operated under the radar, and scoop up as much of it as you can afford. Then sit back and watch the profits roll in.But it's far more common to buy based on runaway investor sentiment related to future developments, anticipated outperformance, or positive headlines. This often also means there’s already a lot of buzz around such themes by the time retail investors catch wind of them. One of the most prominent recent Australian examples was the buy-now-pay-later theme, headlined by the ASX darling formerly known as Afterpay – now Block Inc (ASX: SQ2).We’re not saying all, or even any, of the following themes, are entirely devoid of fundamental strengths. And moving with the herd sometimes pays off. But historically, hordes of investors buying into “crowded trades” have set off large market rallies and sell-offs that almost entirely lack fundamental basis.So as part of Livewire Markets’ Outlook Series for 2023, we gathered six professional investors to name the consensus trades within the market, and whether or not they are avoiding them. These include one sector that’s riding the coattails of the energy transition, a dangerous currency play and others. Tune into the video below to find out what they’re each avoiding – and why – in 2023. And please scroll to the comments to share your own ideas on the sectors, themes or stocks that could burn investors’ fingers this year.Our featured experts include: Nick Griffin, Munro PartnersNick Sladen, LSN Capital PartnersMarcus Padley, Marcus TodayRobert Gregory, Glenmore Asset ManagementMichael Goldberg, Collins St Asset ManagementDion Hershan, Yarra Capital ManagementNote: We would like to thank the fund managers for sharing their insights for 2023 in the spirit of the Outlook Series. All of the fund managers featured in this series run diversified portfolios. This is not intended to be a set of recommendations. Please do your own research and seek advice from a professional before making any investment decisions of your own.These interviews were recorded on 13 December 2022.Industrials posing as decarbonisation enablersMunro Capital’s Nick Griffin suggests some Industrials have been riding on the coattails of the energy transition –...

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