Technical Investing managing director of investing Craig Scheef is a 30-year industry veteran who combines thematic investing with technical analysis to manage his portfolios.

Speaking to Reach Markets ahead of last week’s The Insider: Meet the Fund Manager presentation, Mr Scheef said both the thematic and technical components of his investment process play critical roles in choosing which companies to buy – and, importantly, when to buy them.

It’s a technique Mr Scheef has developed over many years in the industry, and one which helped him successfully – and profitably – navigate 2008’s Global Financial Crisis.

So how does Mr Scheef identify the companies he thinks could be the next big market winners? Mr Scheef gave us a breakdown of his approach.

Trendy and prudent

The first step is to identify broad themes or trends which will influence market movements, Mr Scheef said, noting these will create tailwinds that benefit select companies.

Such tailwinds have additional benefits too, Mr Scheef noted.

“If you’ve got a tailwind or a major theme behind you, not only will that help the business succeed but you then can also get PE expansion and investors are more inclined to value the business higher,” he said.

“If it ticks that box, we’re more likely to invest in it.”

The significant gains made by tech companies in recent years are a good example of a theme at work, Mr Scheef said.

Mapping a path to success

Once Mr Scheef identifies a theme, the next step is to use technical analysis to create a macro overlay as a sort of ‘roadmap’ to guide investment decisions.

“We do fundamental deep dives into companies, and themes and such, but we have an overlay,” he said.

“We use technical analysis or behavioural finance as a risk management tool to help with our timing.”

Effectively, this technical analysis looks at where a market sits in its cycle and whether it’s safe to be invested.

This approach proved immensely useful in the GFC, Mr Scheef said.

“During the beginning of the GFC that roadmap said we were about to go through a major bear market, so we went to 50% cash, we put short positions on, and we changed the structure of the portfolio,” he said.

Mr Scheef even began consulting for other Australian funds, providing insights on a purely technical basis as the industry looked to weather the storm.

Mr Scheef recently presented at our fortnightly ‘The Insider: Meet the Fund Manager’ session. You can watch a recording of the full session below, or you can click here to book into our next installment of the series.

Reach does not assume responsibility for the accuracy or completeness of any information provided, and the views expressed are not reflective of Reach Markets position.

Any advice contained within this presentation is general advice and does not consider your personal circumstance, you should consider whether it’s appropriate for you.

The information we are giving you is for educational purposes only. “Investing is about understanding your risk” and every time you invest in the share market there is a risk of loss.