Forget Logic, This is the Formula That’s Working

This week’s update at a glance

• Why the market can rally when the news still looks terrible. Price action often turns before the headlines improve, which is why logic alone is such a poor guide.
• The real formula that helps investors stay on track. Start with the right stocks, then let money flows and risk management guide the decision making.
• Where strength is showing up now. US indices broke out strongly, money rotated back into technology, and selective opportunities remain in commodities and precious metals.
• Why selectivity matters even more in Australia. Structural issues at home mean the focus should stay on stocks that are as immune as possible to external shocks.

What you’ll learn

• Why trying to make sense of every headline can damage your investing results.
• How to use price action and money flows as a more reliable decision making framework.
• Why quality stocks can become excellent opportunities during panic driven selloffs.
• How to think about immune stocks in a market shaped by energy risk and AI disruption.
• Where Garry sees the clearest signs of strength across the US, Australia and commodities.

The thinking shift

Most investors still try to force the market to behave logically. That sounds sensible, but it often leads to poor decisions because markets regularly move before the logic becomes obvious. A better approach is to accept that price action can be irrational in the short term, then respond to what the market is actually doing rather than what you think it should do.

That does not mean chasing anything that moves. It means narrowing your focus to quality stocks, understanding your own tolerance to volatility, and then using money flows and chart behaviour to manage entries, exits and overall risk.

What history shows

Market lows usually occur when the news is at its worst. That is one of the most consistent patterns in investing history, and it is driven by emotion more than logic. By the time the headlines feel safer, much of the opportunity has often already passed.

That is why contrarian awareness matters. You do not buy simply because sentiment is terrible. You wait for quality stocks to be sold down, then watch for the market to confirm that buyers are stepping back in. Historically, that is a far more practical way to deal with volatility than trying to forecast every macro outcome in advance.

Where I’m focused now

• US leadership: The strength in the Nasdaq, S&P 500 and Russell 2000 suggests the wall of money behind this rally is broader than many expected.
• Technology and semiconductors: Money has flowed back strongly into parts of tech, especially where the underlying businesses remain high quality and operationally strong.
• Australia: I remain more selective here because our market still faces structural economic issues, so immune stocks matter even more.
• Precious metals: Gold remains in a strong long term uptrend, while silver has improved in the short term, even though both remain volatile.
• Energy and commodities: The Middle East is too unpredictable to trust the news flow, so risk management and stock selection remain critical.

Important information

_{Any advice in this video is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly, you should consider how appropriate the advice is to those objectives, financial situation and needs before acting on the advice. Garry Davis (AR No: 317590) is an authorised representative of Primary Securities Ltd (AFSL No. 224107).}

_{Note to traders: The publishers of this article, information or promotion wish to disclose that they may hold stocks discussed in their portfolios, and any decision to purchase should only be made after you have carried out your own enquiries and obtained appropriate advice where required.}

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