Published on Livewire 30/10/2023 (Original Article Here) – Ally Selby

In this interview, reader favourite Romano Sala Tenna shares a key risk that should be on your radar.

Despite the end of an era of cheap money and what seems to be an overwhelming number of geopolitical, social, and economic headwinds, financial markets have continued to move sideways in 2023. 

And while Katana Asset Management’s Romano Sala Tenna believes the path of least resistance is a Santa rally for the end of 2023, he’s not convinced that investors have fully priced in all the risks. 

In fact, he argues that “deleveraging” is a major headwind set to change the global economy as we know it.  

As a quick explainer, leveraging uses borrowed capital or debt to fund investments. For instance, an investor could use options or futures to leverage their investments. At the same time, a company may borrow money instead of raising capital (and diluting shareholders) to pay for its business operations. 

Deleveraging involves paying off this debt. But this doesn’t always go to plan – particularly in an environment where interest rates have risen by 400 bps in 17 months. 

“We’ve gone through about a decade and a half of leveraging. And there are now five key drivers that are starting to perpetuate a deleveraging [of the system],” Sala Tenna says. 

“Leverage is the lifeblood of the economy. As we start to pull money out of the system… corporations are going to find it harder to raise funds for new projects, profits will shrink, wages will contract, consumer spending will contract – the whole cycle works in reverse. 

“What we have seen spiralling upwards over the last decade and a half starts to work in reverse.” 

That said, Sala Tenna doesn’t believe investors should sell their portfolios down for cash. 

“Do we think it’s a difficult time? Fundamentally, I think you can make a very strong case for a bear market evolving from here,” he says. “But there are also enough strong data points for a bull market.” 

In this interview, Sala Tenna shares where the team has been putting cash to work, 10 stocks that are currently on his radar, as well as a guide to controlling behavioural biases for the volatile times in which we find ourselves. 

Note: This interview was recorded on 18 October 2023. 


  • 0:00 – Intro 
  • 0:29 – What investors can expect for the remainder of the year 
  • 0:47 – Why the market is oversold right now
  • 1:48 – Where Romano and the team are putting cash to work 
  • 2:20 – More pain to come for the consumer discretionary sector
  • 3:06 – Why healthcare and resources are the best sectors right now (and Katana’s top stocks in these sectors)
  • 5:24 – Why Romano is still backing Mineral Resources (ASX: MIN)
  • 6:15 – Two risks for investors’ radars
  • 8:43 – Should you be investing in equities right now? 
  • 9:51 – How to control your emotions and behavioural biases (and how Romano has done it himself)


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