Sean Fenton, portfolio manager with Tribeca Investment Partners, writes for the AFR’s ‘Market Minds’ column.

Where do you invest when the housing market is rolling over and threatening to take consumer spending with it? According to the Reserve Bank, the areas of consumer spending most exposed to falling house prices and negative wealth effects are car sales – by a long way – followed by household furnishings, clothing and apparel, utilities (although we are not sure we agree with this), recreation, transport and hospitality.

In essence, companies with exposure to these categories are likely to struggle for the next year. So where do you hide?

The popular choice of banks with their high yields seems too tough as they adjust to a world where responsible lending takes priority. Lower credit growth, greater regulatory costs, increased capital and bottom of the cycle bad debt charges all provide headwinds for the banks.

To read the article, click here.