Aussie shares suffer worst year ever

Now that the year is over, is anyone else seeing opportunities out there?
Is it time to get back in?
Should we be directing our new super contributions into Oz shares??

From the article: " The Australian stock market will offer investors the best buying opportunity in a generation in 2009, after the bourse suffered its biggest ever annual decline in 2008.

Australia's main share indices are expected to rebound by up to 30 per cent in the second half of 2009, making up some of the losses in 2008, as the yields on stocks eclipse those offered by cash or bonds and equity investors anticipate an economic recovery."

more here
Aussie shares suffer worst year ever - Breaking News - Business - Breaking News

 

Hi Bill,

There certainly is alot of opportunity out there. Banks are certainly much more attractive to buy rather than stick your money in. The yields are high single digits with fully franked dividends. It's amazing how our market tumbled more than 10% further than the US market. Fortunately our market didn't drop as much as Iceland 89% and our country isn't bankrupt.

I love newspapers who say the end is coming!

Cheers,

Dan

 

Hi Dan

Happy new year.

I feel that the worst is over and IMHO in 2009 we will see a nice turnaround so I'd hate to miss that.

I would be interested to know what other people think about our market because I am thinking of restructuring my super.

I was going to buy a property with it but mrs BV said that we have enough properties and the SMSF lending interest rates were not very attractive so we left it all invested in cash earning 5% or so.

We've put it in there for protection but now I feel that the storm is nearly over so I am thinking that I should put it into a more productive use. Do you think it's time to move it into shares? Or at least part of it?

cheers

 

You know when a journalist uses figures like this to support their argument that something they are really trying to sell something they don't understand:

"During the Great Depression, shares fell 34 per cent in 1930, then bounced 11 per cent in 1931."

I sincerely hope husbands and wives don't read comments like this and run home to tell their partners "honey I read in the newspaper that said you can make good gains by investing in the market when it has fallen dramatically!"



The past is not reflective of the future and biased journalism like this helps no one. You'd only have to take one look at the Japanese market over the last TWO DECADES to see that what goes down doesn't have to come back up, and I think most of the western world is in for a rude shock if they think their gravy train is pulling into the station where they can jump back on as they head to BRW rich list.

Yes and No. There is still a lot of volatility in the market, and there is still a lot of bad news to be reported, but whether it's a good time to buy or not is probably more about your strategy than timing.

Obviously there are a great number of companies out there that have proven track records, defendable businesses, good earnings and are going to survive and continue to thrive after this world wide recession. So if you are merely looking to pick up such companies at a good price to hold for the long term then now might be the time to start dollar cost averaging in.

I, on the other hand, don't think it is time to be jumping into the market with highly leverage positions, because I'm personally of the belief there is more downside to come, I'm not sure if we will break through the intraday low of 3200, but I'm fairly confident we will be coming back under 3500 once the bad news from the US (and Australia) begins to mount again. Not to mention greater focuses being placed on the likelihood of an Australian recession. I think February through until May will be particularly bad as businesses start aggressively laying off workers.

But at the end of the day, I don't really know what is that different from 6 - 12 months ago. US house prices are still falling, and most are speculating there is still quite a way to go, and to date it would appear that the Government has merely just absorbed the debt, and taken it off companies balance sheets and passed it onto the American tax payers. Ultimately the debt still needs to be paid, or someone needs to cop the losses, and with 50+ trillion worth of losses worldwide, there is enough deflation pressure to keep the world on the consolidation path for quite awhile.

All in all I would be vary wary of rushing out and buying back in for fear of missing the "recovery" as I think most are still overly optimistic about the likelihood of the US coming out of recession in 3Q, but I wouldn't be betting my house on that fact. I tend to be a bit more pessimistic and think there is a lot more potential downside than there is upside at this stage and when a recovery does come (mid-late 2009) it will be a slowish recovery. I think buying the trend is a far safer option than trying to pick the bottom.

 

Chris

Thanks for your post.
I could be wrong but I believe that gold does not satisfy the criteria for investing money held in a SMSF.
I will check it out.

cheers

 

Fortunately for us "dumbluck" Australians the AUD tends to follow the gold price so if the gold price does skyrocket, I imagine the average Australian will be a lot wealthier in comparison to the rest of the western world.

However if you are looking to have some exposure to gold without buying bullion, especially as an Australian, I'd argue that investing prominent gold mining companies may be a better alternative anyway.

I should point out that whilst I'm a big fan of gold at the moment, I'm a little uncertain on what to expect from the price of gold over the next 6 months, but I'm fairly confident on the long term direction of gold (up).