Market Outlook

Ok, I don't follow the market as close as many of you hear; however, have been hearing here and there that people are expecting a correction sometime latter in the year.

Are you able to elaborate on where we've come in the past few months and why it'll drop harshly in the upcoming future..

Have we really hit the top? All funds are going through the roof at the momment after the slight hiccup in August

 

Oct 19 2007 - Twenty years on

I have a nervous feeling in my gut that a moronic herd may develop in two days, on the 20 year anniversary of the Black Monday crash (Oct 19 1987).

Let's just hope that the SFE don't reboot their computers.

But I don't plan to do anything about it. I think there's a bit of legs left in the ASX still.

 

Tha market IMO can continue going up for many months or it can crash in 1 day. Do some online reading, the US IMO are expecting a correction
and we won't walk away unscratched...

Think about it, nothing can keep on rising forever.
At some point (and sooner rather than later) the market will correct.
The stock markets are not like the property market where the correction is slow and you have the time to sell.

Also, stock markets IMO can easily be driven to correction by large players, national/political interests etc and they are the ones who will decide the timing and the duration.

Many of us think that AU stocks (based on revenue, dividends etc)
are not overpriced but we don't control stock prices.
World markets do.

The other thing to remember is that company revenue and dividends can change and this can make a big difference to a stock price.

Cheers
Bill

 

Very briefly ...

Based on macroeconomic theory, we have been seeing the signs of an overheating economy for some time. This being mainly record low unemployment, but also increasing inflation and consumer spending.

However, the Reserve Bank has been very careful to regulate interest rates to control inflation. This appears to have resulted in a record sustained growth period. In fact this is so long that many investors have not actually been through a full investment cycle !!

BUT when input costs of manufacturers rise, and wages rise, this is usually indicates that control has been lost.

If this is the case, then interest rates rise, inflation rises, businesses become distressed due to high costs and lower consumer confidence, then unemployment rises due to layoffs.

Grossly over-simplified of course.

Value investors are watching the various measures of inflation, interest rates and any wage pressure. They might be watching during a correction for under-priced stocks.

Speculators are watching and anticipating movements in the price of securities and adjusting stop loss thresholds etc.

Contrarians are just doing the opposite to the market.

Long term investors might rebalance a bit to more robust stocks.

People without a plan will be in and out of the market all the time losing money in transaction costs, capital gains tax liabilities and miss-timed opportunities.

AND investment advisors will be making money on the trade activities - whether the price is going up or down.

And the dance goes on ...

Cheers,

Rob