Last week we saw the market blow off on Friday. This week it managed to maintain this level and even go a little higher.
It was a week for investors to take a deep breath and look for the best approach.
Interest rates are dropping and expected to fall further causing exchange rate to drop. Investors are at the cross road between capital loss and loss of income.
Cash like investments are now yielding so little you are in fact going backwards if you are holding cash. With the cash rate at 2.25% and inflation running at 1.7% anyone, paying more than 32.5% tax rate is losing money each year.
Cash is a double whammy at present with capital loss and income loss.
Unemployment is up to 6.4% so chances of increase in your take home pay are also decreasing if you have a job that is.
Finding work is becoming a big problem.
Add to this the Australian debt issues and governments looking to reduce debt quickly puts the economy in an unstable position.
The only positive news is the share market with gains of around 9% since January 2015. No wonder investors have overcome their fear of the share market.