The last couple of months have been positive on market. With the reporting season just gone there has been, as always a mixed bag of results, some of the expected poor results such as Woolworths has performed better than expected as such the price has moved up. On top of this our market moved above the 5400 resistance point and to date is still maintaining this level.
With interest rates now at lows of 1.5% and expected to go low, cash has become a poor investment. Add to this that we are now hearing in the media that property prices are expected to fall 20% in coming years the share market is now looking as the best bet for investors. I expect that this is assisting the market to hold above 5400.
Having just gone through an election the current government has 3 years to get things right, I expect that sooner rather than later the government will pull its head out of the sand and look towards real jobs growth. Unemployment is the biggest factor in our economy, to combat this the government will need to start serious infrastructure work.
We have also seen record bankruptcy in the country which is clearing out all sectors allowing major players to earn better profits as price discounting decreases. For me these factors point to companies making better profits, which will lead to economic growth. Do not get me wrong, this may not happen in the next 12 months but by the next election we should be seeing the affects.
The big question I when will be see the market back to post GFC highs of 6800? I expect it will be in the next 3-5 years, as such we currently looking for growth stock for clients.