Our Markets Outlook 2010 is presented for general interest – and for guidance to our clients as to the investment recommendations we will make in the early part of the year.
Equity Markets are rising around the world on the various stock exchanges in response to the ever-so-slow increase in economic activity – and share prices are generally staying ahead of any foreign currency exchange headwinds to generate continuing improvement in share portfolio values.
As Continuum Financial Planners Pty Ltd has shared previously, we anticipate that this trend will continue through 2010 – and we are in the camp that suggests there should be an overall increase for the forthcoming calendar year, in the low double-digit numbers. (Actual performance in diversified portfolios proved to be much better than this, varying depending on the asset allocation and the currency-risk strategy – hedging – adopted.)
There are a couple of things to consider when monitoring our effectiveness at ‘calling the market’ for 2010: firstly – a trend does not mean that there will be a continuous positive market (it allows for there to be some set-backs from time-to-time); and our guess is that there could be setbacks during January, sometime in the second quarter and possibly again in the fourth quarter – and that each of those ‘corrections’ could be up to ten per cent (10%).
The second issue is that as economist Dr Don Stammer frequently says: allow for ‘factor X’ – which could be some further geopolitical upheaval; or some other as yet unidentified ‘disturbance’ or event. These events by their very nature cannot be predicted as to time – or consequence! [Europe emerged as something of a Factor X as it eventuated for calendar year 2010.]
Our Investment Committee deliberations also allow for the possibility that there will be some better days ahead for the Listed Property sector; but we still hold reservations regarding the Unlisted Property market – in general terms.
We are yet to form a firm view on the Bond market, but have reservations on the basis that increasing interest rates in the various economies generally signal a reduction in the value of existing bonds – so ‘watch this space’ as they say. [An incorrect call as it eventuated: bonds, particularly government bonds increased in value during 2010, finishing the year with rather low yields.]
As an overall prediction, we believe that we could be at least another two years away (in parts of the globe) – and up to another four years (in Australia) – from seeing the share market indexes back at the levels they were in late-2007. [As we close out calendar 2013, the market is still well off the 6800 index mark, sitting in the mid-5300’s at this point in time!]
Whatever the timeframe, your experienced adviser at Continuum Financial Planners Pty Ltd we are on the journey with you; and will continue to monitor the progress of the investment strategies you have accepted to their appropriate conclusion, with you.
Readers who are not clients of the firm might wish to seek a meeting with financial planners who listen to your needs, reflect understanding of your goals – and offer solutions to your wealth management dilemmas: call us on 07-3421 3456; or use the website facility to Contact Us to arrange a no-obligation meeting – at no cost to you.
[Originally posted in December 2009: revised and re-posted August 2013; updated in December 2013]