“Betting on the Market”

Posted by Mike H on 15 September 2016 | Comments

I went to the 2016 AIA conference asking myself one question.

 “What does the future hold for Australian economy on zero interest rates?”

Luckily, there were lots of experts there who had the answer. Unluckily, they were all different!

Two highly esteemed speakers, brokers by nature, said yes the market is overvalued but just look at that momentum curve!

 “Just make sure you get off before the music stops!”

Others proffered their predictions and their solutions: options, hedging, charting, trusting the wise heads of managed funds, lower grade fixed interest investment products etc. The solution always was in their field of expertise.

(Reminds me of that old saying “When you own a hammer every problem looks like a nail”)

Finally, the best Shane Oliver could do was post his bookie’s board  

The Australian Economic Cup

 

Muddle through    10/7

Burst through       5/1

Burst                10 /1

I suspect this is as much certainty as we are going to get.

The trouble will be if the music keeps on playing for another 1-5 years or more, will we get impatient watching the dividends go whizzing by and the market continue to climb?

The recent irrational increases in Equity markets around the world followed by the to date mild panic shown by the markets at the mere hint of a tiny increase in interest rates suggests that the current market shares this dilemma.

It seems nobody knows what to do and that includes the Central Bankers!

No, I do not have an answer. I almost wish I owned a hammer.

So “Ladies and Gentlemen” Place your bets! 

 

Regards

Mike H

"The views expressed here are the views of individual contributors and in no way should be construed to represent of the AIA, the Board, employees or volunteers. The AIA does not provide advice or recommend products or strategies. Readers should obtain professional advice before acting on any information provided in this Blog".