Coordinator’s Message

By Brian Matthews

In this bumper edition of Equities Bulletin we have two articles, the first by Robert Vagg an AIA member and regular contributor to our education program; the second by Zac Zacharia, a Representative of Ord Minnett Ltd whose previous articles in this bulletin have been thought provoking and well received. Each of the articles relate to the stock market and each is forward looking - Robert's (which may provide some comfort to the longer-term investor) more so than Zac's which provides a more cautious shorter-term outlook with two possible scenarios. By reading both you may be able to determine how Zac's scenarios can be reconciled with the long-term trends evident in Robert's model of the market. 

Robert's article 'A comparison of long-term trends in the US and Australian stock markets' is based on a generic model that he has developed. This is described in some detail in the May 2009 issue of Investors' Voice. In the article below Robert outlines the linkages evident in the performances of the US and Australian markets. He then reviews and illustrates the Primary Trend in each of these markets and details observations apparent from the trends, noting that the Primary Trend indicates fair value at any point in time. Fair value for both the US and Australian markets at January 1, 2010 and 2015 are provided as examples. Volatility and the impact of currency movements on the markets are then reviewed.

Zac Zacharia's article 'The sharemarket - running out of puff?' refers to both fundamental signals and signals from the charts to determine probable market outcomes, with specific reference to trend direction and momentum, market sentiment, and commitment to the trend. Based on that analysis, Zac details two possible scenarios that could unfold over the coming few weeks to months. He concludes by outlining a proactive approach that he believes astute investors should take.

Brian Matthews is a member of the AIA.

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