Business News

Armageddon again…not!

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by Peter Switzer

My simple guide to dealing with stocks over the next two months is buy when the market goes down because it will go up in December.

There has been a nice run up in stocks since early June and so it’s time for a pullback.

Right now there are doomsday merchants tipping Armageddon again but I think they will be wrong again, like they have been for three and a half years.

Yesterday I made the point that if you had been spooked by the negative experts, you could have missed out on returns on a good stock portfolio that matched the S&P/ASX 200 index and you could have averaged around 17 per cent a year if you throw in dividends, franking credits and possibly a tax refund depending on your tax rate.

Wall Street had nothing to worry about overnight and in fact jobless claims fell to levels not seen since 2008, but there were some question marks over the figures as one state failed to report data.

The Dow lost 0.14 per cent to end at 13,326.39.

In the meantime, the S&P 500 was up 0.02 per cent to 1432.84.

There’s no big market news over the next few days but the main game will be to watch how US companies report over the next three weeks. The actual profit figures will be less important than the outlook statements however if these companies do better than expected, this pullback phase could be shorter than I think but the US election and the fear of the fiscal cliff will weigh on markets.

However, when they’re out of the way, the optimists are expecting a 10 per cent rise for the S&P 500 over 2013, but I reckon these predictions will prove to be too conservative!

And I suggest the Armageddon types can be ignored.

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

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Published on: Friday, October 12, 2012

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