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by Peter Switzer

If you’re out of the stock market and want to time yourself in or if you’re in but are nervous about the precariousness of equities or shares, then I have got news for you — a majority of Aussie fund managers say the time for shares has arrived.

And for Telstra watchers, they have formed an opinion on this troubled share as well.

In fact, the survey of fund managers by Russell Investments was emphatic with not one fund manager thinking that stocks were overvalued! This hasn’t happened for two years and can be a reasonably reliable precursor to the advancement of stock prices. In a way, it’s like an auction for a property where you have 20 possible buyers — this is better for the vendor than if only two contracts have been taken out.

Bulls vs. bears

Despite this valuation view, the survey did find 60 per cent of managers were bullish while 20 per cent were bearish. If 100 per cent were bullish, we would be in an unbridled boom/bull market and we’re a long way from that point, so 60 per cent being bullish is good without being a great sign.

Remember, if everyone wants to buy then value could disappear pretty quickly and so it means, and many expert investors think this, now there are shares at good prices, which will be miles higher in three years' time. It’s at times like these that you have to have a medium to long-term view on shares to pick up real bargains that will deliver in the future.

Improving attitude

Generally, the fund managers like local shares but are not fussed about international equities but there’s a really interesting twist in this survey. You see, this survey is also done with US fund managers and get this — this group were more bullish than the quarter before and 57 per cent liked international equities.

Wall Street still is the piper that plays the tune for other stock markets and so an improving attitude of US managers is another positive sign building up against the pile of negatives that have seen so many Americans run to low yielding bonds in preference to shares.

The sectors

Local managers like resource stocks and they believe the mineral resources rent tax is better for stocks than the old resource tax — the resource super profit tax.

On telecommunications, the once more positive view expressed in June has now more than halved with those bullish falling from 31 per cent to 12 per cent! That’s huge. This primarily reflects the uncertainty over the NBN with a hung parliament dependent on independents and Greens.

One final twist is that many managers still like defensive stocks such as consumer staples and many of you might have seen Woolworths rise recently to over $30.

Muddling forward

The final conclusion has to be that the solid support for shares will be easier for the brave after this survey. Nervous Nellies still have reason to be cautious but probably a tad less. All up, this survey supports my view that we’re muddling forward and while a boom market is a way off yet, this is possibly a time of great value.

For advice you can trust, contact Switzer Financial Services.

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 08, 2010