Can we believe this optimism?
by Peter Switzer
I can’t get out of my head, despite the fact I have tried, that John K. Galbraith, who was an eminent economist in the US but was actually Canadian, once warned: “In economics, the majority is always wrong.”
Right now my charts guy on my Sky News Business Channel program, Lance Lai from Accountancy Invest, can see a pullback happening, but even he’s more optimistic for the overall year ahead.
Last night BT Financial Group’s chief economist, Chris Caton, another highly respected economist, said he had a target for the S&P/ASX 200 of 5250 for awhile but he says he’s inclined to raise this up rather than bring it down.
He says he doesn’t lose sleep over the debt of governments around the world and reminds us that this debt is seen as assets and many businesses — especially financial ones — are programmed to buy it!
He’s confident that the Aussie economy, which does look a bit soft now, will power home over the course of the year. And he’s more confident that the China story and therefore the resources story of being stronger for longer holds true.
However, he warns this is his long-term view and there could be some challenges along the way but that would be more a short-term issue.
One last comment — yesterday CBA reported better than expected and I wouldn’t be surprised to see Telstra do well in its reporting today. My contacts suggest they’re actually doing better where it should count, at the retail coalface.
If I’m right, there could be an overdue spike in its share price — let’s hope so!
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.
The Switzer Super Report is a newsletter and website for self managed super funds. With exclusive commentary from Peter Switzer and Paul Rickard the Switzer Super Report will help you maximise your after tax investment returns and grow your DIY Super. Click here for a free trial or subscribe today.
Published on: Thursday, February 10, 2011blog comments powered by Disqus