Business News

I’m getting more bullish

| More

by Peter Switzer

I know May is coming and I know Europe is going to be a pain in the wallet as we cope with French and Greek elections as well as Dutch government upheavals over austerity programs but I’m even getting more bullish. Two things in the past 24 hours explain my positivity — one is Wall Street’s showing overnight and the other is Chris Cuffe’s view for the year ahead.

Before going on, let me be clear on this — I’m buying stocks but I suspect I will see some down days between now and October but I will use them to buy stocks. My view is long-term and so I buy the dips but I think they will be shallower this year compared to last year.

Wall Street overnight

Wall Street put in another great day at the office with the Dow up 113.9 points or 0.87 per cent to 13,204.62 while the S&P 500 was up 9.29 points or 0.67 per cent to 1399.98. This has been driven by company earnings coming in better than expected and the new belief that if the US economy falters, QE3 will kick in.

There’s a determination that the Federal Reserve boss, Ben Bernanke won’t let the recovery fail and he knows confidence needs to be fed so that a normal strong growth economy is put into train. Without this, the chances of paying down debt and repairing the budget will be made hopeless.

So, the Yanks have sails set for growth and that has to help stock prices.

Outlook for Australia

Now for Australia. Chris Cuffe of Third Link Investment Managers, who was one of the most rewarded fund managers of all time in Australian history because of his insights and ability, thinks stocks are heading up.

Last year he was more negative but recently on my Switzer program on Sky News Business Channel he acknowledged that we will see some European Union challenges this year but he thinks as we get closer to year’s end, lots of the crucial ducks will be in a row.

He thinks we are well-placed to play some stock price catch-up with Wall Street, given our S&P/ASX 200 is up only 39 per cent since the 9 March 2009 bounce while the S&P 500 is up around 105 per cent!

Of course this will be helped by the rate cuts ahead which should start on Tuesday and provided we get around three cuts this year then I can see Cuffe’s predictions coming to pass.

Europe concerns

Overnight Europe’s business sentiment index hit a 14-month low and that’s not really surprising but European companies such as Volkswagen have been reporting better than expected.

I suspect there will be some worrying moments this year but I reckon they will be less concerning compared to last year.

However, by year’s end I’m wagering that we could be into a bull market and so I want to be in early even if I make some short-term losses in the process.

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.

Watch more from Peter on SWITZER TV.

Published on: Friday, April 27, 2012

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.

When do we dump stocks?

Abbott’s budget reply: is he really trapped?

Budget 2013: what are the real issues?

Labor’s trap for Tony Abbott

Call me irresponsible - should this be Swan's Budget song?