Shareswatch Australia

Nobody likes to see their investment portfolio decrease in value but for most of us, that is what has been happening now for most of 2008. The downturn in the stock market has hit everyone, from top fund managers to amateur stock traders and there must be a lot of nervous people close to selling out of the market.

According to the prevailing wisdom, the Cold War between the Soviet Union and the West was suppose to have ended in the 1990′s, but it appears the U.S misses the excitement and is trying to stir things up again. You would think a global war on terror would keep the Americans occupied and that keeping as many countries as possible on friendly terms would be the smart thing to do.

I do enjoy watching the Olympics from time to time, but I cannot help but think of all the money and resources that are needed to host the games in the modern era and question if these should have been directed elsewhere.

Rather than focus how bad things are at the moment let’s focus on what could turn things around. To do that as far as our stock portfolios are concerned, I suggest we look at what factors could trigger a long term stock market rally.

As I have mentioned on a few occasions I believe the RBA (Reserve Bank of Australia) went too far with their interest rate increases especially when a possible global downturn was on the radar. We now find ourselves in a situation where the RBA is focused on inflation (much of it beyond their control) whereas the real threat is that the Australian economy will stall.

Often one of the major problems facing Japan is said to be that is has a declining population. All sorts of scary statistics are used to paint an almost doomsday scenario where at some point there will be few young people left, the country will be composed mainly by the elderly and the economy will collapse.

One thing that really annoys me about many financial journalists and market commentators is they often imply that that they have some unique insight into the market, yet they rarely disclose how they took advantage of their wisdom.

I have to admit that I am a bit of a skeptic when it comes to the theory that human activity is the primary reason for the apparent rise in global temperatures. My main reason for being a skeptic is the fact that the link between global warming and human activity is only one (of many) scientific “theories” that attempt to explain the reason why the earth “appears” to be getting warmer.

Recently we have all been hearing about the price of oil and the various reasons why oil should either be trading higher of lower. So in an effort to simplify the whole debate here is my quick summary of some of the key points often raised when oil prices are discussed.

Back in March this year, I tentatively outlined my market forecast for 2008 based on a number of assumptions as contained in my blog: Are we near the bottom. Since I am the first to admit that forecasts are rarely 100% (or even 80%) correct it would seem now is a prudent time to review my assumptions and update my forecast to cover the last 6 months of this year and a little into CY2009 as well.

Goodbye FY2007/2008 and thanks for nothing. Let’s hope FY2008/2009 will be better and we can all plug some nasty little leaks in our portfolio’s. Being an optimist I believe at some point in the next 12 months we will see equities post some modest gains, although after a horrid June I must admit my cheerful disposition was tested. Thankfully I was able to find my Spinal Tap DVD and this put all my problems in perspective, I was after all only dealing with investment portfolio problems, not a poorly sized Stonehenge stage prop or disputes about an album cover.

Well what a terrible first half of 2008 and a shocking close to the financial year. After watching the market over the last week or so, I decided the best course of action was to finish work just after lunch and catch up with some reading and movie watching. One thing I was not doing was selling as I have no idea why people wait until this time of year to sell and take tax losses. In fact I picked up a few small parcels of shares as I hope we will see some upward market movement in July.

Let me dare to suggest to readers of this blog that perhaps higher oil prices are in the longer term, good for the world and good for business. I know this may offend motorists and companies struggling to deal with the additional costs associated with higher prices, but before anyone sends me any nasty comments let’s look at the reasons for my apparently insane comment.

Investing in the stock market recently has not been a lot of fun. Many people would be holding some stocks in their portfolio’s that have been savaged with quite a few stocks 40-60% lower than they were just 6 months ago. It is not just the small caps that have been hit either, even the usually reliable banks have been hit hard and it can all make one feel a little depressed at times.

Wayne “Fluffy Duck” Swan and Kevin “Teflon Man” Rudd have delivered their first budget and so I will share my thoughts on a few areas in the budget and my impression of the budget overall.

There appears to be an ever increasing number of stock market related websites and no shortage of stock tips and market advice available to us all. But who should we listen to, and where are some good sources of stock market insights?