Shareswatch Australia

As I write today the Australian stock market has slumped around -4% so far after the Dow Jones fell -4.3% and markets in Europe also ended sharply lower. As per usual, many finance journalists are hurriedly pumping out scary stories and dramatic headlines to gain readers attention so it’s time to grab a cup of coffee, relax and focus on the facts.

If you are confused about the conflicting  reports regarding the Australian economy and outlook for the stock market you are not alone.  Much of this confusion is caused by financial journalists who one day are talking about a double dip recession and then suddenly switch to chirping about a robust Australian economy once some positive economic data appears.

In Brazil they tell the story of the small-town TV crime reporter who gained fame and scoops by arranging crimes himself. He could then rush out and interview the victims well before rivals. But eventually his scoops caught up with him and he ended up in jail.

Well September passed rather uneventfully as far as the stock market was concerned although in the last few days, it has pulled back somewhat. However the overall trend is undoubtedly upwards and this looks like it will be maintained for the rest of the year. Despite plenty of gloomy views the bull market lives on, at least for now.

One of the many misjudgements made by the Rudd Government in managing the Australian economy this year has been their almost fanatical belief that Australia would be shielded from the worst of the global financial crisis because of our trade with China. For the first part of this year in addition to the “War on Inflation”, Rudd and Swan were also pushing the line that our significant exports to China would keep the Australian economy ticking over nicely despite the problems brewing in the economies of the United States and the Eurozone.