Shareswatch Australia

Now that the major stock markets around the world are falling the Australian media have become obsessed with the concept of a “two speed economy”. I am not sure who first started using this term, maybe it was the gurus at the Treasury or the Reserve Bank, but in my view there is no such thing as a two speed economy. The situation we have now is that the economy has simply been mismanaged.

It is time once again to put my ramblings, rants and ruminations for the previous 12 months under the spotlight. Did I correctly spot any stock market or economic trends or should I be standing in the corner with the dunce cap on for most of 2010?

Over the last few weeks I have found it difficult to write much about the Australian economy or stock market simply because events have pretty much unfolded as I guessed they would some months ago. Despite the hype from the Reserve Bank of Australia (RBA) and some sections of the business media the fact is that the Australian stock market is still trading around 30% below the highs of 2007.

Most investors in the stock market are today looking at some nasty losses in their portfolios. Some investors may have already sold shares and incurred losses while others may be nursing stocks that have lost 50% or more of their value since late 2007 and hoping they will recover some value. The question that confronts all of us now is: what do I do from this point onwards?

Well it is Christmas Eve and amazingly the ASX All Ordinaries has defied Wall Street and closed higher.  Although I am of course pleased, I know that unless there is a mother of all stock market rallies that 2008 is going to be a shocker for shares. It seems a great result for this year would for the All Ords to climb back to around 4000, although this would still be well below where I thought the bottom of the market would be. (i.e around 4800) It is dangerous business trying to pick the bottom of the market and I certainly made a mess of my attempt to do so!

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.