Shareswatch Australia

The ASX All Ordinaries Index and S&P/ASX 200 Index finished much lower than I expected in 2011, so this makes me somewhat reluctant to go on record and make an Australian stock market forecast for 2012. However the process of looking at the various economic data and trying to guess where the market will end is a useful one, so foolishly I will outline once again my Australian stock market forecast for the year ahead.

As we approach the end of another year we should not be surprised by the economic turmoil in Europe, the ailing U.S. economy or the rumblings of a major slowdown in the Chinese property market. The signs that all was not well with the global economy have been raised on this humble site going back more than a year. Simply put, borrowing vast sums of money and splashing it around did not fix the global economic imbalances highlighted by the market meltdown in 2008.

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.

As the Australian ASX All Ordinaries Index slowly crawls towards the 5000 level again, now is a good time to look at how some stocks have come through the global financial crisis. Does it look like a global recovery has finally taken hold, and is the Australia stock market poised to surge higher over the next few weeks?

All things considered 2009 was not a bad year for the Australian economy and certainly a good year for the Australian stock market. Now with the worst of the global financial crisis apparently behind us all should be well in 2010 correct? Well maybe, China willing, but where others see blue skies ahead for the economy I see storm clouds.

Now that it appears we are in the midst of the long awaited stock market correction it seems an ideal time to check how the 52 week stock prices have been tracking for a number of ASX listed stocks as this may tell us if the rally of the last 7 months is running out of steam.

It appears that somewhere above Australia there is an alien spaceship transmitting a beam across the continent that makes Australians incapable of rational thought. Few people seem to question how the nation will repay billions of dollars in debt nor do they seem to question what the Government is spending their money on.

Although Kevin Rudd stated some weeks ago that Australia would not slide into a recession it seems another one of his forecasts has exposed just what an economic dunce he is. Possibly only Wayne Swan can make worse assessments regarding the state of the Australian economy with Glen “I raised rates too far” Stevens (the Reserve Bank Governor) finishing of a trio of people who are best ignored. As I wrote a while back…we would be better served by getting a hobbit and wizard into the government economic team as soon as possible. (see The RBA,Swan and a Hobbit)

As most people will probably know, real estate prices in Japan collapsed in the early 1990′s as part of the damage caused by the bursting of the infamous Japanese bubble economy. Sadly for the Japanese economy, there was no magical recovery and the dizzying prices seen in the late 1980′s were never seen again. Prices dropped for years and Japan entered a period often labelled as “the lost decade”. (although the term seems a little harsh to me)