Neville Prior

Equities : Where to Now?

Neville Prior  4 September 2009 02:38:09 PM
As far as I can see, most of those "in the know", and who like to talk about it, reckon that shares are about to take a nosedive. Here are some observations :
  1. September & October are the favourite months for crashes to happen.
  2. Does anybody know a market that goes forever upwards in a straight line?
  3. We have experienced the strongest rally since the Great Depression........................

OK, so things look rocky! However, some have made other observations, based on the S&P over the past 20 years :
  • September => 11 declines and 9 increases
  • October => 7 declines and 13 increases
  • Fourth Quarter => 6 declines and 14 increases
  • The last point comes about because September sell-offs are often followed by an October rally.

Recent economic data has been encouraging, but there is a big "if"! The profits that have spurred the optimism have come from cost-cutting, labour force reductions, inventory rebuilding and subsidised buying such as car scrappage schemes. None of these are sustainable.

So where now?

Some say that a second decline is inevitable as things unwind, other say productivity is now so high, that sales increases will go straight to the bottom-line of companies, and help sustain the market. It is anybody's guess. However a final point to ponder. As things look rosier, then politicians are challenging the ongoing use of Government stimulus packages. The louder those voices become, the more the markets will fret, so I guess we need to continue spending!

If I were a betting man, I still think things are going to go up, but as with any uphill climb, there is the odd valley to negotiate.
Comments

1Neil Forbes  10/09/2009 2:04:12 PM  Equities : Where to Now?

It's interesting to consider the stock market adage "sell in May, then go away", a reference to the fact that markets tend, on average, to show more growth from Nov to May than over the remainder of the year. The fact that 2009 seems to contradict this saying confirms my belief that only the very clever or very lucky can accurately predict the stock market!

2Neville Prior  10/09/2009 3:31:52 PM  Equities : Where to Now?

My strategy precisely : stay away permanently!

3Geoff Newman  22/09/2009 12:47:45 PM  Equities : Where to Now?

Just a thought but diversification is clearly important and while commercial property has taken a real bath over the last two years there are signs that as a medium term play this could be the place to be. Margin over gilts at their highest level ever!

As for equities avoid the dividend cutters and hang on to your seat, it will be an interesting 12 months!

4Neville Prior  24/09/2009 10:39:09 AM  Equities : Where to Now?

Geoff, interesting view on the property issue. Probably a good time to get into that market if one can afford it!

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