Is This A Real Recovery?
September 23rd, 2009
Economists say markets predict, the job market reflects.
People ask how can the stock market be going up while the number of people in jobs is going down? Experts like Nouriel Roubini predict the recovery will be anaemic and in the US there could even be another dip into recession. But the markets say it’s over. The US market is up 40% from its lows of this cycle, and the NZ market is climbing as well.
Aust experts believe the market is now embarking on a cyclical recovery. Further gains are likely as shares now look cheap. They say a cyclical recovery usually sees Aust shares rise by over 130% in a four year period. The cycle usually lasts three to five years. Investors are still worried, but at a time when interest rates are low, inflation is down and growth and profit expectations are higher, a sweet spot is developing.
Property is also primed for a mini boom. But there’s a danger markets could run out of steam. The market is known for racing ahead and correcting as economic recovery begins. At this stage of the cycle it may not be a bad time to invest in property, but there are some shares in great companies which are at low levels historically, and you can’t go wrong buying shares in great businesses.
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