It’s Australia Day – a time to eat lamb and be proud. A time to wear something outrageous and spend the day at the beach or by a pool with family and friends. Well at least that’s my Australia Day.
But is will be hard for me not to be thinking about the markets. I love the markets. I think of them as a multi-dimensional rubix cube in my head. I’m forever thinking of and discussing the possibilities, the probabilities of the differing events or drivers and the conceivable outcomes.
But currently whichever way I slice or dice the Australian Share and Property Markets I can only see BIG OPPORTUNITY!
I was recently asked to write an article for Phil’s newsletter Cycle Trends & Forecasts. The title? Aussie Stocks to Hit 10,000 Points By 2019
Sounds a bit far-fetched hey?
Yet that’s exactly what I expect will happen within the next three years. At the very least, I expect the Australian Stock Index [ASX:XAO] to hit 8,000 points.
The chart shown is a comparison chart of some major world stock indexes:
- S&P500 – America
- DAX – Germany
- FTSE – The United Kingdom
- XAO – Lamb Capital of the World
What this chart displays is the relative increases of these stock indexes since the March 2009 Lows of the GFC.
Clearly this chart shows just how strong the US and Germany have been as their major stock index have climbed higher and higher out of the economic abyss they were supposably in.
Remember the thinking? US was employing Robert Mugabe inspired Zimbabwean printing press action. While Greece was going to pull down the entire European Union with Germany in toe….
What did happen with all that?….
Oh Yeh did you see Barron Trump at the inauguration? Sorry I digress – like billions of other people around the world distracted by news, entertainment and goodness knows what else they failed to look at the market reality of international stocks climbing.
As the most productive nations re tool and start producing again (think USA and Germany here!) the productivity starts to flow. From productivity flows profitability!
And where does profitability go?
YES! It is reflected in higher share and property prices.
Those economies that increase productivity first will see the greatest initial gains as show in the relative stock performance.
So what does that mean for Australia? Our relative performance is equivalent to Australian Ice Skater Steve Bradbury’s first few laps in Salt Lake City……
But you need to understand the structure of our economy. We didn’t retool after the GFC and we don’t produce much. So the gains from the “real economy” are going to take some time to flow through into the share market.
However like EVERY cycle before this is what will happen. We WILL play catch-up and close the relative gap between US and THEM.
In fact we think that this process is just getting started and enormous opportunities are presently available to us. The technical position of our market is excellent. The underlying economic fundaments are exceptional.
Yet no one sees this opportunity and certainly no one is positioning themselves for it. Single digit returns is what we should be expecting so we are told……
Well we see the very real potential for our market to crack 10,000!
So while you relax this Australia Day weekend have a think about how you are positioned to take advantage of the massive opportunity that is upon is.