{"id":39497,"date":"2013-06-30T22:52:49","date_gmt":"2013-07-01T02:52:49","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=39497"},"modified":"2013-06-30T22:52:49","modified_gmt":"2013-07-01T02:52:49","slug":"why-this-could-be-another-great-year-for-australian-stocks","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2013\/06\/30\/why-this-could-be-another-great-year-for-australian-stocks\/","title":{"rendered":"Why This Could be Another Great Year for Australian Stocks\u2026"},"content":{"rendered":"<p>By <a href=\"http:\/\/www.MoneyMorning.com.au\" target=\"_blank\"><u>MoneyMorning.com.au<\/u><\/a> <\/p>\n<p>With another financial year behind us it&#8217;s worth looking at the  performance of a few key asset classes &#8211; shares, cash, gold, and property.<\/p>\n<p>However, one point worth noting is that this isn&#8217;t an exercise in  saying you should put all your money in one asset class rather than another.<\/p>\n<p>And we aren&#8217;t saying you should diversify your assets across an  equally balanced portfolio.<\/p>\n<p>Rather, we&#8217;re saying you should actively manage your <a href=\"http:\/\/www.moneymorning.com.au\/best-investment-opportunities\" title=\"best investment opportunities\">investments<\/a>  and not be afraid to re-balance your portfolio at certain points during the  year.<\/p>\n<p>Because as the past 12 months have shown, those investors who  refused to see that the market had change have missed out on spectacular gains&#8230;<\/p>\n<p>First, let&#8217;s see how the various assets stack up over the past  year:<\/p>\n<ul type=\"disc\">\n<li>S&amp;P\/ASX       200: up 17.3%<\/li>\n<li>Cash:       up 4-5%<\/li>\n<li>Aussie       dollar Gold: down 13.2%<\/li>\n<li>Property:       up 2.85%<\/li>\n<\/ul>\n<p>There is no doubt shares were the best performing asset class over  the past 12 months. Remember, we&#8217;re not being a &#8216;Hindsight Harry&#8217; on this.  We&#8217;ve said since late 2011 that it was time to build up your <strong>stock<\/strong> exposure  (especially <a href=\"http:\/\/www.moneymorning.com.au\/category\/stock-market\/stocks-and-bonds\/dividend-stocks\" title=\"more on dividend stocks\">dividend stocks<\/a>) after we had been bearish for the previous year.<\/p>\n<p>The worst performing asset was gold. What more can we say? <a href=\"http:\/\/www.moneymorning.com.au\/category\/gold-and-silver\/gold\" title=\"more on gold\">Gold<\/a> is  a great investment and you should own some. But it won&#8217;t make you rich.<\/p>\n<p>As for property, that figure is of course the gross amount based  on numbers from RPData. If you take into account financing and other costs of  holding a property, then it has been a negative financial year for the average  property investor.<\/p>\n<p>Look, we know spelling this out won&#8217;t be popular. Bashing the <strong> stock market<\/strong> has become something of a blood sport in recent years. Heck, we&#8217;ve  even given it a well-deserved smack around the chops.<\/p>\n<p>But as we&#8217;ve continued to explain in <em>Money Morning<\/em>, whatever the knockers say, <a href=\"http:\/\/www.moneymorning.com.au\/stock-market\" title=\"more on the stock market\">the stock market<\/a> still  remains hands down the best way to build wealth. Of course, the numbers we&#8217;ve  just given you are last financial year&#8217;s numbers.<\/p>\n<p>Who&#8217;s to say the stock market will give investors the best return  this financial year?<\/p>\n<h2>Two  More Years of Gains for Australian Stocks?<\/h2>\n<\/p>\n<p>The following chart shows you how the last financial year&#8217;s  performance compares with previous years:<\/p>\n<div align=\"center\"><a href=\"http:\/\/portphillippublishing.com.au\/images\/MPR20130701a.jpg\" target=\"_blank\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/portphillippublishing.com.au\/images\/MPR20130701a.jpg\" width=\"369\" height=\"156\" border=\"0\"><\/a><br \/>\n<strong>  Source: <em>Bloomberg, The Australian<\/em><\/strong><\/div>\n<p>You don&#8217;t need that chart to tell you it has been a volatile seven  years for stocks.<\/p>\n<p>So after a standout year, can you expect this year to provide  another big double-digit gain?<\/p>\n<p>Well, our bet is that <strong>Australian stocks<\/strong> will hit a new record high in  2015. In order for the market to do that, the Australian market will need to gain  46% from Friday&#8217;s end-of-financial-year closing price.<\/p>\n<p>That&#8217;s roughly a 21% gain each year.<\/p>\n<p>It&#8217;s not impossible, but we won&#8217;t kid you&#8230;it&#8217;s a tough ask  considering how volatile the market has been over the past seven years.<\/p>\n<p>And it will be even harder following the market&#8217;s recent 10% fall.<\/p>\n<h2>The  Market Has Made These Gains Before<\/h2>\n<\/p>\n<p>Despite that, there is a precedent for the market to make stunning  returns when few expect it to. You only have to look at the last nine months  for a classic example.<\/p>\n<p>But also look at March 2003 to October 2007.&nbsp; In four-and-a-half years the market gained  over 150%. That&#8217;s three times the percentage gain we need for the market to  take out a new high in 2015.<\/p>\n<p>Of course, that&#8217;s longer than the two-year timeframe we&#8217;re looking  at now. But how about March to October 2009? You may have forgotten about that  period because it all happened so quickly.<\/p>\n<p>In the space of just seven months, while most investors thought  the entire world economy and financial system would collapse, the Aussie index  gained 54%.<\/p>\n<p>We agree that was an extreme time. But that&#8217;s exactly our point.<\/p>\n<p>It&#8217;s at times when most investors, analysts and commentators have  given up on the market that you should look to buy. But what and where?<\/p>\n<p>Right now, from an Australian market perspective, we&#8217;ve got our eye on  two key segments &#8211; companies that can pay a dividend and hopefully grow that  dividend; and speculative stocks.<\/p>\n<p>That&#8217;s not to say other stocks such as blue-chip growth stocks  won&#8217;t go up, because there&#8217;s a good chance they will if the market pans out as  we expect.<\/p>\n<p>But the important factor is to get as much bang for your buck as  you can, without unnecessarily putting too much of your money on the line.<\/p>\n<h2>Even  Big Corporations Keep a Cash Buffer<\/h2>\n<\/p>\n<p>Obviously, you&#8217;ll have your own attitude to risk. It will be  different to ours and to other people&#8217;s.<\/p>\n<p>If you&#8217;re as bullish on the stock market as we are, you need to  shift more of your cash into it.<\/p>\n<p>That doesn&#8217;t mean investing all your cash. It&#8217;s crucial to have a  big cash buffer &#8211; even big corporations like Google [NASDAQ: GOOG] and Apple  [NASDAQ: AAPL] keep plenty of cash in reserve. (At the end of March, Apple had  USD$145 billion in cash, about one-third of its market cap.)<\/p>\n<p>That&#8217;s why we like term deposits. It forces you to lock cash away  for 3, 6 or 12 months at a time. It means you can&#8217;t succumb to temptation and  invest more than you should in the stock market.<\/p>\n<p>Even so, to our mind the conditions are ripe for another stock  rally. Interest rates, regardless of recent spikes, are still near record lows  globally. The Reserve Bank of Australia&#8217;s Cash Rate is at a record low and  seems set to fall further.<\/p>\n<p>And even if it doesn&#8217;t, the recent fall in the Australian dollar  should provide a boon to Australian exporters and attract investors.<\/p>\n<p>Finally, the overseas market that appears to influence the Australian market the most &#8211; Japan&#8217;s Nikkei 225 &#8211; has started to rebound after a torrid  few weeks. For all the talk of the Japanese market crashing, it&#8217;s still up 52%  for the year.<\/p>\n<p>The <a href=\"http:\/\/www.moneymorning.com.au\/category\/stock-market\/australian-share-market-stocks\" title=\"more on the Australian Share market\">Australian market<\/a> has underperformed compared to the Japanese  market in recent months. That&#8217;s due to the poorly performing resource sector.  That trend won&#8217;t last for long.<\/p>\n<p>In fact, after ignoring<a href=\"http:\/\/www.moneymorning.com.au\/category\/commodities\/resources-and-mining\/resources-and-mining-stocks\" title=\"more on resource stocks\"><\/a> resource stocks for most of the past year,  we say that resource stocks should be back on your shopping list. We&#8217;re looking  around at a few beaten-down stocks now.<\/p>\n<p>But as we say, that&#8217;s not the only bargain out there right now.  Before you add risky resource stocks to your portfolio, you need to make sure  you&#8217;re on board with the <a rel=\"nofollow\" href=\"http:\/\/pro1.portphillippublishing.com.au\/129029\" target=\"_blank\">yield rally<\/a>.<\/p>\n<p>Despite the talk about the yield rally being over, the reality is  different. It&#8217;s far from over. In fact, the recent stock price slump has  created <a rel=\"nofollow\" href=\"http:\/\/pro1.portphillippublishing.com.au\/129029\" target=\"_blank\">a bunch of opportunities<\/a> investors would be foolish to ignore. And if we&#8217;re right, stock prices and high  yields won&#8217;t stay this way for long.<\/p>\n<p><strong>Cheers,<br \/>\n  Kris<\/strong><a href=\"https:\/\/plus.google.com\/u\/1\/102832084048340347143\/about\" target=\"_blank\">+<\/a><br \/>\n  <strong><em><br \/>\nFrom the Port Phillip Publishing Library<\/em><\/strong> <\/p>\n<p>Special Report: <a href=\"http:\/\/pro1.portphillippublishing.com.au\/129029\" target=\"_blank\">Just  What are &#8216;Turbo Cap&#8217; Stocks?<\/a><\/p>\n<p><em>Daily Reckoning:<\/em><strong> <\/strong><a href=\"http:\/\/www.dailyreckoning.com.au\/how-the-power-of-tweets-saved-tesla-motors\/2013\/06\/28\/\" title=\"Permanent Link to How the Power of Tweets Saved Tesla Motors\" target=\"_blank\">How the Power of  Tweets Saved Tesla Motors<\/a><strong> <\/strong><\/p>\n<p><em>Money  Morning<\/em>: <a href=\"http:\/\/www.moneymorning.com.au\/20130628\/dont-get-caught-in-the-market-crossfire.html\" title=\"Permanent Link to Don&rsquo;t Get Caught in the Market Crossfire\" target=\"_blank\">Don&#8217;t Get Caught  in the Market Crossfire<\/a><strong> <\/strong><\/p>\n<p><em>Pursuit of Happiness:<\/em> <a href=\"http:\/\/www.pursuitofhappiness.com.au\/index.php\/technology-2\/is-technology-the-most-exciting-industry-in-the-world\/5411\/\" title=\"Is Technology the Most Exciting Industry in  the World?\" target=\"_blank\">Is Technology  the Most Exciting Industry in the World?<\/a> <\/p>\n<p><em>Australian Small-Cap Investigator<\/em>:<br \/>\n<a href=\"http:\/\/www.australiansmall-capinvestigator.com.au\">How to Make Big Money from Small-Cap Stocks<\/a><\/p>\n<div class=\"feedflare\">\n<a href=\"http:\/\/feeds.feedburner.com\/~ff\/MoneyMorningAustralia?a=i9E7yE-pRkc:sPMpANWtz8o:yIl2AUoC8zA\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/MoneyMorningAustralia?d=yIl2AUoC8zA\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/MoneyMorningAustralia?a=i9E7yE-pRkc:sPMpANWtz8o:V_sGLiPBpWU\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/MoneyMorningAustralia?i=i9E7yE-pRkc:sPMpANWtz8o:V_sGLiPBpWU\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/MoneyMorningAustralia?a=i9E7yE-pRkc:sPMpANWtz8o:gIN9vFwOqvQ\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/MoneyMorningAustralia?i=i9E7yE-pRkc:sPMpANWtz8o:gIN9vFwOqvQ\" border=\"0\"><\/img><\/a>\n<\/div>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~r\/MoneyMorningAustralia\/~4\/i9E7yE-pRkc\" height=\"1\" width=\"1\" \/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>By MoneyMorning.com.au With another financial year behind us it&#8217;s worth looking at the performance of a few key asset classes &#8211; shares, cash, gold, and property. However, one point worth noting is that this isn&#8217;t an exercise in saying you should put all your money in one asset class rather than another. And we aren&#8217;t &hellip; <\/p>\n<p class=\"link-more\"><a href=\"https:\/\/www.investmacro.com\/forex-news\/2013\/06\/30\/why-this-could-be-another-great-year-for-australian-stocks\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;Why This Could be Another Great Year for Australian Stocks\u2026&#8221;<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-39497","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/39497","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/comments?post=39497"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/39497\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/media?parent=39497"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/categories?post=39497"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/tags?post=39497"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}