Wednesday, July 29, 2009

Reality check on shares winning streak

by Robin Bowerman, Principal and Head of Retail, Vanguard Investments

Politicians and economists share a common ability to fearlessly predict the way forward where mere mortals see confusion and uncertainty…

So it was refreshing to read the essay by the Prime Minister, Kevin Rudd, at the weekend. Naturally there was a fair bit of political positioning within it but the overriding message was a good reality check.

The sharemarket has enjoyed a rally since mid-March – and the S&P/ASX 200 index has recovered all the ground lost since last November - but this week commentators were excited about a 10-day winning streak. Now the best run of days of consecutive gains since 2004 and the strong positive news on the investment return front that flows from that is more than welcome given what investors have had to endure in the past 18 months.

But it would be easy to get carried away and think the worst has been put behind us and that it is all upside from here. Which was what made the Prime Minister's rather sober commentary noteworthy...