AMP Oliver’s Insights – Bear Territory
AMP’s Dr Share Oliver takes a look at whether current market conditions have been fueled by “the fear of fear itself or something more fundamental” in this edition of Oliver’s Insights.
A summary of the key points is as follows:
- The malaise in financial markets is continuing with Australian shares now joining Europe, Japan and emerging market shares in a bear market (as defined by a 20% fall in share prices from their last high – which in this case was last year).
- Global growth worries could drive more short term weakness. But in the absence of a US/global recession it’s hard to see a deep and long bear market.
- The key for investors is to recognise that periodic declines in share markets are normal, that selling after big declines just locks in a loss, that dividend income from a well-diversified portfolio is little affected by share market volatility and that the income flow from Australian shares is now very high relative to bank deposits.
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