I start this comment making it very clear that I am not an investment adviser and would class myself as an amateur in the financial markets. But I have been studying this area since the GFC and I follow a number of financial newsletters.
Plus I attended the Investment Expo yesterday and listened to allot of people who know allot more than me in this field.
This is what I learned and what I am hearing. Check with a professional before you act on any of my comments.
What could be coming:
Immediately after our Australian election on 7th Sept the Australian stock market will see a further spike in prices and confidence up until about the 16th Sept which is the height of the company dividend payouts.
But by October we will see a decline towards Christmas. However internationally there could be a major correction very soon!
The DOW is at an all-time high of 15558 which is higher than just before the GFC of 13895. The Aust All ORDS is just over 5000 it was at 6875 just before the GFC. CBA bank shareholders beware CBA is one of the most expensive bank shares in the world, its currently $72 AUD its was $60 AUD just before the GFC and it went to $24 so I would be looking at this share very closely. (wink wink say no more) but beware the dividend date for CBA is 3rd October so don’t do anything until after then.
I would also consider taking a defensive position, some people I know have already moved their super into cash.
Bonds are getting sold off which means interest rates will be on the way up if this trend continues. It could be a good time to lock in a fixed term interest rate for your mortgage. Remember if interest rates go up overseas like USA they must go up in Australia so we continue to attract overseas capital, even if our local market is depressed interest rates would still rise.
Gold and Silver has been heavily sold off and are now looking like they might be in a long term upward trend, with some fluctuations along the way. Gold had a 45% retracement from its low of $280 to $1920 back to $1180 USD an ounce. And one thing I have learnt is that what goes up goes down and what goes down goes up! I heard some estimates by Gold enthusiasts of $ 5000+ USD in longer term future.
AUD might stay in the mid to low .90s in Sept and might start sliding down to mid-80s and then find good long term support, unless there is a major 2GFC.
Our petrol prices will stay somewhat stable as international oil companies need oil to stay above $80- 90 dollars a barrel (currently $106 barrel) but will not get allot higher as high oil prices encourages alternative energy solutions so OPEC and other oil producing nations have a vested interest to keep oil affordable so it does not encourage alternative energy rivals. This little fact explained to me why the big car companies have not been quick to design alternative fuel source cars!
A shining light for the USA is shale oil, which is expensive to produce but is making a helpful 22% reduction to the US trade deficit that is still over $500 billion per year. The USA stopped having a trade surplus after 1975. They still export $2.2 trillion per year but they import 2.7 trillion per year. The US National Debt stands at $17 Trillion.
I hope you found this interesting!