Strategy

The sharemarket can be both a wonderful and a frustrating place to invest or trade. Indeed we suspect that many who entrust their capital to professional managers must struggle with the logic of what is being done on their behalf. Why buy when markets are falling? Why sit back when markets are rallying hard? Why raise cash and why trade out that position? These are some of the many questions we field in our dialogue with clients.

As the developed world’s consumers maintain a process to vigilantly reduce debt, it is likely that the only event that will change their collective sombre moods would be a spirited recovery in political leadership.

A notable feature of the recent trading on the Australian stock market has been the dramatic drop in daily turnover. Whether this is important or not for the market or for us as investors, is subject to much debate. The turnover is low compared to what? Were previous periods normal? Does mindless turnover really matter and if you are not a seller should you care?

Five years from now the current uncertainty will be history and we’ll be enjoying economic growth.