With 2010 a year of ups and downs for investors, what is 2011 expected to bring, and, as an investor, what signs should you be looking for?
For long-term holders, Australian shares remain a good investment and buyers will find value in further market weakness.
Keeping an eye on the following indicators should assist in your assessment of markets.
- Australian interest rates – if they rise the Reserve Bank of Australia (RBA) thinks the economy is still growing. If they fall the RBA consider we are heading into a period of deflation.
- Commodity prices – if they fall Australia will suffer (as will other countries such as Brazil)
- US interest rates – if they rise this will hurt US borrowers and the banks will suffer as defaults increase.
- Credit – if the costs of credit increase it becomes more expensive to borrow and thereby feeding economic problems.
As the sharemarket is a leading indicator of economic health, and Australia is in a fortunate position at the moment on a global basis with our economic situation largely positive, it is important to understand the pressures on the sharemarket. Staying calm and making sure your investments are sound, offer a good yield and are the best value you can find.
Always remember that your specialist investment advisor Andrew Frith is available to assist you with any queries about your investments.
For more information visit www.financialplanner-newcastle.com.au
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