August 2011 Review Comments
Written by Tony Gray   
Friday, 19 August 2011 09:48

 Portfolio Valuation & Comment

Global sharemarkets are in turmoil – with issues we have canvassed for some time coming to dominate investor sentiment (US debt and deficit issues, European sovereign debt crisis and risks to Chinese growth and inflation).

Add to that questions about political dysfunction across many developed nations (including some Australian state governments), social unrest in the UK and leading economic indicators pointing to a possible return to recession in the US; weaker growth in Australia (and quite possibly recession in Tasmania) – with weak building approvals and finance figures, sharp falls in job ads, very low consumer confidence and falling business confidence.

Earlier this week we saw very sharp share price falls (coming on the back of months of weakness and sharp falls in recent weeks) and a very rapid bounce - the only bigger two day move I can recall was during the 1997 Asian financial crisis.

It all paints quite a gloomy picture; however, portfolios are generally holding higher than normal cash reserves and assets such as term deposits, bonds and gold - we are positioned to risk some funds when others are panicking.

We are only just at the start of reporting season but I am certain that we will see some bargains presented that can be added to portfolios with confidence.  Australian companies have the lowest levels of debt I can recall; government debt is rising, but from low levels.  The savings rate for individuals in Australia is now around 12% - the highest for 25 years – and that means we are improving our national balance sheet and steadily becoming more self reliant.

As always, please contact me if you have any investment or planning queries.

Best wishes,


A.W. (Tony) Gray BCom, LLB, Dip FP, GDipAppFin, CFP, FFin
Principal, TG Financial

Please treat the above comments as General Advice, with no action to occur until we have considered with reference to your financial position, needs and goals.

 

 

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