2010 - looking good

[affordableadvice]

Post GFC, Australian Banks look stronger than ever (Westpac buys St George, CBA buys Bank West, NAB buys Aviva and now AXA, ANZ buys ING). Result - big profits to come.

China has shown that it can grow even during a US recession. Result - commodity prices will remain high meaning the likes of BHP, RIO, OZ Minerals, and Woodside will make big profits. (As will their suppliers and contractors.)

On the Australian sharemarket, the banks and big miners make up over 40% of the market. If these companies show rising profits, their share prices will rise. There is no magic to it, the "secret sauce" is simply rising profits and expectations of more to come.

The next few years look good.


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[abd]

Very good advice. I feel the market will have another little crash early next year, but will recover nicely.

[one]

I think that's a pretty optimistic outlook. You must remember that the global economy is still very fragile, and you can't rely solely on China's appetite for our resources to drive the economy.

Most analysts suggest that 2010 will be relatively flat. My personal view is much the same, and that we won't get back to the peak of 2007 until at least 2011. Clawing back the first 50% was easy, but the second 50% will take a lot longer.

That said, of course I'd be very happy if the market did fly in 2010, but I just don't see it happening.