What were investment conditions like in March 2011?
Investment market reflection is a useful activity by which to enhance coping mechanism. This is particularly helpful in times of market volatility. It can provide a guide to eventual outcomes, reminding us that for many reasons, volatility occurs – and over time, corrects.
Quite noticably, just two years into the recovery from the GFC, equities were the best performer. Equity investors who held their nerve were rewarded for including economic risk in their portfolios!
Why was this so? (the other asset classes)
Globally, whilst inflation over the prior several quarters had been benign, interest rates were also at historically low levels. Whilst true that –
- a low-interest-rate environment creates little threat to the spending power of cash, there is also
- little to be earned from investing in Cash!
Property, whether at the commercial end of the market or the residential, was being impacted by the lack of availability of credit (and serious levels of foreclosures in a number of overseas markets) and so the performance of this sector was of concern for investors.
Significant levels of borrowing by many foreign governments (and sovereign debt ‘failures’ around Europe) kept dedicated Bond investor at bay, guessing what the next move in this asset class might be.
What is it about equities?
Equities are a favoured long-term investment because they reflect the economic activity of the economies in which the companies operate: in March 2011, consumer spending had started increasing as unemployment was being reined in. Consequently, corporate turnover was increasing; and bottom-line returns were supporting the price/earnings ratio that were only around long-term average rates.
Investment market reflection (in your portfolio)
Meet with an experienced adviser at Continuum Financial Planners Pty Ltd to discuss any of these matters. You might also consider having a portfolio review undertaken, to affirm progress toward achieving your financial goals and objectives.
To arrange an appointment with one of our team –
- phone our office on 07-34213456, or
- at your convenience, use the linked Book A Meeting facility, assured that
‘we listen, we understand; and we have solutions’ –
that we deliver in ‘personalised, professional wealth management advice’.
(This article was originally posted by us in March 2011. It has occasionally been updated/ refreshed, most recently in February 2025.)
