Investment markets strength is understood by technicians in the industry, to reflect the ‘depth’ and the ‘liquidity’ of the markets. Those features are referenced in this article, but of greater interest to most investors is how market prices are performing.
Geographically, the markets to which most of the funds Australians commit as investors, are located in Australia. Their performance has been substantial during the period since the ‘bottom point’ of the GFC.
We refer to ‘markets’ as being the sharemarket and other markets that deal with financial instruments. These are the scripts that are used to develop investment strategies for our clients. These include –
- Cash;
- government and corporate Bonds and other Fixed Interest paper;
- shares in listed public companies;
- property;
- infrastructure;
- commodities; and
- variants of those investment asset classes (sometimes referred to as derivatives, alternatives etc).
These markets are able to be accessed directly and/ or through managed funds, to –
- take advantage of scale investing – and
- diversification of portfolios).
Investment markets strength and economic considerations
The Reserve Bank of Australia and the International Monetary Fund regularly forecast Australia’s Gross Domestic Product around 3%. There is reason to believe that our markets will continue their strong growth for some years to come. Having said that, not all segments of the economy (industries and sectors) will necessarily experience growth simultaneously.
As we updated the commentary in June 2022, global economies were experiencing new challenges arising from the pandemic, including –
- inflation (because of the surplus cash available to households after a couple of years of ‘lockdown’ austerity),
- supply chain interruptions – as well as
- the Russian atrocity in Ukraine, albeit unrelated to the pandemic.
In spite of these headwinds, investment performances from March 2020 to the present time been impressive. Rising interest rates imposed by the Central Banks – and the inflation effects brought on a Bear market by mid-June 2022 – have not changed the underlying market strength.
At the time of writing this update to the original December 2010 article investment markets strength in
- shares,
- property and
- some bonds,
since the beginning of the post-GFC recovery has continued. Its memeory is now just a ‘blip’ in the ever-ascending (though occasionally volatile) chart.
Many of the markets have fully recovered the losses from the GFC. Some, like the Australian Sharemarket, have only recovered to trend from the pre-GFC trajectory. Yet others are progressing on ‘the new normal’ path. Forecasts indicate that annual growth for diversified ‘balanced’ portfolios could continue at around 10% for the near- to medium- term. In this update, we suspect that one will need to use an average return over a three-year period.
An outlook perspective
At Continuum Financial Planners Pty Ltd, we are quietly confident that this could be be achieved. At time of the May 2014 update this had progressed well. It took over six years from the original peak (December 2007). This was a similar time as the 1987 share market crash took to retrace its losses! This recovery became the longest recovery period in recorded modern financial markets history. Of itself, that is a story of strength in the markets and progress in the underlying economies.
If you entered the local sharemarket as a new investor in the months around March 2009 you will have seen the growth of the ASX All Ords from around 3400 to a recent 8000 – a compound average return rate of around 10% per annum (not counting dividend imputation credits).
..giving rise to some questions
Are the markets running too hot? We don’t believe they are in a general sense; although some sectors; and some geographic markets have displayed ‘bubble’ tendencies in the ‘recent’ past.
Will the markets keep pushing a straight line upwards? We don’t believe they will: each new ‘high’ as the recovery progresses is likely to meet with some resistance as investors take the opportunity to take some profits and rebalance their portfolios.
If the markets are going to ‘correct’, how big a correction will happen – and when? We believe that corrections will happen throughout the recovery period, occasioned by unexpected news (company, geopolitical, extreme weather events etc) – but we anticipate that those corrections to be only between 5% and 8% in most cases. We believe that this is a ‘healthy’ process and one that all markets go through from time to time.
Are the investment markets strong? We believe they are.
Experienced financial advisers at Continuum Financial Planners Pty Ltd maintain a keen awareness of trends in markets and the activities of the fund managers we entrust with client funds. In providing our services to our clients our team works to the premise that – ‘we listen, we understand; and we have solutions’ and we care about the outcomes of the ‘personalised, professional wealth management advice’ we deliver. To participate in the growth of investment assets over the next few years – and to ensure that participation is strategically appropriate to relevant individual circumstances –
make an appointment with one of our experienced advisers: you can either –
- call our office 07-34213456, or
- at your convenience, use the linked Book A Meeting facility.
(This article was originally posted by us in February 2011. We occasionally update/ or refreshe it, most recently in August 2025.)