After two weeks of very strong gains, shares are due to a pause. More broadly though, this note looks at outlook for shares.
The key points are as follows:
– The evidence is continuing to accumulate that shares have embarked on a cyclical recovery.
– Further gains are likely: shares are not expensive and an economic recovery will lead to an improvement in the profit outlook. In addition, there are still plenty of funds sitting on the sidelines and there is still a lot of healthy scepticism about the really which is normally a good sign.
– Past cyclical upswings have seen Australian shares rise on average by 132% over an average of four years.