Will the Stimulus Work?

The government is at it again, handing out more money to Australians in the hope they will spend it to stimulate the economy. But with the significant rise in the unemployment figures, I am sure most people will be worried about their job and the security of their family over the next 12 months. Given this, it is unlikely that the money will be spent as the government intended. Instead I believe the wise thing to do would be for people to put the money toward reducing their personal debt.

Surely the government would be better off putting the money into the hands of those who will create jobs and deliver assets that as a society we can benefit from for generations to come, not just stimulate the economy for a quarter. Why not reduce taxes for small businesses who employ 80% of Australian’s, or incentivise those who enter into contracts to build new houses (not just for first home buyers) or buy Australian made cars. In my opinion giving cash handouts to certain individuals is simply applying short term thinking to a long-term problem, and is doomed to fail.

So what can we expect in the market?

On Monday the Australian market fell to a low of 3052.50 points or its lowest point since June 2003, while in contrast the Dow is now trading at levels not seen since April 1997. This is further evidence that our market operates independently of the Dow and also confirms it is far less volatile than the Dow.

The good news for investors is that both markets have started to show signs of reversing the current down move over the past few days. If the market continues to find support and trades up over the next few weeks I believe, as I have previously indicated, that the market will rise through to mid year to between 4000 and 5000 points.

The challenge I see over the next few years is that the market will not be suited to those who want to buy and hold instead it will reward those who are educated and know how to actively manage their share market investments. It is essential for anyone looking to enter the market that they practice sound money management techniques or they might be in for a rocky ride.

Dale Gillham
Chief Analyst
Wealth Within

Dale Gillham, ‘one of the country’s most respected analysts’ (Wealth Creator Magazine, Nov/Dec 2004), sought after key note speaker and author of the best selling book ‘How to Beat the Managed Funds by 20%’, has assisted thousands of traders and investors to become confident and profitable in their direct share investments. Tired of an industry saturated by quick fix gimmicks and expensive short-courses, Dale co-founded Wealth Within to provide ‘ real education and ongoing personalised support’, as well as independent investment advice to traders and investors who have become disillusioned by the market for one reason or another. As testament to this, Wealth Within launched Australia’s first and only nationally accredited Diploma and Advanced Diploma of Share Trading and Investment.

For more information please visit www.wealthwithin.com.au

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