Will the Stock Market End the Year Higher?

Dale Gillham, Chief Analyst and Head Trainer of Wealth Within

By Dale Gillham |

We all know that investing is an important part of securing your financial future by helping you to reach your goals including in retirement. Yet, so many still rely on some level of government pension to get by even after accounting for superannuation. So, why don’t most invest more outside of superannuation to have a better lifestyle in retirement.

Why learning to invest reaps rewards

The top two reasons are due to a lack of knowledge and fear. Fear causes many to do nothing and we all know where that gets us. Robert Schuller once said that it is better to do something imperfectly than to do nothing perfectly, and I tend to agree. If you invest imperfectly, it is highly likely you’ll be better off financially in the future than if you do nothing.

Investing your money means you’ll earn higher returns than if you keep your money in a savings account, but many don’t even get to enjoy the rewards of that because they have a short-term focus, which leads to the third reason why people don’t invest. In other words, individuals are so focussed on their immediate expenses and wants, they spend all of their money and leave nothing to invest.

Doing nothing is easy, that’s why so many people do it. But all too often, we see people in their 50’s or even later come to us in fear of retirement because they have done nothing. This is the point where the fear of continuing to do nothing outweighs the fear of investing.

The solution to creating a better lifestyle now and in retirement is to start with the first reason why people don’t invest more and that is due to a lack of education. But once you gain an education, all the other reasons why you wouldn’t invest collapse one by one. Anyone can pick up a book and read about the basics of money and investing. They can also keep reading until their fear subsides and they start to invest.

I have seen it many hundreds of times with people who have read my book and others who were very fearful of investing but now they’re not. They began their journey of investing and started to reap the rewards by not only creating a better lifestyle for themselves but also a more financially secure future.

What were the best and worst performing sectors last week?

The best performing sectors included Healthcare up 4.81 per cent followed by Information Technology up 4.30 per cent and Consumer Staples up 2.90 per cent. The worst performing sectors included Materials down 2.18 per cent followed by Energy down 2.14 per cent and Utilities down 0.46 per cent.

The best performing stocks in the ASX top 100 included Charter Hall up 10.80 per cent followed by SEEK Ltd up 9.81 per cent and James Hardy Industries up 9.54 per cent. The worst performing stocks included IGO down 7.40 per cent followed by Insurance Australia Group down 6.89 per cent and Incitec Pivot down 6.30 per cent.

What's next for the Australian stock market?

In just 22 trading days so far in 2023, the All Ordinaries Index has really stunned many investors, as it has traded up 8.98 per cent and is still rising. On four of those days it closed lower while on three it failed to break the high of the previous day, but by any measure, the market had a stellar rise in January.

So, is the market’s performance in January an indication of things to come? If we look back at the last ten years, the market rose five times in January and fell five times. Of the five where the market fell, only once did it end the year down. In the four years prior to 2023 where it rose, the All Ordinaries Index finished the year higher on three occasions.

While we have to wait until the end of this year to see what transpires, the data is pretty conclusive that regardless of what happens in January, the probability indicates that the market will rise. Given this, it is safe to assume that 2023 will finish higher than it opened.

Even with such a strong rise on the stock market, we still need to expect one or two down weeks in the next month before rising to the next major high. That said, the move up out of the low in October 2022 ran for eight weeks with the market rising 12 per cent before falling away in December 2022. So, while I say we need to expect a fall, it doesn’t mean it will occur, but it is far better to expect it than to be surprised by it.

Finally, I am still confident the Australian stock market will trade up and challenge the all-time-high in the not too distant future.

For now good luck and good trading.

Dale Gillham is Chief Analyst at Wealth Within and international bestselling author of How to Beat the Managed Funds by 20%. He is also author of the bestselling and award winning book Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in all good book stores and online.

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