As you were as Obama reigns
Published in the Geelong Advertiser, November 2012
I, for one, am glad the US election is over as we can all get back to normal life.
Perhaps you buried your head in the sand on this issue and missed the result, but Barack Obama won.
What may interest you more is what I found when I looked into how the US electoral system works.
What I found inconceivable was that the candidates were predicted to spend more than $1 billion on their campaigns. Australia’s trade deficit in September was a mere $1.46 billion.
So was this spend worth it? And the big question for investors is, will the election result be good for our market.
I suggest that not much will be different. The US is at the financial cliff face and Mr Obama has struggled to effect change over the past four years.
Americans may have chosen the safe option of the devil they know rather than the one they don’t, and this might be to their detriment.
For world markets to rise, the US needs to show consistent signs of an improving economy.
For economies to grow, businesses need to spend or borrow, or things stagnate.
To some degree, this is where we have been in Australia as many businesses are in a holding pattern.
Despite the state of the US economy, the US sharemarket has moved ahead of itself, while Australia is yet to catch up.
So what do we expect in the market? We have entered a period of increased volatility, which will last until the end of the month.
For traders this can mean either some great opportunities for short-term gains, or we will see lots of false triggers to buy or sell, which for investors means having to cope with larger than normal swings in price in the shares they own.
This week our market moved higher to suggest the down move may be over and that in the coming month we can expect our market to trade through 4600 points.
Given the volatility ahead, this may come sooner rather than later, and if it is sooner 4800 points is not out of the question by Christmas.
There are many top 50 shares showing signs of rising, and so I suggest investors and traders look to take advantage of some nice opportunities.
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