Shares on the cheap

Published in the Financial Standard, October 2008

Sharemarket expert Dale Gillham said that for the past year he has advised his clients to put the bulk of their portfolio in cash. 

But the events of last month meant he is now saying exactly the opposite.

‘I’ve been advising my clients all year to sit tight. Get cash behind you and wait. 

But now, I think we’re pretty close to the bottom so if you just buy the top 10 shares on the ASX and hold them in the next five years, you’ll make a lot of money, there’s no doubt about that.’

Global equities expert Peter Walmshurst from Templeton Global Equities said that all things considered, global stockmarkets are not facing a catastrophe as painted in the media.

‘I don’t think a US depression is the consensus, it’s not likely. 

There is still a lot of money in the world and there are a lot of tools we have now than in the last depression,’ he said.

‘The credit markets are not functioning properly but a lot of companies don’t have to finance their debt today. 

Even if you take a dire scenario, if we really a tough 12 months, we’re not talking about earnings down 20 to 30 per cent.’

Vanguard Australia’s chief investment officer Eric Smith agreed and said in the direct retail space, there’s been more churn but that larger clients are putting more money into equities, particularly in domestic shares.

Gillham said that a more significant outcome of the maladies in the US is that Asian governments and investors are now looking to Australia as an example of a country with a robust financial and regulatory system.

‘It’s a super positive for Australia from the point of view of Asia looking much more to following Australia’s model where traditionally they look to the US in terms of structure, financial systems and for financial advice.’

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