Oliver's Insights - Short & long term market cycles
This article looks where we are in both the short term investment cycle and the longer term trend for shares.
The key points are as follows:
- While there will be setbacks along the way - just as we have seen over the last few days, shares have most likely embarked on a short term cyclical upswing that has further to run, probably for the next few years.
- However, various structural constraints - including high debt levels and the need to reverse huge policy stimulus - mean that for US, European and Japanese shares this should be seen as a cyclical bull market in the context of a weak longer trend. We are also likely to see shorter, more volatile cycles going forward.
- Countries that don’t face the same problems will be affected by the same short term cyclical swings as US shares but against a far more positive longer term trend. This includes Asian and most emerging market countries. Australian shares are likely to lie somewhere in between.
