Perth Financial Planners Provide Comforting Facts About Recent Bear Market
Announcement posted by Approved Financial Planners 11 Apr 2016
Perth financial planners reveal why the current bear market may not be as bad as many past bear markets.
Perth, WA, 11 April 2016 - Recently, Perth firm Approved Financial Planners posted a timely blog about the recent fall of the ASX 200 into a “bear market.” Approved Financial Planners is a firm that is backed with the resources of parent company AMP Capital. One of those resources is Dr Shane Oliver, Chief Economist and Head of Investment Strategy and Economics for the parent company.
In his column called “Oliver’s Insights,” Dr Oliver posted an article on the AMP Capital company blog that may have a calming influence on those who are worried about the bear market. (1)
For some background, the ASX 200 fell into what is called a “bear market” in February 2016. Currently, a “bear market” means that shares have declined from their most recent high. The “high” from which the ASX 200 fell 20% occurred in April 2015. Dr Oliver noted that “bear markets aren’t always of the grizzly variety” because they are of varying lengths and depths. (1)
Dr Oliver sees it as “unfortunate” that the only metrics for a “bear market” are a 20% fall from the previous high. The worst bear market in Australian history was from January 1973 to September 1974, when the drop was 59%. On the other hand, the bear market from April 2011 to September 2011 only fell 22%. (1), (2)
Due to these wildly divergent depths and lengths of bear markets in Australian history, Dr Oliver would prefer different definitions of correction markets and bear markets. He also sees it as “unfortunate” that there is no official to pronounce or define a market as a bear market or a correction market. (1)
Dr Oliver would prefer a market which features sharp falls in a previously rising market lasting a short duration, such as a “few months,” followed by recovery to a rising market again, as a “correction market.” He would prefer that the term “bear market” be saved for a market which features a “pattern of falling lows and highs” lasting “many months or years” with shares failing to return to previous highs for “at least a year.” (1)
What The Current Bear Market Could Mean for Financial Planning
According to Dr Oliver, the probability that shares will climb upward by the end of 2016 is 65%. He bases this on his analysis of past bear markets and a few key factors. He feels that a prolonged bear market is likely only if there is a recession in Australia or the US and there is a “sharp fall in earnings.” According to Dr Oliver, current numbers don’t indicate either of these events happening. (1), (3)
(1)AMP Capital, 18 February 2016. Dr Shane Oliver. Oliver’s Insights: “There’s a bear in there – what drives mild versus deep bear markets.”
(2) ASX, Global Financial Data, Bloomberg, AMP Capital
Located in Perth, Approved Financial Planners provide a full menu of financial services to their clients in the Perth area. They have the resources and backing of parent company AMP Capital and use them to the fullest to help provide the best in financial planning, investment planning and mortgage broking to the Perth market. To learn more, call 1300 787 274 or visit their website: http://www.approvedfp.com.au/.
Approved Financial Planners
Approved Financial Planners Pty Ltd ABN: 52 116 910 528, trading as Approved Financial Planners is an Authorised Representative and Credit Representative of AMP Financial Planning Pty Limited ABN 89 051 208 327 Australian Financial Services Licence 232706 and Australian Credit Licence 232706.
General Advice Warning
What you need to know.
Any advice contained in this Page is of a general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regard to those matters.
In his column called “Oliver’s Insights,” Dr Oliver posted an article on the AMP Capital company blog that may have a calming influence on those who are worried about the bear market. (1)
For some background, the ASX 200 fell into what is called a “bear market” in February 2016. Currently, a “bear market” means that shares have declined from their most recent high. The “high” from which the ASX 200 fell 20% occurred in April 2015. Dr Oliver noted that “bear markets aren’t always of the grizzly variety” because they are of varying lengths and depths. (1)
Dr Oliver sees it as “unfortunate” that the only metrics for a “bear market” are a 20% fall from the previous high. The worst bear market in Australian history was from January 1973 to September 1974, when the drop was 59%. On the other hand, the bear market from April 2011 to September 2011 only fell 22%. (1), (2)
Due to these wildly divergent depths and lengths of bear markets in Australian history, Dr Oliver would prefer different definitions of correction markets and bear markets. He also sees it as “unfortunate” that there is no official to pronounce or define a market as a bear market or a correction market. (1)
Dr Oliver would prefer a market which features sharp falls in a previously rising market lasting a short duration, such as a “few months,” followed by recovery to a rising market again, as a “correction market.” He would prefer that the term “bear market” be saved for a market which features a “pattern of falling lows and highs” lasting “many months or years” with shares failing to return to previous highs for “at least a year.” (1)
What The Current Bear Market Could Mean for Financial Planning
According to Dr Oliver, the probability that shares will climb upward by the end of 2016 is 65%. He bases this on his analysis of past bear markets and a few key factors. He feels that a prolonged bear market is likely only if there is a recession in Australia or the US and there is a “sharp fall in earnings.” According to Dr Oliver, current numbers don’t indicate either of these events happening. (1), (3)
(1)AMP Capital, 18 February 2016. Dr Shane Oliver. Oliver’s Insights: “There’s a bear in there – what drives mild versus deep bear markets.”
(2) ASX, Global Financial Data, Bloomberg, AMP Capital
Located in Perth, Approved Financial Planners provide a full menu of financial services to their clients in the Perth area. They have the resources and backing of parent company AMP Capital and use them to the fullest to help provide the best in financial planning, investment planning and mortgage broking to the Perth market. To learn more, call 1300 787 274 or visit their website: http://www.approvedfp.com.au/.
Approved Financial Planners
Approved Financial Planners Pty Ltd ABN: 52 116 910 528, trading as Approved Financial Planners is an Authorised Representative and Credit Representative of AMP Financial Planning Pty Limited ABN 89 051 208 327 Australian Financial Services Licence 232706 and Australian Credit Licence 232706.
General Advice Warning
What you need to know.
Any advice contained in this Page is of a general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regard to those matters.