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Over the last month, the US stock market has rebounded 8%, the Nasdaq over 11% and our market put on 6.2%. I’ve been canvassing the idea that market has been trying to put in a bottom over the past month, so the question is this: can I dare say to investors: “Ready, steady, buy!”?
Ultimately, I don’t know your individual circumstances but the cautious investor should wait until mid-August. However the more gutsy share market player might want to wait for a dip and then get set for the rebound I expect will take root in the December quarter.
Meanwhile, the real thrill seeker will buy now and keeps their fingers crossed that time will prove them right. They also could be prepared to buy more if the stock price drops because recent rebounds are probably giving us a sneak preview of what is likely to happen when the interest rate rise cycle goes into pause mode, or even ends.
So why the confidence that we should believe we’re getting into the ‘buy’ zone for stocks?
That’s a strong list of reasons to believe that stocks should make a comeback this year but where I could get it wrong is when you should buy to avoid another leg down. This could happen if the US inflation reading on August 10 doesn’t show that the Consumer Price Index is starting to fall. The market expects to see this, and I think it will, but you can never tip this sort of thing and be undoubtedly right.
There could also be another curve ball, such as the Ukraine war to send oil prices sky high again and that would ruin positive expectations about falling inflation rates. When it comes to what Vladimir Putin does is beyond my training as an academic economist.
However, the best protection for stock-buyers now is that they see themselves as long-term investors. Why? Try these facts about this kind of investing:
Telling you to buy now and expect immediate gains over the next two months is risky, given the fact that reporting season news or future economic data drops could encourage short-sellers try to test out this recent rally for stocks generally, and tech stocks in particular.
However, if you are prepared to be patient for what I think happens to stock prices by Christmas, then buying my “ready, steady buy” suggestion, and if you go long good quality shares/businesses, well this could easily prove to be the gift that keeps on giving!
Peter Switzer is founder of the Switzer Report. All prices and analysis at 02 August 2022. This information was produced by Switzer Financial Group Pty Ltd (ABN 24 112 294 649), which is an Australian Financial Services Licensee (Licence No. 286 531This material is intended to provide general advice only. It has been prepared without having regard to or taking into account any particular investor’s objectives, financial situation and/or needs. All investors should therefore consider the appropriateness of the advice, in light of their own objectives, financial situation and/or needs, before acting on the advice. This article does not reflect the views of WealthHub Securities Limited.