Where are we in both short and long term market cycles?

This note looks at the short-term investment cycle and discusses 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.

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-term trend. We are also likely to see shorter, more volatile cycles going forward.

Countries that do not 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.

View Oliver's Insights 18-June-2009 (PDF: 64KB)