Securinvest Financial Planners

The uncertainty surrounding the tax deductions given to investors in forestry managed investment schemes (MIS) run by Timbercorp and Great Southern has ended, with the Government announcing plans to amend tax law in investors’ favour.

When the stock market has rebounded as strongly as it has since March, an obvious question arises—have shares moved too far, too fast?

It’s a simple question but a very complicated one to answer. Firstly, because share prices and the economy (whilst related), do not move in synch with each other— the market makes a judgement today about what the economy will be doing tomorrow. Secondly, measuring what’s actually going on in the economy is not as easy as it looks. The indicators that economists use are a mix of forward-looking and backward-looking measures, they lead and lag. At times like these, when the economy is apparently on the cusp of recovery, the messages can be confusingly mixed.

Once again, it is fantastic to see the rebound in both global and Australian equities continuing. Confidence continues to improve across a number of fronts and the colour is starting to return to everyone’s cheeks!

Economy

Following on from what had been a disastrous 18 months and as we have touched on earlier in this newsletter, the economic recovery signals continue to be positive in Australia with building approvals, housing finance and business confidence all on the way up. With a resilient job market, unemployment remains stable and looks like staying well below the original forecasts as we entered into the GFC.