MedAu Share market analysts have been predicting a sharp correction in the US market for so long now that even they must be finding themselves hard to take seriously. Sure the market is jittery but any downturn seems to be quickly followed by a strong rally that takes it above where it started. The Australian market, while it has basically echoed the fortunes of the US market, has been a bit of a laggard. The share market has always followed a cycle that is closely linked to the economic cycle and hence company profits.
Reality can then hit with an alarming thump.
Usually a full cycle will last about five years from start to finish. However the current cycle, partly because inflation has been kept under control, has been in one basic upwards direction for eight years. This is practically unprecedented. It is no wonder that so many small US investors have been seeing the market as an easy way to wealth. These investors see any downturn as a great buying opportunity instead of a reason to panic - so far.