For the Australian economy, it’s full steam ahead!

For the Australian economy, it’s full steam ahead!

Compared to most other major economies, Australia is now in a sweet spot. After breezing through the COVID-19 pandemic, economic growth is above expectations, unemployment is low, and the outlook for business is incredibly positive. If you add low rates and ongoing government support to the mix, it all adds up to a rosy near-term outlook.

I wrote in The Australian at the beginning of the year pouring cold water on the bearish sentiment of some market commentators, like Jeremy Grantham. Just as a stopped clock is right twice a day, I said that his bearish assessment of bubble-like conditions in the market will eventually be right but I explained why valuations were supported by an extraordinary combination of monetary and fiscal support as well as outstanding economics being generated by some of the biggest companies in the world, and which dominate the major stock market indices. I also added that evidence of burst bubbles in some sectors of the market did not immediately imply the entire market was a bubble. I concluded that 2021 had the potential to be a very good year for equities.

Since the beginning of the year the S&P500 is already up more than 11 per cent, the NASDAQ is 8.5 per cent higher and the S&P/ASX200 is just over 6 per cent higher.

MORE BY RogerINVEST WITH MONTGOMERY

Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.