There Is A Bear In There – And A Bull As Well!

I,  like many investors were very happy to see the back of last week.  Last weeks declines of  4.2% to the Australian share market took our markets year-to-date losses to 10%.  And yes we are officially 20% from our recent highs which means we are in a bear market.  However share market declines of 20% or more come along every few years. They are totally normal events.  Bear markets are indeed the reason why the share market has done so well, over time.

For investors my 3 key points to consider are:

All Australian banks are being battered on the share market amid ongoing concerns about Europe’s banks — precipitated by a recent Deutsche Bank share price slump.  Despite that the CBA recorded another record half year profit and held its dividend.

In contrast Rio Tinto joined the retreat after the big miner abandoned its progressive dividend policy, although peer BHP Billiton held up relatively well despite renewed speculation it, too, would dump the payout stance when it reports earnings later this month.

Globally, the Chinese share market which re opens later today after the Chinese New Year break year to date is down 22%, Germany down 16%, and the US more than 12% largely driven by the concerns of a global slowdown and oil price.