Will the sharemarket soon deliver double-digit returns again?
The ASX200 returned about 25% between 2003 and 2007, but many economists regard this as a once-in-a-generation bull run. It was driven by cheap credit that allowed investors to take out margin loans to magnify returns. This was underpinned by complex financial engineering that was responsible for the crisis we now face. Still, according to history the average return in the first year after a bear market is about 30%. This time, after the initial bounce, the market is likely to settle for high single-digit returns as investors remain sceptical of “engineered” and leveraged products. Should I still salary sacrifice into super? In hindsight it is easy to see that the time to suspend salary sacrificing into super was probably about a year ago, but now that the market is so cheap it is probably sensible to continue. It may feel painful given all the gloom and doom, but the price of most shares is around the levels two to three years ago, meaning it is a good time to get in to be in on the r
