Tuesday, January 02, 2007

Will 2007 be the year of the crash ?

The SMH reports that

"Australian investors should be cautious and pick stocks carefully in 2007. Some people are fearful that the long sharemarket boom could come to an end in 2007, just as the stock market crashed in October 1987 after a long boom. There are some similarities between the bull market in 2006 and the one that ended in October 1987. Stock market analysts are uncertain about how 2007 will play out, although many are still optimistic. On the positive side, superannuation money is flowing to stocks at a great rate. On the negative side, the Australian economy is slowing. Experts warn that share investors should avoid stocks where there are signs of a sharemarket bubble."

Its very hard to predict a market and as it says you should keep clear of stocks that show signs of a bubble. We do this by looking for undervalued stocks. Just buying a low PE or low PEG stock helps keep you away from the bubble stocks.

Good Luck.

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