MLC Market Watch

The recent market volatility is, understandably, making investors nervous and they’re probably concerned this volatility resembles the correction we had mid-way through 2011.

While we’re expecting short-term volatility, we’re confident in the medium-term return potential in equities.

While there are clearly difficult macro uncertainties, we’re increasing our focus on companies which, we believe, have the fundamental strengths to perform well, even in this environment.

And our investment managers have been avoiding some of the troubled areas and are actively finding the opportunities that will underpin long-term returns for clients.

Current markets and our investment approach

Our approach to investing is supported by what sounds like a simple notion; share prices follow earnings which follow economic growth.

However, what happens to economic growth, how that translates into company earnings and the value the market places on those earnings, is far from straightforward.

Today there are real worries about the course of global economic growth and this creates uncertainty about future company earnings streams, which is why we’re seeing such volatility in markets.

We understand this, but continue to emphasise the importance of investing in fundamentally sound companies to deliver adequate real returns for investors.

For more information, please contact your financial adviser.

With a few small hiccups along the way, the Australian and global economies have continued their recovery. In this update, MLC’s Investment Strategist Brian Parker looks at:

• the implications on world sharemarkets by the debt freeze in Dubai
• the mixed bag of economic numbers in Australia, and
• what it all means for investors.

View the December Economic and Market Update video here.

Download Brian Parker video script.