Feature Stories | Sep 09 2011
All this and more was discussed in FNArena's Market Insight program yesterday live on the BRR Network. An archived vodcast and alternative audio-only recording, along with all slides used in the presentation, are now available. Click here. Scroll down for alternative versions.
Please note that due to technical difficulties we were pushed for time, and didn't quite get to the last slide in the presentation. Here I chose to note that brokers have now multiplied their FY12 earnings forecasts by their PE expectations to arrive at forecasts for the ASX 200. I have chosen one example, from Goldman Sachs.
In short, Goldmans is tipping the ASX 200 to reach 5000 by end-2012 (with the caveat of no market meltdown due to, for example, Europe in the meantime). This looks like a good opportunity for traders, or investors sitting in cash, given it represents a 19% price return. However longer term investors will no doubt note that the ASX 200 was already at 5000 earlier this year, and at least a couple of times last year. Not very encouraging.
The forecast does, however, emphasise how investors in the twenty-tens should be looking towards yield rather than capital appreciation to provide returns. Stocks with projected earnings growth and potential dividend growth are preferred, as the broadcast notes.