At McCarthy Group, please don’t think we are ‘anti-shares.’ It’s just that we are very ‘pro-property.’ Here are some extracts that explain why there is so much investor caution at the moment regarding shares.

The Australian share market is lagging global markets as investors sit on record piles of cash. In these changing and uncertain times, how should investors who don’t want to sit on their hands best proceed? What does the share market hold?

Rather than bagging alternative strategies to property, we have chosen to quote some extracts and key messages from an article that was printed in The Weekend Australian Financial Review, dated August 14-15, 2010, by Philip Baker:

• “Put off by the global credit crisis, retail investors have their lowest exposure to the local share market since 1995, while their holdings of cash are at a 15-year high.”
• “The index is still 53 per cent from its record high reached on November 1, 2007.”
• “And to make things worse, the so-called “mum and dad” stocks, many blue-chip leaders, are underperforming the index.”
• “There is an extraordinary amount of fear around, and that is what is underpinning rising cash levels, both in Australia and the US.”
• “Many investors who were in the share market in the last few years should not have been there in the first place.”
• “Investors who were saving for something, sometimes a house, sometimes something else, ended up putting their money into the share market, without realising the risks.”
• “Investors are narrowing their investments to blue chips and cash.”
• “Few people appear willing to buy into stocks right now.”
• “The retail investors who looked to the market in the 1990s have had to put up with more than their fair share of woes, ranging from the Asian Financial Crisis, the Long Term Capital bailout, the tech wreck, the fallout from September 11, 2001, to the accounting scandals of Enron and Worldcom and the global financial crisis.”

Whew! I am so glad that instead of this roller coaster ride, that I placed most of my funds in immoveable property, with buildings on it, which people who needed accommodation could pay me rent for, and enable me to hold the investments.

In recent times the fears of the slide in the US economy are also serving to drag down our share market, meaning that investors who are sitting on cash will need to look to an alternative. Investment property is one such opportunity, and investors are steadily increasing their presence in the property market as a result of the uncertainty elsewhere.

(Source: Baker, P. Why investors are scared of the market. The Weekend Australian Financial Review, 14-15/08/2010).