We trust you enjoyed a relaxing break.

It is at this time when we see predictions being made for the year, the best way to approach the market, sectors that will outperform and any number of alternative outcomes. A similar exercise may have been enjoyed amongst friends during a holiday BBQ for fun. A similar level of gravitas should be applied to both.

Predictions tend to follow the mood of the time, oscillating between fear and greed and largely dependent on recent market performance and news-flow. Although the following chart is often presented, it provides a reminder of the psychology that impacts the market.

Statistically, the market has produced a positive performance 75% of the time on an annualised basis since 1980.

Looking further back, the average return on the ASX since 1900 has been 13% pa, with a positive annualised outcome occurring 81% of the time.

It follows that regardless of any predictions, it has proven advantageous to take a positive view on the market.

Alex Leyland

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