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From the Paris Desk

By Jack Wellings

I happen to be on holiday in Paris at this moment. Zero degrees, but nothing can detract from the wonder of this beautiful city.

And, of course, the financial news here is the same here as everywhere else in the developed World;  "Markets spooked as oil leads commodity crash". Always 'the markets'. Oh dear!

In other words, the price of oil on World markets has fallen. Of course, for oil-producing countries, including the US, but particularly Nigeria, Saudi Arabia, Norway, Canada, Indonesia and Russia, this is not welcome news.

But cheaper oil means good economic news for the rest of the World, and will be a spur to economic growth. And, of course, you will be paying less for your petrol.

So, yes, there's a very positive spin on this.  But, then, share prices are down, and - as an investor - and as always - you're supposed to panic.

And if you're 'in the market'; that is, as a trader (ie, a gambler), maybe you would panic.

But as a serious, security-minded investor, who holds shares (particularly Australian 'blue chip' shares) in your SuperFund, and does so because they produce a consistent, reliable (and increasing) income-stream from company dividends, which continue unabated, why should you care about lower share-prices? Certainly, your fund value may be lower, but your Income is safe. And, in any case, prices can't stay down forever - not in a growing economy, now benefiting from lower oil prices!

So, in summary, what should we think about what is happening?

Here Are The Facts

  • There is no sign of a recession on the horizon for the US, Australia or China and there are no signs of negative global growth
  • Growth in Europe isn’t shooting the lights out but it is accelerating
  • Japan is doing what Japan does with growth trending at about 0.5% per annum thanks to population issues.
  • There is no collapse in the banking/payment system or credit squeeze like there was in 2008.

Holding (not trading) shares, as a conservative, security-conscious investor, doesn't mean you are 'in the market'. You bought your shares (at least your SuperFund did), and - unless you're selling them, prices simply don't matter.

It's an excellent time to be buying though!

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