I’ll stake my whole stock portfolio on this bet…

The dire warnings of economic, financial and stock market Armageddon keep on coming.

On the weekend I received a warning my stocks are about to fall 90%.

Happy father’s day, huh?

I’m not even going to get into the details of why this wealth manager thinks Australian stocks will most likely have fallen 90% in around two more years.

To say the least, the prospect is totally farcical.

Such dire and 100% WRONG scare mongering is totally irresponsible.

I’ll bet my WHOLE stock portfolio on this…

In fact, I’d be willing to stake my whole stock portfolio — and I’m talking about hundreds of thousands of dollars — that ASX stocks won’t fall 90% in around two years.

Any takers?

I suspect not, particularly an even money bet. The true odds of something like this happening should be around 10,000 to 1, perhaps more.

And in an even bigger shock to the pedlars of doom, The Age yesterday reported

Analysis from CommSec shows our top companies are still making money.

Bit of an argument killer for the “stocks down 90%” crowd?

I’m sure the pessimists will still find some reason for despair.

They’ve been predicting market crashes from when the S&P/ASX 200 was 3,145 all the way through to today’s 5,190… and they’ll be making them at 7,000 too.

Long-time Motley Fool readers will know we’re business focused investors.

We don’t sweat the macro environment. Not for us is trying to guess which way the gold price will move, what the S&P/ASX 200 is going to do this month or next, or what Helicopter Ben Bernanke’s taper will or won’t do to U.S. stocks.

Oops… shares up

Yesterday’s ASX action is a case in point.

The futures market was predicting an early fall in the ASX, down 18 points in early trading.

As you can see in the chart below, that prediction, like the one that stocks will fall 90% in the last two years, was 100% WRONG.

ASX Sept 2 2013
Source: The Age

Commenting in The Australian Financial Review, Alphinity Investment Management lead portfolio manager Johan Carlberg said…

“A falling Australian dollar and the benefits of company cost-cutting measures enacted over the past 12 to 18 months should act as tailwinds to help lift the Australian sharemarket over the coming year.”

Stocks to fall 90%? Doesn’t look like it just quite yet!

Speaking of The Australian Financial Review, the publication reported that September has traditionally been the worst month for U.S. stocks.

Will it come to pass?

Who knows?

My money is on shares continuing to be a wonderful long-term investment class, no matter what happens to U.S. markets in September this year.


Now… I fully admit the good old “buy and hold” message lacks a little excitement.

— Sorry. Stocks are not about to plunge 90%, this year, next year or most likely EVER.

— Sorry. I don’t have some “hot mining stock tip that could soar 842%” in the next 132 days. Finding needles in a haystack is far easier.

— Sorry. I’m not going to predict the ASX will hit 6,154 on March 13th 2014 and that you should pile into stocks now, before it’s too late. It won’t.

On that last point, I did note with some level of amusement The Australian Financial Review quote Macquarie Securities Group strategist Tanya Branwhite as saying she thinks…

…the share market will hit 5,309 by December 31…

Good luck with that prediction!

To emphasise the disparity between a sample of “the experts” canvassed in the Australian Financial Review article, year end targets for the S&P/ASX 200 varied between 4,600 and 5,250.

Revealed… how and when you can make big stock market money

There’s an old stock market saying that goes you can’t pick the top of the market, and you can’t pick the bottom of the market, but there’s plenty of room to profit in the middle.

That’s some middle — 650 points. It’s a middle I fully intend to take advantage of, as I’ve always done.

In recent weeks I’ve been putting more money to work in the stock market.

If nothing else, these ultra low interest rates give me few other alternatives, especially since you won’t find me charging into the property market, today’s latest hot investment class.

Remind me… haven’t we been here before?

I’d rather be forced to watch an hour straight of political advertising than to tie up my hard-earned cash in an overpriced, illiquid, expensive lump of bricks and mortar, complete with random tenants who may or may not pay their rent on time, trash the house or have late night parties.

Who wants to be an amateur DIY landlord? It’s about as fun as a Rudd/Abbott debate.

Stocks please, preferably of the fully franked variety

So stocks it is for me. Fully franked dividends all the better.

What did I say about putting more money to work in the market?

As it turns out, I have today elected to buy more shares in one of the Motley Fool Share Advisor recommended stocks I already own.

Sure, it’s as part of a capital raising, but it’s still a vote of confidence…

a) In the stock market;

b) In the stock itself and its 4.2% fully franked dividend. My confidence level is raised knowing Motley Fool Share Advisor Investment Advisor Scott Phillips recently personally met with the company’s CEO and CFO, with Scott reiterating his BUY recommendation on the stock, and;

c) That “after the election” could well see a serious injection of confidence into the Australian economy, and by extension, the Australian stock market. I hear the election is thankfully only a few short days away.

(I say “thankfully” not because I’m looking forward to Tony Abbott becoming prime minister, but so that we can all just get on with our lives and not be subjected to the Rudd/Abbott sound-bites, lies, exaggerations, slogans, debates, and political advertisements.)

As I said last week, just need ditch the doom-mongers, delete the dire warnings… stocks have been the big winners in the past, and history says they’ll do the same in the months and years ahead.

The Australian Financial Review says “good quality Australian shares that have a long history of paying dividends are a real alternative to a term deposit.” Get 3 Stocks for the Great Dividend Boom in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

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