Recent speculation that the US stock market is heading for a major correction, or even possibly a market crash similar to the global finance crisis, has prompted concern about the health of Australia’s own stock market.
To add fuel to the fire, the Aussie stock market dropped 2.5% last week.
So, do we need to be concerned?
According to Dale Gillham, chief analyst of Wealth Within, the simple answer is no.
“It is not crashing; rather the market is simply having a normal pull back, so there is nothing to worry about,” he said.
“If the majority are suggesting that a crash is imminent, the market will not crash. This is because those who are likely to panic would have already sold out and the professionals would have already adjusted their portfolios, both of which would result in the market drifting down.”
He adds that while confidence may have deteriorated, there is nothing to suggest there will be a correction in the near future.
“Bullish markets do not just crash and our market is bullish; they give many warning signals before this occurs,” he said.
“Markets do not crash at the top; instead they will generally provide many warning signs that alert you to get out which we are not seeing right now.”