'Bull run may last decade'

Johannesburg - The current positive sentiment on the markets is the start of a bull run that could last several years, reckons Max King, investment strategist at Investec Asset Management.

He bases this view on historical trends indicating that global markets, which have performed poorly for 10 years - such as in the past 10 years - are making way for a sustainable bull market.

As far as shares are concerned, he says that history shows that after every poor decade one of good returns tends to follow.

Since 1871 it has frequently been seen that a decade of negative real growth is followed by a decade of shares producing average real returns of more than 10% a year. He expects that the markets are in for many years of good yields if history is to be believed.

The markets could put on as much as 40% without moving out of the cycle of poor returns. This means that investors could see good returns for several years thereafter, he said in London.

Unlike other analysts, he is positive on the dollar, but still unsure whether the market is seeing the start of a dollar bull run.

He also believes gold - and gold shares in particular - to be a good investment. His company expects the gold price to reach a new high, but cannot say where it will be.

The gold price is undervalued because the price, adjusted for inflation, remains much lower than the peaks it reached in the late 1970s, he thinks.

Gold shares are even more undervalued. They have a strong correlation to the gold price and, because his company believes the gold price will rise, it would be very clever to buy gold shares, King reckons.

- Fin24.com

For more business news in Afrikaans, go to Sake24.com.