Nicolette Rubinsztein, General Manager Strategy, Colonial First State, looks back in history and examines some major downfalls in the Australian share market, how long they lasted and how much they bounced back one year on.

The question on everyone's mind at the moment is, 'Will financial markets recover?'

The Australian share market has seen significant falls since November last year. History shows that the share market continually fluctuates and periods of downturn occur, however over time the Australian share market has always returned to previous levels and even surpassed them. We expect the Australian share market to recover- the more difficult question to answer is when will it recover?

At this point, economic commentary suggests that the United States is likely to enter a recession. This downturn and the turmoil engulfing US financial markets will undoubtedly affect the Australian share market, with the impact likely to be felt for at least the remainder of 2008. However, it is important to remember that Australia's big banks are well capitalised and well regulated and should withstand the current problems, albeit with some volatility in share prices.

Lessons from history

Markets move in cycles and volatility is not new or unusual. While no one can predict exactly where we are in this market cycle or when the market will recover, history shows that falls in the Australian share market have eventually been followed by a recovery. The table below looks at major downturns in the Australian share market since 1987 and the recovery in the following 12 months. You can see that even after the longest downturns the Australian market always showed strong growth in the year after they ended.

Past performance is no indication of future performance.
Source: All Ordinaries Price Index and IRESS.

Benefiting from the bounce back

You may find the current market climate concerning, but remember the long term trend of share markets has been upward. While you may be tempted to withdraw your investments or switch to cash, this isn't always a good idea. Everyone's situation is different and you need to think about what is right for you - but by selling your investment now you are realising your loss, and forfeiting the opportunity for your investment to recover in value. Investors who have had the courage to remain invested during previous downturns have been rewarded with any upside that has followed.

Source:  http://au.pfinance.yahoo.com/b/nicolette-rubinsztein

From Good to Great – Yes You Can!

Why some companies make the leap... and others don't

A while back I listened to the audio book, and loved it.

Would you like to Find out why Good is the enemy of great

Harry C. Edwards summed it up like this:

Five years ago, Jim Collins asked the question, "Can a good company become a great company and if so, how?"

In Good to Great Collins, the author of Built to Last, concludes that it is possible, but finds there are no silver bullets.

Collins and his team of researchers began their quest by sorting through a list of 1,435 companies, looking for those that made substantial improvements in their performance over time. They finally settled on 11 - including Fannie Mae, Gillette, Walgreens, and Wells Fargo - and discovered common traits that challenged many of the conventional notions of corporate success.

Making the transition from good to great doesn't require a high-profile CEO, the latest technology, innovative change management, or even a fine-tuned business strategy.

At the heart of those rare and truly great companies was a corporate culture that rigorously found and promoted disciplined people to think and act in a disciplined manner.

Peppered with dozens of stories and examples from the great and not so great, the book offers a well-reasoned road map to excellence that any organisation would do well to consider.

Like Built to Last, Good to Great is one of those books that managers and CEOs will be reading and rereading for years to come.

The least you should do for yourself is grab the audio book, and put it on your MP3 player; you will get a lot out of it

PS: I can almost hear someone say, well Paul, I thought you were gonna spell it out for us.  Nope – you’ll have to get the book and you’ll benefit in two ways. Firstly from the content and secondly from the discipline of reading (or listening) to something that will educate and build you/your business up if you take the time to apply the lessons.