2026, THE OUTLOOK FOR THE YEAR AHEAD
Last year many world markets reached new highs. Gold and silver shined, the domestic property market boomed but AI faltered.
At the start of 2025, I felt that Gold was unlikely to be a star performer in 2025. How wrong could I be? Predictions are now suggesting that Gold will continue to perform well in 2026.
One certainty within any market is that markets overshoot on the way up and overcompensate on the way down. Hindsight will tell us why a particular bubble had burst.
Tensions in the world remain, the Trump factor still dominates as he tries to impose his will on the world. My view is that we should be mildly and cautiously optimistic about 2026. But not a time to get carried away chasing runaway valuations which might just prove to be a bubble ready to burst.
Investment in AI is going to continue. Is a bubble forming due to inflated values? The power needed to fuel AI is doubling every seven months. Will we see a reversal in the attitude to nuclear power?
Defence spending is likely to increase especially in Europe.
Interest rates? Might rise in Australia? and decrease in America?
Australia’s economy might have a slow pick up in its value. This could depend on where inflation goes.
Where to invest in 2025?
• Consider a small reduction in Fixed Interest and Cash.
• Increase exposure to Property.
• For direct shares consider CSL, Amcor and Life360.
• Continue with small cap fund managers.
• International and local Shares keep steady.
The price of Lithium increased in 2025. RIO, CXO and PLS have benefited.
I look forward to our next review meeting.
Yours Faithfully,
Steve Burge