Support is needed to bridge the wealth divide

By Dale Gillham. Published at Jan 22, 2021, in Market Wrap

The past few months has certainly been interesting for everyone around the world, not just politically but in terms of health and quality of lifestyle.

Some of the issues have brought us closer together while others have torn us apart. However, once certainty for allis that these world events have affected our wealth, not just as a nation but as individuals.

Over many decades, we have seen the divide between the haves and the have-nots in many countries grow, including Australia. Despite our country being considered wealthy, I have to question if this is really the case.

The divide between the haves and have-nots has caused significant division in countries like the US, a divisiveness we have watched play out on television in recent months.

We know Australia follows the US and while I am not suggesting we will end up like the US, we do need to address the divisions that exist in Australia right now.

We need to support Australians to create more wealth in their lives by helping and supporting our farmers, small businesses, the less fortunate, as well as young people and the elderly. While it is every individual’s responsibility to create and look after their own wealth, if we truly want to be recognised as a wealthy nation, we need to provide support to all Australians from the ground up, not the top down.

So what are the best and worst performing sectors this week?

After a slow start to the year, Information Technology has taken off on the back of a strong rise in WAAX stocks including Wisetech and Afterpay with the sector up over 7 per cent so far. Consumer Discretionary is also up over 3 per cent while Communication Services is up over 2 per cent. The worst performing sectors include Utilities, which is just in the red followed by Financials and Energy, as both are up around 1 per cent.

The best performers in the ASX/S&P top 100 stocks include Wisetech up over 18 per cent followed by Afterpay up over 11 per cent and Domino’s Pizza up over 10 per cent. The worst performers include Alumina down over 3 per cent as is Cleanaway Waste Management followed by Vicinity Centres, Bendigo Adelaide Bank and Scentre Group, which are all down over 2 per cent.

So what's next for the Australian share market?

The All Ordinaries Index has started 2021 strongly, as it is up nearly 4 per cent, which is a good sign for what might unfold this year. That said, before you get too excited, this rise will be short lived because as I mentioned last week, the Australian stock market is expected to fall away slightly in late January to mid-February.

Therefore, it is highly likely that we will see the end of the current upward move either this week or next, with the market falling away for one to three weeks into mid to late February.

In the medium to longer term, I believe the Australia market will perform much better than it did in 2020 and it will present many good buying opportunities for those who are looking for good value stocks, rather than those who like to speculate.

While technology stocks and the sector are performing well right now, I believe this bubble will burst soon and the sector will not perform as well as others in 2021.

Dale Gillham is Chief Analyst at Wealth Within and international bestselling author of How to Beat the Managed Funds by 20%. He is also author of the award winning book Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in all good book stores and online at www.wealthwithin.com.au


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