Analysts say 'greed is good' is back, as euphoria emerges in global financial markets
Such phases are typically characterised by investor mania for so-called meme stocks, made popular on the share market by social media posts.
But investors are also chasing after cryptocurrencies, gold and small-cap stocks, or stocks with relatively low prices.
Adelaide woman Lisa, who only wants to use her first name for privacy reasons, buys so-called penny stocks in small companies trading on the share market.
She trades stocks in the resources, information technology and pharmaceuticals sectors.
"And also because of their small nature, often they're overlooked by the larger managed funds, superannuation funds, for example."
Lisa first bought $500 worth of shares in 2001, and now has a $100,000 share market portfolio returning 18 per cent per annum.
A typical stock market return, according to analysts, is anywhere between 7 and 10 per cent per annum.
Lisa shares trading ideas with other investors on several social media platforms.
"One of my favourites would be Straw Man, which is a private investors club where people share ideas of companies that they've researched," she said.
"I also look at a couple of others like Hot Copper, Inside Trader, The Motley Fool and MSN News, occasionally, just to give me ideas, and then I'll take those ideas and do my own research."
In January 2021, retail investors bought American meme stock GameStop, after positive reviews of the company went viral in an online investing forum on Reddie .
Marcus Today senior portfolio manager Henry Jennings said this type of frenzied trading activity was popping up again.
"Shorting" stocks is when big investment firms borrow stocks they see as overpriced, only to sell them.
They buy the stock after the share price falls, and return it to the owner, having made a profit.
GameStop was being heavily shorted in the market in 2001, so when retail investors bought it up, the big investment firms started to lose money on their "shorts" as the price stopped falling and began rising.
"And if there's enough of them, do that at one particular time, they can push stocks to outrageous gains and outrageous moves," Mr Jennings said.
"So it is, I guess, a sign of irrational exuberance to some extent."
Roger Montgomery, who runs Montgomery Investment Management, is also seeing meme-stock mania.
"Last week we saw, for example, the share prices of Wendy's, GoPro and others jump," he said.
"I think Krispy Kreme was the other one to jump by as much as 80 per cent just in a couple of days.
"That's telling you that things are getting a little bit hot again."
Mr Jennings warned investor euphoria is taking hold again in financial markets, making "Star Entertainment look like a Sunday afternoon bongo club."
"I guess primarily the reason is the animal spirits are running pretty hot at the moment," he said.
"You know, we've got markets around the world at all-time highs.
"Despite the news from tariffs, the optimism is high, but Trump is making America great again and greed is good.
While that may sound concerning, Mr Montgomery said investors were buoyed by the amount of cash coming from central banks.
He said this was supporting stocks and other financial markets' assets.
"The Chinese Central Bank has injected something like 10 trillion renminbi into the market over the last six months," Mr Montgomery said.
"And because there could be a slowing economy from Trump's tariffs, the US Federal Reserve is expected to engage in Quantitative Easing [money printing], or more Machiavellian versions of that, and inject more liquidity into the market as well."
There is, however, no shortage of risk facing investors across the globe.
Analysts point to problems from US President Donald Trump's Big Beautiful Bill, uncertainty around global tariffs, and the health of China's economy — all of which have the potential to drag markets down again.
Rising bond yields, which can hurt stock prices, are also a concern.
But Mr Jennings said the risks investors did not see presented the most danger to financial markets and the economy.
"It's not really the risks that you can see that are going to trap us and trip us up," he said.
"It's the ones that you can't see.
Locally, Australian companies are yet to report their full-year earnings for the 2024/25 financial year, so analysts are not yet able to compare stock prices to recent valuations.
But the ABC understands the broad expectation is that Australian companies will remain profitable.
There is also hope of several interest rate cuts, which would boost overall demand in the economy by early next year.
Lisa, for one, is holding onto her stocks.
"Even if they're down for six months, a year, two years, they will go back up again to what they were at, [or] … above what their previous high was."
Australian investors may also react to second-quarter inflation figures due from the Bureau of Statistics on Wednesday, which could determine whether the Reserve Bank cuts interest rates again next month.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Australian
2 hours ago
- The Australian
Collapse in private-sector job creation as public sector surges
Private-sector job creation has collapsed as employment funded by federal and state governments soars to five times the normal rate, sparking warnings of unsustainable distortions in the labour market that are at the heart of the nation's productivity slump. Analysis of labour-market data shows that 82 per cent of all jobs created over the past two years were government-funded positions, with the private sector adding only 53,000 jobs in 2024. This marks a dramatic reversal of normal labour market trends, in which the private sector typically contributes about two-thirds of total job creation. While Jim Chalmers has ruled out discussion of industrial relations at this month's economic and productivity summit, employer groups are demanding that dysfunction in the labour market needs urgent attention. Australian Industry Group analysis shows that the historically low unemployment rates maintained since the pandemic are masking a fundamental shift in the composition of job creation, which lies at the heart of the nation's productivity slump. It warns that labour-market resilience, as shown in official unemployment data, was being supported almost entirely through government spending, leading to an excess of job vacancies in the private sector. This was unsustainable, according to the Ai Group, which also pointed to a dramatic fall in mobility rates – the frequency of workers changing jobs or roles – to a record low in 2025 that was directly linked to productivity. The analysis showed that the number of new jobs needed for the economy to maintain an unemployment rate of about 4 per cent was approximately 400,000 a year. 'Since the pandemic, this has been achieved, however, the composition of job creation has changed dramatically,' the Ai Group analysis said. 'Typically, the private-market sector accounts for about two-thirds of job creation in Australia. However, as the economy has slowed since 2023, private-sector job creation rates have collapsed. 'In 2024, the sector only added 53,000 new jobs – about a fifth of its normal level of job creation. In its place, two government-supported sectors took up the slack. 'Employment in these government-supported sectors has boomed since the pandemic, adding an additional 670,000 jobs over the last two years. This is over five times higher than the normal growth rate, and ultimately accounted for 82 per cent of all job creation in Australia. 'It was driven by significant uplift in public-sector staffing levels, as well as the rapid expansion of the private-sector (but government-funded) care-economy workforce. One of the Albanese government's key election boasts was its maintenance of low unemployment and job creation. But the bulk of those jobs have been in the public sector (where workers are directly employed by government), and the non-market sector (industries such as healthcare and education) which are driven by government funding decisions. 'Job creation has become unsustainably dependent upon government spending,' the Ai Group research said. 'Growing regulatory burden has raised the costs of private sector employment generation. Job mobility rates have rapidly declined, while excess vacancies and skills shortages have disrupted business operations and efficiency.' The public sector was the least productive part of the economy and, with public spending showing signs of easing, unemployment rates have begun to rise. Last month, the jobless rate surprised experts by jumping from 4.1 to 4.3 per cent. This prompted economists to call for the central bank to lean in further on interest-rate cuts, following its surprise decision last month to keep them on hold, to protect the economy. Ai Group chief executive Innes Willox said the historically low headline unemployment rate had created a 'blind spot to labour-market trends that are decreasing our productivity, our wellspring to national wealth'. 'While the labour market has remained resilient, with the jobless rate around 4 per cent for the past three years, in many other respects it is failing to meet the broader needs of our economy or productivity,' Mr Willox said. 'There are four key areas that are a material drag on productivity: job creation has become almost entirely dependent on government spending; a growing regulatory burden has increased private sector costs; there is a persistent overhang of excess job vacancies; and mobility is declining. 'These all make job creation more expensive and difficult, reduce the efficiency of matching jobs to employers, while disrupting productivity and sapping business growth.'' Mr Willox said there was an urgent need for the private sector to resume its role as the primary job creator 'or our labour market resilience will be at risk'. 'Regulation has pushed up employment costs since the pandemic, with growth in superannuation, workers compensation and payroll tax adding $14bn to the annual wage costs,' Mr Willox said. 'The regulatory costs for employment, on top of wages, have grown to 15.6 per cent from 14 per cent in the past three years. 'We have a plague of excess job vacancies, which disrupts business operations, make it harder to allocate resources properly and less likely to pursue new opportunities for growth.' Mr Willox said the intervention by governments to prop up job creation through their budgets had starved the private sector with about 330,000 jobs remaining unfilled at the beginning of 2025. This was 100,000 more than the historical average. 'This persistence of excess vacancies has exacerbated a further challenge for employers: a crippling skills shortage,' Mr Willox said. 'The sectors with the most chronic shortages – healthcare and social – also delivered the worst productivity outcomes, so there is a clear link between the two.' Mr Willox said the issue needed to be a central piece of the productivity debate at the Treasurer's roundtable this month. Nation A massive pro-Palestine protest brought Melbourne to a standstill as activists clashed with riot police, harassed officers, blocked traffic, and targeted fashion brand Zara – defying Premier Jacinta Allan's warning of swift action. Nation The PM's energy infrastructure tsar and a pro-renewables independent are worried concerns about one of Australia's largest proposed solar farms are being ignored.
ABC News
8 hours ago
- ABC News
Algal bloom recreational fishing response includes plans for artificial reef and reservoirs
A new artificial reef will be created off the South Australian coast to help the state's recreational fishing sector battle the ongoing impacts of the algal bloom "disaster", the state government says. The government said it was also looking to open more of the state's reservoirs for freshwater fishing "where consistent with public health advice", and boost fish stocks in reservoirs and lakes to take pressure off the marine environment. The bloom is devastating some of the state's commercial and recreational fisheries, as well as hitting parts of the economy that rely on them, such as regional tourism. The government today unveiled measures to support recreational fishers, with short-term funding of $200,000 for Recfish SA to bolster community participation initiatives, such as fishing lessons and competitions. Recfish SA's executive officer Asher Dezsery said fishing and tackle shops were desperately in need of stimulus. "They've had sales collapse by up to 70 per cent so they really need not handouts but feet through the door, they need boots on the ground, they need customers," Mr Dezsery said. The funding forms part of the state and federal governments' $28 million support package, with $300,000 to be spent on installing an artificial reef somewhere in Gulf St Vincent. "The idea of re-establishing reefs as soon as we see this bloom pass is a really important one," SA Environment Minister Susan Close said. "The faster we can help nature restore, the faster we can accelerate that recovery, the faster we'll all be able to move past the experience of this bloom and also make ourselves more resilient in the event that it returns." SA Premier Peter Malinauskas said recreational fishers were feeling the economic effects of the bloom — which he described as a "natural disaster" — even in regions that had avoided environmental impact. "The algal bloom has impacted around about 27 per cent of our coastline, which means 73 per cent of our coastline remains completely unaffected," Mr Malinauskas said. "There are whole regional communities that are underpinned by recreational fishers who book an Airbnb and go to the pub and go to the cafe and restaurant, buy equipment from the local fishing tackle shop. South Australia has several artificial reefs, and it is understood a precise location for the new one has not yet been decided. Recfish SA has strongly backed the proposal, and the government believes it will boost fish stocks and allow "real-time monitoring" of the environment by researchers and citizen scientists. "We know that artificial reefs, from interstate projects, 100 per cent assist fish stocks in recovering. They also create biodiversity," Mr Dezsery said. According to the Department of Primary Industries and Regions, recreational fishing is already permitted in several of the state's reservoirs. Recfish SA said the government was looking to expand that further, including in regional areas. "Wherever there's water, wherever there's reservoirs, council stormwater catchments — any body of water, we're trying to create freshwater fishing opportunities so people can keep fishing without putting pressure on that marine environment." Speaking before the announcement, SA Opposition Leader Vincent Tarzia said that what had been offered to recreational fishers so far had been "completely inadequate", and he issued his own call for reservoir fishing. "There are a number of things that the government could be doing to help the recreational fishing space — one of them, for example, is the government could be doing things like stocking fish and allowing some of our reservoirs, where it's safe to be done, to be fished in," Mr Tarzia said. "That would add significant value in the recreational space." Mr Tarzia has also suggested tourism vouchers, like those that were made available in the wake of the 2023 River Murray floods, could be handed out to encourage regional travel. "Any sort of stimulus that could be allowed for that sort of area would certainly be welcome."
The Australian
9 hours ago
- The Australian
AFCA complaints handling hurry leaves thousands exposed
Thousands of decisions by the Australian Financial Complaints Authority could be called into question because it has resorted to checking its own homework to process a backlog of claims. AFCA insiders are concerned that the organisation is drifting from its promise to apply a high standard of scrutiny to complaints. Instead, it has resorted to allegedly misrepresenting that a fresh set of eyes had ruled on matters when they had not, sources told The Australian. Where an AFCA ombudsman would rule on complaints at the final stage, these were routinely overseen by more junior case managers. The involvement of the ombudsman was allegedly limited to signing off on their recommendations. This is despite AFCA's assurance that decisions would be subject to review where either party to a complaint disagreed with the preliminary ruling. AFCA, assembled in the wake of the Royal Commission into Misconduct in the Banking, Superannuation, and Financial Services Industry, is designed to keep disputes from clogging up the court system and free-up regulators to pursue more egregious misconduct. In its first six months, AFCA received 34,263 complaints. Between July 1, 2023 and June 30, 2024, the latest period for which data is available, it was handed 98,622 matters. Of these, 41,583 were related to bank behaviour. AFCA insiders told The Australian it has resorted to 'quick and dirty' decision making in a bid to shift its backlog of claims, warning it put the outcomes of thousands of matters at risk. It's process boils down to a two-tiered arrangement. Matters are initially allocated to a case manager, who attempts to resolve the complaint by mutual agreement. If this fails, the complaint progresses to a second stage where a case manager assesses the merits of the case. The matter proceeds to an ombudsman if a party refuses to accept the case manager's finding. But poor resourcing meant ombudsman matters were often being sent back to the initial staffers, leaving the ombudsman to sign-off on their thinking. This may be as little as a 'quick glance'. 'There were often times where instructions were given to not send out decisions by ombudsman because it looked like it was too quick,' a former AFCA staffer, who spoke on the condition of anonymity, recalled. AFCA was pinged for weak processes in the 2022 NSW Supreme Court Notesco case, which saw a third party broker sue the body alleging it had acted without impartiality when awarding a decision to Jean Pasquier, a retired 83-year old living in France who lost €306,900 ($545,724) after making thousands of trades on Nextrade. AFCA staffer May Chng had sought the view of her manager, who in turn consulted ombudsman Nicolas Crowhurst, before issuing a decision in Mr Pasquier's favour. When Notesco contested the decision, it was sent to Mr Crowhurst to rule on, again in Mr Pasquier's favour. Following this, AFCA engaged former Federal Court judge Julie Dodds-Streeton and barrister Ahmed Terzic to review 30 decisions. AFCA deputy chief ombudsman Dr June Smith said the dispute's body had reviewed the Notesco decision. 'Steps were then taken to ensure that a final decision maker is not involved in the early investigation stage of a complaint they will determine,' she said. Dr Smith said AFCA had commissioned regular independent audits and its next review is slated for 2026 or 2027. 'These reviews have all found that AFCA is engaging in procedural and substantive fairness, and is meeting its obligations of independence and impartiality,' she said. 'These consistent results should give consumers and industry full confidence that AFCA interprets and applies its fairness jurisdiction appropriately and in accordance with its remit.' Resolving cases at AFCA has proven costly as it hires more staff in a bid to catch up to a spiralling case load. Parties before AFCA are slugged for each case, starting at $105.81 for a matter to be registered and up to $10,234 for a final decision. As revealed in The Australian, AFCA has been warning many complainants it would take up to six months to assign them case managers. AFCA chief executive and lead ombudsman David Locke told The Australian in February he was 'mortified' over the delays. AFCA has also been hampered by financial institutions poaching from its ranks, with ANZ recruiting its former banking lead Evelyn Hall as 'customer fairness advisor' in March 2022. David Ross is a Sydney-based journalist at The Australian. He previously worked at the European Parliament and as a freelance journalist, writing for many publications including Myanmar Business Today where he was an Australian correspondent. He has a Masters in Journalism from The University of Melbourne. Markets With the ASX trading near record highs despite subdued earnings forecasts, this reporting season will show whether investors are paying too much for a recovery that may not materialise. DataRoom Executives from Canada's largest mining company have been spotted at Bellevue Gold's flagship Western Australian project, fuelling takeover bid speculation.
