Bear market risk greater, says broker

In an equities outlook report entitled Into the Bearpit, analyst Bernard Doyle argues the sharemarket has risen 50% since February on a capital gain and reinvested dividends basis. The gains have continued despite evidence that domestic and global growth both peaked during the second quarter of 2004; that house prices are slowing and there is a risk they will go into decline; that bond valuations are stretched; and that GS JB Were expects global equities to range trade (mark time) for the next six to nine months.

Mr Doyle's analysis showed two common characteristics of past sharemarket downturns were monetary tightening and rising global risk aversion.

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