more from Shane...are you getting a warm fuzzy feeling?Shane...

more from Shane...are you getting a warm fuzzy feeling?

Shane Oliver, head of investment strategy and chief economist at AMP Capital Investors, says there is a good chance that we have “actually seen the bottom” in shares. “If not, we’ve come very close,” he says.

“What we know from history is that when a bear market rebounds, the really big gains are made in the transition from the panic stage to a more normal stage – the index tends to rally by about 32 per cent in the first 12 months,” says Oliver.

“So it’s quite possible when the rebound comes, the market could put on 30 per cent quite quickly. I don’t think anyone should assume that that’s going to be sustained, but the market could recover quite quickly.”

Oliver was heartened that the Australian market “did not make a new low” when it fell 4.3 per cent on the Tuesday following the US Congress’ rejection of the bailout plan. “Given that major bear market lows often involve some sort of retest of the low, a fall back to last week’s low levels is a distinct possibility. But after expecting a slump into the normally weak September/October period which we have now seen, I am now more confident that shares will stage a decent rally into year-end and then through 2009.”