The experts are buying shares now, says one touting investment newsletter, encouraging clients to take advantage of the 20 per cent slump in share prices (and more than 50 per cent for resource stocks) that has wiped billions of dollars off Australians’ savings and superannuation funds. But while there is growing professional support for this view that the severe losses in the dismal beginning of 2016 have been overdone, others talk of a ‘market apocalypse’, with Australia now a ‘bear market’ – and that these usually last a year or so. Another warns that Australia is poised to fall into an inevitable recession, its first for 25 years, while ‘Brace for Oilmaggedon’ is just one of the dismal headlines, with ‘Sharemarket still hostage to oil price volatility’ echoing the gloom. A director of a leading bank and a guardian of the government’s $120 billion Future Fund says world financial markets are now in ‘unchartered waters’ not seen since the 1930s; within a year Japanese, European and emerging share markets have dropped by almost 30 per cent, China by almost half and even the US which is supposedly in an economic recovery has suffered a 14 per cent fall. Under the heading ‘Fears of US recession on the rise’, the Wall Street Journal notes that although the economic data shows no recession, there is now a ‘risk premium’ as markets are anxious about growth and oil prices (and lenders to struggling oil producers) and the prospect of rising interest rates, of another Chinese devaluation, of Britain leaving Europe and of Americans electing ‘a populist president who seeks to overturn the existing economic order’. Then there’s the recent advice to ‘sell everything’ from the Royal Bank of Scotland, whose gloomy world view follows its near-death experience during the GFC.

Locally, caution is still the dominant sentiment, with the CEO of the Future Fund telling a Senate estimates committee last week that ‘We have a relatively cautious position in markets at the moment with a little less risk than normal’; the Fund’s biggest single investment now is cash of $24 billion, or a huge 20 per cent of its portfolio compared with less than 6 per cent only three years ago. This rush to the safety of cash has been in part at the expense of its holding of Australian listed shares which has slumped by a quarter to 6.5 per cent or only $7.7 billion – its lowest proportion since the Fund’s creation in 2006. A decision by Australia’s Future Fund to invest once again in Australian equities, (which currently are only a quarter the size of its foreign listed shareholdings) would be a useful boost to the market. Cash is no earner; the Fund will need to put that cash to work to restore its remarkable earnings record (averaging 8 per cent a year) following its dismal 1 per cent return for the latest six months.

But while the Senate got the cautious message from the Future Fund, the House of Representatives Economics Committee heard a much more up-beat version from the Governor of the Reserve Bank, Glenn Stevens who told it that ‘some of the gloom and doom is overdone’ and that ‘pessimistic’ markets had ‘dropped their bundle’ in acting as if there will be a global recession. The Commonwealth Bank CEO Ian Narev, when reporting CBA’s higher profit last week, described the global banking shares rout as an over-reaction and the Australian’s John Durie wrote at the weekend that the concerns that hit global markets that bank earnings would be hit by plunging commodity prices has not shown up in Australia. Our banks are better prepared for more difficult funding markets, according to the chairman of APRA, Wayne Byres.

Commentators are beginning to cock their ears for the imaginary bell that rings when the market hits bottom, with investment newsletter the Motley Fool quoting a senior analyst saying ‘It’s time to aggressively buy’, another intending to buy resources stocks for his managed fund for the first time since 2012, another saying that the solid company profits now being reported indicate the current bear market will be of short duration, another that ‘the equity bloodbath this year is little more than noise’, and concluding that there is a difference between a bear market driven by sharply deteriorating fundamentals and one almost totally driven by fear, like this one. But stock exchanges have always been dominated by fear and greed; isn’t it greed’s turn?