The collapse of Great Southern Plantation and Timbercorp raises concerns as to how two companies with similar investments could fall from grace so quickly. It also begs the question whether these types of investments should even be considered by investors. These products are generally offered as a tax incentive scheme by accountants and financial planners to enable investors to offset capital gains, however, it is questionable whether these schemes actually constitute tax avoidance or tax minimisation.

In my opinion any worthwhile investment should be assessed based on two simple criteria: the ability to generate capital gain and income with tax being the last consideration. An investment that has tax included to make it appear attractive, suggests that the investment may not be as good as it should be. I would never consider buying an investment property or investing in the share market unless I could achieve adequate levels of capital growth and income. In my opinion, investors who invest in tax incentive schemes are speculating on the potential profit that may or may not occur.

So what can we expect in the market?

The volatility experienced over the past few weeks is subsiding and the market is now displaying signs that it is returning to being bullish. I expect the All Ordinaries Index to rise over the next 2 to 4 weeks from its current level through to 4200 points and beyond before experiencing a small pull back between 18 June and early July. If the rise is strong over the next few weeks, my target for the yearly high is around 4500 points by late July although it is possible that the market could rise to 4900 points but only time will tell.
Again the market is presenting some great opportunities to purchase some good quality blue chip shares with the banks likely to run another 10 to 20 per cent. That said I do not believe the banks will fair well with the fall into the yearly low in September and may fall heavily given that the short selling ban has been lifted this week. As always if you decide to buy I recommend you set your stop loss at no more than 15 per cent below your entry price.

Dale Gillham
Chief Analyst
Wealth Within

Dale Gillham, ‘one of the country’s most respected analysts’ (Wealth Creator Magazine, Nov/Dec 2004), sought after key note speaker and author of the best selling book ‘How to Beat the Managed Funds by 20%’, has assisted thousands of traders and investors to become confident and profitable in their direct share investments. Tired of an industry saturated by quick fix gimmicks and expensive short-courses, Dale co-founded Wealth Within to provide ‘ real education and ongoing personalised support’, as well as independent investment advice to traders and investors who have become disillusioned by the market for one reason or another. As testament to this, Wealth Within launched Australia’s first and only nationally accredited Diploma and Advanced Diploma of Share Trading and Investment.

For more information please visit www.wealthwithin.com.au

The recent outbreak of swine flu has sent speculators scrambling to buy into Biota, the company responsible for the Tamiflu vaccine in the hope of making a quick dollar. But is this really smart investing or just plain gambling? On Friday 24 April Biota closed at $0.87 before rising 78.16 per cent to a high of $1.79 just two trading days later (Tuesday 28 April). Six days later it had fallen 41 per cent in price, which means anyone who purchased the stock after 24 April would be sitting on a loss. Gambling on a stock rising in price as a result of market announcements is extremely risky and definitely not smart investing.

It is important to remember that what goes up fast can also come down fast and often much faster if people panic. Smart investors know, however, that long-term profits are only generated through astute buying of good quality shares utlising sound money management principles. It is for this reason why I advocate investors stay away from investing based purely on market announcements simply because the majority of investors end up entering the stock too late and as a consequence suffer losses as the share falls back to its true value.

So what can we expect in the market?

On Monday the share market fell to a low of 3703 points, in what could be the low I was expecting between 7 and 22 May. If this is correct, then over the next week the volatility we have been experiencing over the past two weeks should subside and the market should start to rise once again. I expect the rise to last until around mid June before we see a short downward move followed by a rise up into the year yearly high in late June or July to between 4200 and 4500 points.

Right now the market is presenting some great opportunities to purchase good quality blue chip shares for the expected rise, however, I would urge all investors entering the market to set a stop loss as the run up will be short, lasting around 8 weeks into the yearly high. In my book “How to Beat the Managed Funds by 20%” I recommend you set your stop loss no more than 15 per cent below your entry price.

Dale Gillham
Chief Analyst
Wealth Within

Dale Gillham, ‘one of the country’s most respected analysts’ (Wealth Creator Magazine, Nov/Dec 2004), sought after key note speaker and author of the best selling book ‘How to Beat the Managed Funds by 20%’, has assisted thousands of traders and investors to become confident and profitable in their direct share investments. Tired of an industry saturated by quick fix gimmicks and expensive short-courses, Dale co-founded Wealth Within to provide ‘ real education and ongoing personalised support’, as well as independent investment advice to traders and investors who have become disillusioned by the market for one reason or another. As testament to this, Wealth Within launched Australia’s first and only nationally accredited Diploma and Advanced Diploma of Share Trading and Investment.

For more information please visit www.wealthwithin.com.au

Regardless of what you think of the budget, there is one thing that is certain and that is there will be hard times ahead for all Australians. In my opinion not enough is being done to encourage people to invest and become self funded in retirement, instead the government creates policies that in the long term will result in many retirees continuing to rely on the government to meet their day to day needs. But this needn’t be the case.

If all the government did was remove capital gains tax on investments, investors would be better off. Over the past two years the net wealth of the majority of Australians has fallen dramatically as a result of the significant pull back in the share market. Many have held on to their investments rather than sell and protect capital because of the capital gains tax consequences. As a result many nearing retirement will now have to continue to work or rely on the government for a pension. Ironically this is exactly what the government is trying to avoid.

So what can we expect in the market?

As expected the market has become quite volatile this week, with many shares such as RIO and other miners falling heavily. We are now falling into the short term low that I have been expecting with price now trading below my target of 3800 points.

It is possible that the market will continue to fall until around 22 May and trade below 3600 points. That said given that the market has been quite bullish of late, it is possible that the fall will be short in both time and price. I believe the market will find support in the next one or two weeks and then rise to its yearly high in late June or July to between 4200 and 4500 points.

Right now Investors should be getting ready to take advantage of the impending rise as the market will present some fantastic opportunities when it does turn.

Dale Gillham
Chief Analyst
Wealth Within

Dale Gillham, ‘one of the country’s most respected analysts’ (Wealth Creator Magazine, Nov/Dec 2004), sought after key note speaker and author of the best selling book ‘How to Beat the Managed Funds by 20%’, has assisted thousands of traders and investors to become confident and profitable in their direct share investments. Tired of an industry saturated by quick fix gimmicks and expensive short-courses, Dale co-founded Wealth Within to provide ‘ real education and ongoing personalised support’, as well as independent investment advice to traders and investors who have become disillusioned by the market for one reason or another. As testament to this, Wealth Within launched Australia’s first and only nationally accredited Diploma and Advanced Diploma of Share Trading and Investment.

For more information please visit www.wealthwithin.com.au

Dale Gillham will be once again featuring on the Sky Business Channel program “Your Money, Your Call” from 7:00 - 8:00 pm EST Thursday the 14th , Channel 602 on FOXTEL and AUSTAR.

Over the past few months I have heard many people complain about the perceived lack of value they have received from their adviser in regard to their investments. I believe this is because many advisers fail to adequately manage portfolio risk, instead preferring to advise their clients to ride out the market volatility. The problem with this is that instead of exiting the market to protect capital, investor’s funds continue to erode through strategies such as dollar cost averaging, yet the adviser continues to be compensated regardless of the value add to the client.

What is even more concerning about this is that it will continue to happen as the share market moves in cycles and every 4 to 5 years the market will fall around 20 to 30 per cent and every 20 years by around 50 per cent. If advisers are to adequately manage their clients, they need to understand how the market unfolds so they can plan for these events and make appropriate adjustments to a client’s portfolio in order to manage the risk. Unfortunately many investors have paid a heavy price putting their faith in those advisers who, on the surface, appear more interested in the commissions they receive than the value they bring to the client.

So what can we expect in the market?

I don’t think many would argue with me when I say that one of the toughest jobs in the past 18 months has to be as a portfolio manager and market forecaster – this is because we cannot be right all of the time, even though our clients expect it. Over the past 18 months the market volatility and sentiment has caused many false moves in both shares and indices making it difficult to predict, and I don’t expect this to change in the foreseeable future.

Unfortunately many are being lulled into a false sense of security now that the market has been rising since March 2009, however, I believe this is just a bear market rally. Over the next few weeks I believe the market will become more volatile which will see prices fall away sometime between now and 22 May to below 3800 points. Following this, probability suggests that the market will then rise to its yearly high in late June or July to between 4200 and 4500 points. If this occurs, I believe the move down into the yearly low will be in August or September and be quite volatile with the fall likely to catch many unwary investors out.

Whilst I still believe there are good profits to be made over the next few months from astute investing, it is essential that anyone investing in direct shares use a stop loss to protect capital.

Dale Gillham
Chief Analyst
Wealth Within

Dale Gillham, ‘one of the country’s most respected analysts’ (Wealth Creator Magazine, Nov/Dec 2004), sought after key note speaker and author of the best selling book ‘How to Beat the Managed Funds by 20%’, has assisted thousands of traders and investors to become confident and profitable in their direct share investments. Tired of an industry saturated by quick fix gimmicks and expensive short-courses, Dale co-founded Wealth Within to provide ‘ real education and ongoing personalised support’, as well as independent investment advice to traders and investors who have become disillusioned by the market for one reason or another. As testament to this, Wealth Within launched Australia’s first and only nationally accredited Diploma and Advanced Diploma of Share Trading and Investment.

For more information please visit www.wealthwithin.com.au