[youtube]ttp://www.youtube.com/watch?v=7WZED4We_Qo[/youtube]A number of economic reports are predicting rising unemployment, lower demand and pricing for commodities, stable interest rates and a general slowing of most economic activities such as travel and transport services during the 09/10 financial year. This will obviously affect not only the share market but other investment vehicles. That said money is still being poured into superannuation as a result of the 9 per cent contribution guarantee, which cannot continue to be held in cash therefore it is likely it will find its way into the share market at some point in time. Right now I am seeing more and more investors becoming confused about what to do with their money. Over the past two years investors have been switching money around various investment vehicles in the hope that one will deliver on their expectations with some moving in and out of investments within a few months on unrealistic expectations. This has been fueled by the fear of loosing and a lack of education about how investments work, both of which are counter productive in the longer term. Investors would be better off taking the time to understand the three golden rules to wealth creation, which includes spending less than you earn, investing wisely and then leaving your money alone so it can grow. So what can we expect in the market? There is an old saying that when you least expect it, expect it. Over the past two weeks the market has risen quite strongly in what I believe is a last ditch effort to reach new highs since the low in March 2009. The last time the market rose for more than 10 days straight was following the March 2009 low. While this run up started the bullish run we have experienced over the past 4 months, I believe the current run up over the past two weeks will result in the market achieving its high for the year. Given this, I do not expect the market will continue to rise for much longer before falling into its normal correction that occurs every year. I believe the market will peak within the next one or two weeks and then fall into a low in either September or November. Right now I would recommend investors wait until we can confirm the next low before buying rather than jump in now thinking they are missing out as better prices are likely to be gained in a few months time. Dale Gillham Chief Analyst Wealth Within[/youtube]A number of economic reports are predicting rising unemployment, lower demand and pricing for commodities, stable interest rates and a general slowing of most economic activities such as travel and transport services during the 09/10 financial year. This will obviously affect not only the share market but other investment vehicles. That said money is still being poured into superannuation as a result of the 9 per cent contribution guarantee, which cannot continue to be held in cash therefore it is likely it will find its way into the share market at some point in time. Right now I am seeing more and more investors becoming confused about what to do with their money. Over the past two years investors have been switching money around various investment vehicles in the hope that one will deliver on their expectations with some moving in and out of investments within a few months on unrealistic expectations. This has been fueled by the fear of loosing and a lack of education about how investments work, both of which are counter productive in the longer term. Investors would be better off taking the time to understand the three golden rules to wealth creation, which includes spending less than you earn, investing wisely and then leaving your money alone so it can grow. So what can we expect in the market? There is an old saying that when you least expect it, expect it. Over the past two weeks the market has risen quite strongly in what I believe is a last ditch effort to reach new highs since the low in March 2009. The last time the market rose for more than 10 days straight was following the March 2009 low. While this run up started the bullish run we have experienced over the past 4 months, I believe the current run up over the past two weeks will result in the market achieving its high for the year. Given this, I do not expect the market will continue to rise for much longer before falling into its normal correction that occurs every year. I believe the market will peak within the next one or two weeks and then fall into a low in either September or November. Right now I would recommend investors wait until we can confirm the next low before buying rather than jump in now thinking they are missing out as better prices are likely to be gained in a few months time. Dale Gillham Chief Analyst Wealth Within[/youtube]

A number of economic reports are predicting rising unemployment, lower demand and pricing for commodities, stable interest rates and a general slowing of most economic activities such as travel and transport services during the 09/10 financial year. This will obviously affect not only the share market but other investment vehicles. That said money is still being poured into superannuation as a result of the 9 per cent contribution guarantee, which cannot continue to be held in cash therefore it is likely it will find its way into the share market at some point in time.

Right now I am seeing more and more investors becoming confused about what to do with their money. Over the past two years investors have been switching money around various investment vehicles in the hope that one will deliver on their expectations with some moving in and out of investments within a few months on unrealistic expectations. This has been fueled by the fear of loosing and a lack of education about how investments work, both of which are counter productive in the longer term. Investors would be better off taking the time to understand the three golden rules to wealth creation, which includes spending less than you earn, investing wisely and then leaving your money alone so it can grow.            

So what can we expect in the market?

There is an old saying that when you least expect it, expect it. Over the past two weeks the market has risen quite strongly in what I believe is a last ditch effort to reach new highs since the low in March 2009. The last time the market rose for more than 10 days straight was following the March 2009 low. While this run up started the bullish run we have experienced over the past 4 months, I believe the current run up over the past two weeks will result in the market achieving its high for the year.

Given this, I do not expect the market will continue to rise for much longer before falling into its normal correction that occurs every year. I believe the market will peak within the next one or two weeks and then fall into a low in either September or November. Right now I would recommend investors wait until we can confirm the next low before buying rather than jump in now thinking they are missing out as better prices are likely to be gained in a few months time.   

Dale Gillham

Chief Analyst

Wealth Within

The issue confronting a lot of Australian’s right now is whether or not to fix interest rates on their housing loans. The banks have already raised their fixed interest rates potentially in an effort to entice home owners to lock in a rate now before they rise again. So should Australians be looking at locking in a fixed rate? To answer this, let’s look at where interest rates are heading over the coming years? Given that economies run in cycles, if we review the historical movements in the RBA rate rather than economic forecasts, we can ascertain that the official RBA interest rate is unlikely to move above 5 per cent before 2013, with it more likely to fluctuate between 3 and 5 per cent. Given that banks generally fix their rates at between 2 and 3 per cent above the official RBA I don’t believe it would be worthwhile in the short to medium term for home owners to lock in their rate unless they are seeking ways to better manage their cash flow. From a cost perspective, I think variable rates are the way to go given the savings that home owners will receive with the lower variable rates available, the flexibility they offer and the low probability of rates rising significantly in the foreseeable future.      So what can we expect in the market? The past week has certainly been interesting in the market. While it was slightly bearish, the market has really gone nowhere although we are starting to see signs that the All ordinaries Index is finding support and turning to move back up again, but this is yet to be confirmed.   If I am correct, the market should rise up next week in a more definite move although this move is likely to be short lived and may not break the previous high of 4078.3 points achieved on 15 June. That said I still believe the market will move up to my target of between 4200 and 4600 by late July or possibly the first week of August. Predicting the market or individual shares for that matter on a consistent basis is not an exact science but one based on probabilities, therefore we need to plan for the worst and hope for the best. As each day unfolds new information comes to hand that can effect our outlook, therefore as I have said before it is critical for investors and traders when managing their portfolios to use stop losses and to not get complacent with the current bullish move that started in March, believing it will last forever.     Dale Gillham Chief Analyst Wealth Within

The ASX has announced a proposal that would allow retail investors direct access to the bond market in the same way investors buy and sell shares on the exchange. Access to debt funding through the issue of bonds has traditionally been sourced through wholesale markets, but due to a lack of liquidity in this market it is now being proposed that both state and federal governments have the opportunity to source cash from ordinary Australians by way of trading bonds on the stock exchange. For retirees looking for risk free income, bonds are a great investment vehicle provided they can lock in a higher long term interest rate than the cash rate which is debateable right now given the effect on the economy resulting from the sub-prime meltdown. In my opinion, investors looking to generate wealth or increase their retirement savings whilst interest rates remain low would be better off in other investment vehicles. From an economic perspective, it would be prudent to consider the effect on the shares and property market if large sums of money are ploughed into the bond market. While it is early days, I hope that that the government and ASIC don’t make a rash decision simply to solve a short term problem.        So what can we expect in the market? This week the market has been quite volatile and erratic although it has closed higher in 5 of the last 7 trading days. This is in contrast to the Dow which has only closed higher on 3 of the last 7 trading days, which indicates that sentiment in our market is proving to be more bullish and resilient than the

The ASX has announced a proposal that would allow retail investors direct access to the bond market in the same way investors buy and sell shares on the exchange. Access to debt funding through the issue of bonds has traditionally been sourced through wholesale markets, but due to a lack of liquidity in this market it is now being proposed that both state and federal governments have the opportunity to source cash from ordinary Australians by way of trading bonds on the stock exchange.

For retirees looking for risk free income, bonds are a great investment vehicle provided they can lock in a higher long term interest rate than the cash rate which is debateable right now given the effect on the economy resulting from the sub-prime meltdown. In my opinion, investors looking to generate wealth or increase their retirement savings whilst interest rates remain low would be better off in other investment vehicles.

From an economic perspective, it would be prudent to consider the effect on the shares and property market if large sums of money are ploughed into the bond market. While it is early days, I hope that that the government and ASIC don’t make a rash decision simply to solve a short term problem.

So what can we expect in the market?

This week the market has been quite volatile and erratic although it has closed higher in 5 of the last 7 trading days. This is in contrast to the Dow which has only closed higher on 3 of the last 7 trading days, which indicates that sentiment in our market is proving to be more bullish and resilient than the US market. In previous reports I indicated that the down move in the All Ordinaries Index could occur between 18 June and early July, therefore the volatility we have experienced this week could just be a last burst of selling pressure before the next run up occurs.

I still believe prices will rise for the next 3 to 5 weeks to reach the yearly high I have been expecting. Therefore we should see the market settle over the next week and move up strongly once again to my target of between 4200 and 4600 by late July. As always we need to be prepared in case the market decides it is now moving down into the yearly low that I expect will occur sometime between September and November. Therefore I encourage all investors to use stop losses and avoid any leveraging unless you are a really experienced trader.

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