31^st July, 2009 Market Wrap

Economic forecasts have predicted that unemployment will rise over the next year and with revenues down on previous years for many businesses, this is quite a possibility. That said many businesses are preferring to move their employees from full time to part time employment to avoid the high costs of recruitment and retraining when revenues do pick up. Interestingly, many people are in fear of losing their job and are waiting for something to happen rather than being pro-active. But there is old saying that rings true here, ‘if you fail to plan you plan to fail’.

As many would know, jobs are no longer guaranteed and job loyalty is pretty much a thing of the past. Given this, people should be learning how to build up multiple streams of income so that if they do become unemployed for a period of time, they will be able to adequately manage their finances and potentially minimise any impact on their savings for retirement.

Over the past 12 months I have received increased enquiries from people in their 40’s and 50’s wanting to learn how to invest or trade the share market. I strongly believe, however, that we need to start teaching our children to invest so they can build financial security much earlier and therefore become less reliant on a job. The earlier people realise that superannuation is not the retirement savior we have been sold, and instead start creating multiple streams of income by investing directly in shares and property, the better. Remember superannuation has proven time and again not to be able to deliver a comfortable retirement for many Australians.     

So what can we expect in the market?

Over the past week, the market has continued to be bullish with no real signs that the momentum is slowing. As a market forecaster, the ability to predict market highs has a lower probability than predicting market lows. Whilst I don’t believe the bullish run will last for much longer, I need to accept that it may move further into August than anticipated.

That said I still believe the market will move into a low in mid September, bounce up in October and then make another low in November. How the market unfolds will indicate what will occur in the next bull-run that will move up into early next year. Yesterday the All Ordinaries Index hit the lower end of my price target of 4200 points, therefore if the market continues to rise it may hit my next target of 4600 points, which is a real possibility.   

Dale Gillham

Chief Analyst

Wealth Within