In the 2008 ASX share ownership study, it states that 58 per cent of people invest in shares to either make money or accumulate wealth. What is interesting about this is the fact that a large percentage of these investors seek their advice and information from newspapers and the internet, rather than from advisors or financial planners. Is this because individuals believe they are more equipped to make investment decisions than the experts, or is it because of a lack or confidence in the advice they may receive?

According to the survey more people rely on family, friends and colleagues for their source of advice rather than brokers, and use financial planners only slightly more than their family and friends. I am all for doing it yourself when it comes to investing, but in my experience many investors lack the knowledge and experience to fully understand how to manage a direct share portfolio. Quite often investors look in all the wrong places for advice and information - the end result being that they make emotional decisions rather than educated ones designed to achieve their outcome of wanting to make more money or accumulate wealth. As Albert Einstein once said “Education is the progressive realisation of our ignorance”

So what can we expect in the market?

Although unconfirmed, the strong rise in the market over the past week looks to have signalled the end of the down move that we have experienced since 15 October. To confirm this, the All Ordinaries Index needs to fall away for one to four days and hold above the recent low of 4515 points on 5 November. I believe the market will test the low over the next few trading days, and then turn to move up once again.

As I have previously reported, I believe the market will rise to around 5200 points into January 2010 and possibly higher into February before moving down into its yearly low at the end of the first quarter of 2010. That said over the past few months the markets cycles have been shorter than normal, so we need to expect that this could continue and that the next low could occur in January rather than March. For now, enjoy the rise and what looks like to be a good Christmas as opposed to last years doom and gloom.       

Since the 15th October the Australian share market has fallen nearly 8 per cent as part of the normal market cycle. What is interesting is that the longer the market moved down in time, the more fear has arisen in ordinary Australians concerned that they were about to see a repeat of what occurred into March of this year. It seems that Australians are becoming more myopic in their outlook, which is to their detriment, rather than looking at the bigger picture of where the market is heading. This attitude has stemmed from a fear of loosing, and is causing many to not only loose sleep but make poor investment choices 

Markets will always move from low to high and then make a new low before rising again because price always conforms to the averages. For example, the All Ordinaries index long term average growth is around 2.5 points per day, although at times it will rise at a faster rate. Therefore we need to expect that the market will peak and fall back to the historical average. This is also true in a falling market. Knowing this, investors would be better off stepping back and taking a broader approach to the market rather than hanging onto every move that the Dow or our market makes.  

So what can we expect in the market? 

Over the past week the market has fallen away slightly to achieve a low of 4515.3 points yesterday, which represents a fall of just less than 8 per cent. Last week I mentioned it was possible we had seen the last of the down move, although we needed to expect that the market could fall for a further one to two weeks to around 4500 points before starting to rise again. 

Given the move down this week has only been minor, and it is likely that the market will rise strongly today, it is possible that the market will close higher for the week. This would indicate that the down move is most likely over, although over the last two years the market has trained us to expect the unexpected. Given this, it is possible the market could fall slightly into next week.

That said, once the low occurs I believe the market will rise to around 5200 into January 2010 and possibly higher into February before moving into its yearly low at the end of the first quarter of 2010.