Listen to this Australian Share Market Report via audio podcast just click Upfront Investor 

Online trading is a growing trend, with more people in 2011 opening up internet broking accounts. Whilst numbers are still below the peak set in 2010, we have to ask what is driving this new surge given how the market unfolded last year. To me there are two reasons for this, with neither being positive. The first is cost, or the search for cheap brokerage, and the second is that many people believe they can do better than a good advisor.

If you are trying to make money, then concentrating on not paying higher fees charged by a good advisor is using a ‘broke or poverty’ mentality in my book where concentrating on what you don’t want gets you more of it. This ‘broke’ mentality drives people to trade too much, so they end up paying more in fees and lose money, which is what they were trying to avoid. In confirming the second reason, they mistakenly believe they can do better than someone qualified with experience. The facts are that 80% can’t, unless they are willing to invest in themselves.

Would be traders often tell me that their plan is to put their money into the share market rather than first doing my accredited education that is designed to teach them how to make the money. In reality their statement is an oxymoron as you need to be educated to make the money, and so these people also practice a ‘broke’ mentality, just like those setting up internet trading accounts. We have all heard that “cheap is as cheap gets”, and so in my opinion nothing can replace a good advisor or the benefit of getting a good education as both will repay you many times over.       

What do we expect in the market?

Apart from the decline on Thursday, our market has risen nicely this week to trade back up to near the 4400 point level, a barrier it has struggled to break above since last August. The good news is that the rise up this time has been slower and as such more sustainable, which augers well for it to finally break through and rise up to my target levels of 4500, and possibly 4600 points over the next month. That said after last year’s unpredictability where anything could happen, we need to expect that the market may not do what we want. Therefore it is still critical that you use stop losses and practice solid money management techniques.

There are many top shares presenting themselves as possible buying opportunities, with materials, energy and healthcare my preference, however in saying that I would suggest investors be very selective and exercise caution.

Visit our Facebook page for links to more detailed discussions on world markets.

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 learn to trade shares and 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

I just realised that I did not share this article with you that I wrote for the Australian Securities Exchange newsletter in November.

In the article I dicuss cycles in the Australian Share Market and whether or not it is reasonable to believe that the current bearish trend has completed or is still unfolding.

The article is not only great reading for share traders as it discusses share market cycles which are a very interesting study, but it good for investors as knowing the longer term cycles for a market greatly aids in profitability. So just follow the link to the ASX website  ASX November newsletter

Listen to this Australian Share Market Report via audio podcast just click Upfront Investor

One of the most hotly debated subjects at the moment is whether or not the banks are justified in embarking on interest rate hikes while the RBA is moving to lower the cash rate. Banks continue to put forward the rising cost of funding from overseas markets as justification, whilst inside sources say the banks are awash with cash.

As the demand from retail and business borrowers in Australia has dried up, why do the banks need to continue to complain about the cost of funding from international markets and lean on Australian borrowers? It just doesn’t make sense.

Perhaps the real problem is that Australian banks haven’t been quick enough to adjust their funding models to the current climate. Having worked in the banking industry many years ago I recall how Australian banks fostered and built their businesses on a strong depositor base but with huge advances in technology banks were able to source cheaper funding more readily overseas, adding to the expansion of easy credit, and we have all seen the effects of that with the GFC.

The problem is that with the funding boom of past decades, Australian Banks got fat and their belt sizes expanded, but now that the economics have contracted and margins are squeezed their belts no longer fit and they are forcing ordinary Australians to pay the price through a series of rate hikes.

What do we expect in the market?

This week the market spent more time falling than rising, which was contrary to what I had expected to occur. Prior to Tuesday’s trade, my analysis indicated a noticeable shift this year away from huge swings in volatility when compared with how the market unfolded for most of 2011.

Given the big fall in the Australian market on Thursday we still don’t know whether the market is climbing a wall of worry or whether the recent rise signals the start of the next bullish phase. That said, my analysis still indicates a further rise for the All Ordinaries index towards 4500, and possibly 4600 points, in the first quarter.

It is typical for the market to rise for four to six weeks before it pulls back to test support prior to a further rise. To date 2012 has shown what is considered to be a normal bullish cycle and if this continues it augers well for the next cycle to be bullish.

As I have mentioned in previous reports, the market has proven on numerous occasions that it wants to remain above my 4100 to 4200 point support zone and I expect this to continue to hold for at least the foreseeable future. For now, whilst not becoming complacent, we can all enjoy more bullish conditions whilst we have them.

Visit our Facebook page for links to more detailed discussions on world markets.

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 learn to trade shares and 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

I thought you might like to read Janine Cox’s latest article on CFDs published this week in Your Trading Edge magazine. Whether you are currently trading CFDs or are thinking about getting started you need to read these helpful tips on the subject. click here

Listen to this Australian Share Market Report via audio podcast just click Upfront Investor

What are the best shares to buy right now? This question I hear time and time again, usually from people with a hit and miss approach to investing, however, they are probably the very same people I shouldn’t answer. Let me explain….

I find that many people looking to buy shares just want to be told what to buy and sell, however it is not that simple. This situation was highlighted to me this week when one of my team received a call from a prospective student who had previously lost over two hundred thousand dollars and now they were asking for advice after losing a further one hundred thousand dollars. What would you say to them?

Firstly, I can’t comprehend losing that amount of money because if you know what you are doing then losing that amount of money is inconceivable. Further, if I told them what to do would they follow my advice? Evidence suggests not. Also remember that what is said must be taken in context. Are they looking to invest for the short, medium or long term? Are they looking for income or growth?

The sad fact of the matter is that for the majority of investors and would be traders, all they know is that they want to make money but have very little idea how to do it.  Worse still this is only one example of many similar stories that I have heard in both bull and bear markets, and why my advice to you is that your best investment is in educating yourself as ignorance can be expensive.

What do we expect in the market?

Although the Australian share market took off at the start of the week the rise wasn’t enough to convince investors that the risk in the equities market has decreased to a level that justifies a significant increase in exposure to stocks just yet. This is evidenced by the fact that the index is still treading water below 4400 points.However, Australian investors have a lot to look forward to if the past few weeks are anything to go by. If the market continues to unfold in a predictable fashion I believe the next six to eight weeks will shape the equities landscape for the rest of 2012, with some nice opportunities setting up in a number of sectors including energy and resources.

That said we may see a road block in the short term until European leaders find a solution for Greece. But I have always said that a wise investor doesn’t follow news but instead has a plan for their portfolio.

Visit our Facebook page for links to more detailed discussions on world markets.

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 learn to trade shares and 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