The following ASIC release landed on my desk this morning that I thought you should all be aware of.  ASIC obtains court orders against ‘Safety in the Market’ for misleading or deceptive profitable trading statements.

To let you know Safety In the Market is a longstanding Australian Share Market Educator that is run by The Hubb Organisation Pty Ltd.

For more than a decade I have been talking about the misleading marketing exploits of many companies in the investment area. More specifically how they make claims as to returns people will make, how easy it is to make the money or that they are ‘the best”, “Australia’s number one” and so on and so on.

I have always shared with people that they need to independently qualify these statements and not just blindly believe them. I have known investment educators both in property and the share markets that have promoted they have an ASIC licence and yet they did not. I have known of companies that have promoted that they are an RTO and they were not and some that imply they have government accredited courses in share trading and they did not.

I have also wondered why ASIC has not really brought a stop to these companies. Often I am told by people who complain to ASIC that they were told that it was an ACCC issue and to contact them, and then when the person contacted the ACCC they were told to contact ASIC.  I now congratulate ASIC for its work in investigating Safety In The Market as I have long believed its marketing practices were something that needed to be investigated, however I believe that Safety In The Market are not anywhere near the worst offender in this area and that there are several more companies miss-leading Australians with the intent of profiting from them. Whether Safety In the Market has good education is not the issue with the ASIC order but rather how they went about promoting their courses. You can read the order by clicking here.

Whilst this may not be true for all companies, in my experience pretty companies that continually colour up their marketing tend to have poor levels of share market education and most often this share market education is overpriced.

Further to this I would suggest that if you are proposing to deal with any company that you visit the ASIC web site to see if there are any orders against the company and or their directors. I would also suggest you visit ASIC’s new Moneysmart which has replaced the old Fido consumer website that they had. This is an excellent resource for anyone looking at investments.

To finish off ask yourself a question. If a company knowingly and continually promotes themselves in a way or with information that is miss-leading or untrue, how do you reflect on the level of values and ethics of that company? And would you assume that the same level of values and ethics may be present in all areas of their business?   Remember if it sounds too good to be true it probably is!

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 asindependent 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

This week Telstra has again made headlines, but the news isn’t great. The privatization of TLS would have to go down in history as one of the worst handled cases on record. Finally an agreement has been reached for TLS to move forward with the government’s plan to have Telstra hand over the copper network to NBN Co. Even with this agreement being reached, investors still don’t have faith in Telstra and why should they when their capital has progressively eroded over many years. I have flagged for some time that TLS is a ‘dog stock’ and is likely to remain so while this whole deal unfolds, so why do investors continue to be so loyal?

I believe this is perpetuated by a belief in the financial industry that encourages investors to park their money where they are paid good dividends, without due consideration for the risks associated with a falling share price. I have always said that making a decision to hold a stock based on the dividend yield is not a low risk strategy yet it is the retirees who are often told to take this approach. To attract these types of investors, Telstra has paid above average dividend yields but have investors really gained anything given the risk to their capital? If the market is not prepared to support the stock, why should retirees be encouraged to buy in?

So what do we expect in the market?

This week the Australian share market opened at the same level as last week’s close at around 4,959 points before continuing higher to finally break through 5,000 points. This is an exciting time for investors and traders alike, as not only have we seen the market brake above the October 2009 high, which is were the previous sideways market began, it has also pushed through the January 2010 high. This confirms further what I been indicating, that the market is likely to remain bullish and trade strongly into my target zone of between 5,000 to 5,200 points early in 2011.

This move will disappoint those who tried to second guess a market turn without waiting for confirmation, and in so doing were trading against the trend. You have heard me say many times that it is important not to fall in love with a prediction and to be prepared for the market to go either way. For those investors who have been strategically moving back into the market over the past few months you are likely to see the value of your portfolios now moving in the right direction.

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 asindependent 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

This week ASIC has issued proceedings against another share market educator, Click here and again it is aimed at the way they promote themselves. If you follow the link above and type the name of share market educators into the search field, you will be surprised at how many companies ASIC have been watching over the years.

Whilst I will not comment on the content of the courses or the companies themselves, what I will say is that the emotive marketing techniques these companies use is in my opinion often misleading. The first warning sign to me is the free seminar that is promoted as teaching you how to trade the share market or how to learn to trade Foreign Exchange, CFDs, Options or Futures.

There is always a sales pitch at the end, afterall there is no free lunch. The sales pitch is always promoted as a great deal with lots of discounts that are available only on the night. The reason why they do this is very simple, it is because they know that once you leave the room and do your research you are less likely to buy from them. In any event, you will be offered the same deal next week, next month and next year, so there is no rush to buy on the spot no matter how good the deal seems. It is far better to do your research first, which includes visiting the ASIC website, the ACCC and Google.

The second warning sign is the 100% money back guarantee. Hint: read the fine print and you will find out that obtaining a refund is near on impossible, if not impossible.

The third sign is the offer to pay half now and pay the other half when you have made money. They do not expect you to make money and so they get out of you what they want upfront and never expect you will pay them any more. Unfortunately, the unsuspecting buyer thinks they are getting a good deal.

The fourth sign includes statements like:

“You don’t need much money”

“It’s Easy”

“Takes minutes a day”

“No knowledge necessary”

A while ago I recorded some podcasts on these issues, so if you would like to have a listen simply Click here for”Share Market Tips and Traps Episode 5: Part 1 and Click here for part 2.

Dale Gillham

Chief Analyst

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

We have been watching the battle going on between German company Hochtief and Spanish company ACS as it is having an impact on Leighton Holdings (LEI) and we thought you might be interested in hearing about it. Click here

With the QR National float occurring this month, the Australian Stock Exchange (ASX) asked me to write an article specifically relating to company floats with a bias to government floats. I must say the results were certainly quite interesting.If you are not subscribed to the ASX newsletter, the November issue in which the article is written has just been released.  The ASX found my article quite interesting and I hope you do to. Given I am not going to put out to article myself I have attached the link to it here so all can read it.
To read the article click here

Good luck and good trading

Dale