http://www.youtube.com/watch?v=huEB1pwLuso

The US has just started its reporting season, and executive pays are well and truly in the hot seat especially those in US banks who look set to be paid record bonuses. While I am all for paying bonuses to employees who go above and beyond what they would normally be paid to do, I do not believe the US bank executives should be paid any bonuses given that they were responsible for the biggest meltdown in world markets in nearly 100 years. Furthermore, the US banks really only survived bankruptcy because of the US government handout, so I think the real bonus for these executives is that they are not in jail. 

There are arguments for and against large bonuses and salaries for executives, and with the majority of shares traded in the market done by institutions, the average man on the street has very little or no say in what goes on in this area. I believe as the divide grows between those that have and those that have not, we will see more public unrest and much more political debate surrounding these issues. In the next few years, Governments will need to take appropriate action before things get too hot.     

So what can we expect in the market?

In my last report, some four weeks ago, I suggested that the Australian market would soon break out of its sideways move, hopefully on the upside to move up to our target level of between 5000 and 5200 points into January or February. I also mentioned that once the high was achieved the All Ordinaries would move down into its yearly low around March 2010.

This week the market hit 4984 points which is its highest level since 26 September 2008, and I still believe that the yearly cycle high will occur around the target levels I mention above. Given this, I expect our market will continue to rise over the next 2 to 4 weeks before falling away into a low in mid to late March.

The fall into the coming yearly low will be the first real test of the March 2009 low, and will tell us a lot about how the market will unfold this year. My expectation is that once the yearly low occurs we will see a very strong rise in the All Ordinaries Index into the middle of this year, but only time will tell.  

http://www.youtube.com/watch?v=8Fp5VfB20fY

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.       

http://www.youtube.com/watch?v=FAVpm96xAgQ

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.      

http://www.youtube.com/watch?v=WOq1E5hr-4Q

It would appear that despite the severity of the pull back leading up to the low in March 2009, many investors have failed to learn from the mistakes of the past. During the bear market leading up to March of this year many investors were overwhelmed with fear as they watched their investments fall up to 40 per cent with some as much as 70 per cent. However, with the market conditions being so bullish over the past 6 months, investors have now replaced their fear with greed and turned to speculative or penny dreadful shares in an effort to make quick profits. 

Over the past few months, however, the market has risen at a speed far greater than what was evident in the run up to both the 1987 crash and the sub-prime meltdown. Given this, the market has the potential to fall heavily, which could result in many investors reverting back to fear and experiencing the losses they are trying to avoid.

So what can we expect in the market?This week the market has unfolded in a similar fashion to what occurred in late September, where we had a mixture of up and down days as the buyers and sellers tried to decide on a direction. This could be a signal that at least a short term high has been achieved and that the market is about to move down into the low I have been expecting in November.

That said we know that the market has been bullish and we need to expect that it will continue to do so until it indicates otherwise. Therefore I am still expecting the market to rise to between 5000 and 5200 points between now and mid-November before it falls into a low in mid to late November or early December. 

http://www.youtube.com/watch?v=BbVQH1TFVY0

If you are confused about where the economy is heading and whether you should fix the interest rate on your housing loan, or what you should do with your investments, you are not alone. The past year has been one of contradictions given that we were told interest rates were likely to fall further and now they are rising, to use the government handout to buy imported goods because the Australian dollar would continue to fall and prices would rise, that property prices would fall which has certainly not been the case and that unemployment would rise above 7 per cent. Given this, it’s no wonder many Australians are confused about what they should be doing.