For retirees looking for risk free income, bonds are a great investment vehicle provided they can lock in a higher long term interest rate than the cash rate which is debateable right now given the effect on the economy resulting from the sub-prime meltdown. In my opinion, investors looking to generate wealth or increase their retirement savings whilst interest rates remain low would be better off in other investment vehicles.

From an economic perspective, it would be prudent to consider the effect on the shares and property market if large sums of money are ploughed into the bond market. While it is early days, I hope that that the government and ASIC don’t make a rash decision simply to solve a short term problem.

So what can we expect in the market?

This week the market has been quite volatile and erratic although it has closed higher in 5 of the last 7 trading days. This is in contrast to the Dow which has only closed higher on 3 of the last 7 trading days, which indicates that sentiment in our market is proving to be more bullish and resilient than the US market. In previous reports I indicated that the down move in the All Ordinaries Index could occur between 18 June and early July, therefore the volatility we have experienced this week could just be a last burst of selling pressure before the next run up occurs.

I still believe prices will rise for the next 3 to 5 weeks to reach the yearly high I have been expecting. Therefore we should see the market settle over the next week and move up strongly once again to my target of between 4200 and 4600 by late July. As always we need to be prepared in case the market decides it is now moving down into the yearly low that I expect will occur sometime between September and November. Therefore I encourage all investors to use stop losses and avoid any leveraging unless you are a really experienced trader.

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 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

Many people buy stocks because they perceive them as cheap, but just what do we mean by cheap? Is a stock that is falling in value cheap? Maybe, provided it doesn’t continue to fall once you purchase it. Is a stock trading under $5.00 cheap? Cheap in comparison to what? Is a stock that is trading under a $1.00 good value? Possibly although many of these stocks are referred to as ‘penny dreadful’ stocks and for good reason.

It is not how many shares you own that counts - owning a $0.10 share means you will hold more shares than if you bought a good quality blue chip share at $10.00. But the blue chip stock has more potential to make a 10 per cent gain than the $0.10 stock and is probably far less likely to fall dramatically in price. Either way a 10 per cent rise in either stock will net the same result.

While the price of a share may be considered ‘cheap’, in my experience, when investors buy cheap stocks trying to get a ‘good buy’, they usually end up saying ‘good bye’ to their money.

So what can we expect in the market?

Over the past few days the All Ordinaries has risen, which is in contrast to the Dow that until last night had been falling over the past week. This display of resilience and strength on our market may signal an end to the current weakness in the All Ordinaries Index that we have experienced since 15 June.

If this is correct then prices will continue to rise for the next 3 to 5 weeks to reach the yearly high I have been expecting. While I believe the yearly high will occur in the last week of July, we need to be aware that it could occur at any time, with the possibility that it may also occur in early August. I still believe the market will rise to between 4200 and 4600 by late July, however, given that the recent move down was longer than expected in price, it is more likely that the lower end of my target will be achieved.

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 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

http://www.youtube.com/watch?v=6xCUOT7XKhg

Australian’s have been in a negative savings pattern for almost a decade as they continue to borrow more than they earn. This has been fueled by the easy lending polices and heavy promotion from institutions offering credit. While in the current environment the impact has not been as severe as what has unfolded in the US with the sub-prime crisis, the potential is there if this scenario continues.

What is compounding this issue is the fact we have reduced the cash reserves available in Australia because the institutions continue to invest large sums of money offshore based on the so called need to diversify. This means the banks have to borrow from overseas institutions at higher rates, which has the impact of reducing their margins.

In my opinion, the more people take advantage of self managed superannuation the better it will be for the country. This is because more cash would potentially remain in Australia, but more importantly it means there would be more competition, which obviously has the flow on effect of adding more value to the individuals who operate the funds.

So what can we expect in the market?

In my last report I indicated the market was likely to rise over the next couple of weeks from its current level through to 4200 points and beyond before we experienced a small pull back between 18 June and early July. As it turns out the pull back started a few days earlier than I anticipated given that the market has fallen away this week. This current move down is nothing to be concerned about, as I believe it will only last a few more days into early next week before the market turns to rise once again to my target of between 4200 and 4600 by late July.

As I have indicated before, now is not the time to take on any debt to invest in the market, unless you are highly experienced, as I believe the market will turn bearish again into September.

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 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

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

With the changes announced by the government’s recent budget in regard to superannuation, many Investors are now looking to top up their super fund prior to the end of the financial year. But I would question whether this is really a wise move. For over 20 years, superannuation has been promoted by governments and the financial services industry as one of the best investment vehicles we can use to prepare for retirement. While it does have some merit, I have never been a big advocate of having my money tired up in an investment vehicle that is so restrictive and constantly changing. When I was in my 20’s I couldn’t be certain about what the superannuation landscape would be like in 20 years, and now 20 years later I could never have imagined what has occurred.

Given the constant changes, you have to wonder whether we should be putting so much emphasis on this investment vehicle. Obviously the tax benefits of superannuation make it attractive. But with the constant changes implemented by each respective government, retirees or those nearing retirement have less certainty and indeed security; therefore I believe there is a growing argument for investing less in superannuation. While an investor may pay more tax on investments outside of their super, it does provide more flexibility and the opportunity to achieve greater profits with certain investment options that are prohibited by super funds.

So what can we expect in the market?

The market has continued to trade up over the past week as expected; however, I am alarmed by the number of investors I have heard who are blindly buying shares without any real strategy simply because they think they are cheap. Many are also looking to borrow money to accelerate their returns or buying speculative small cap shares, which is even more alarming. While the market is currently bullish, I believe this will be short lived with it highly likely to return to being bearish by around September, which will catch out many unwary investors.

In the short term, I believe the market will rise over the next couple of weeks from its current level through to 4200 points and beyond before we experience a small pull back between 18 June and early July. Last year the market peaked at the end of May and then fell heavily, therefore right now I am preparing for the yearly high to occur any time from now onwards. That said my expectation is that the yearly high will occur some time in late July or possibly the first week of August.

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 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

http://www.youtube.com/watch?v=PI5PFVLfmG0

The economic figures released this week suggest that the economy is in a better condition than many expected, however, is this outcome really a product of good management or good luck?

What has worked in the governments favour is that the Australian dollar traded below the $0.70 USD level for most of the March quarter, resulting in exports increasing which in turn helped the economy technically avoid the “R” word. However, the Australian dollar has risen 14 per cent since 1 April and at one stage was up nearly 16 per cent, so it will be interesting to see what impact this has on the current quarter.

I don’t think anyone in this country believes we are not in a recession regardless of the technical aspects. We need to be cognisant of the fact that things may get worse before they get better. We also need to be aware that even though the share market is bullish right now, we shouldn’t become complacent as conditions could change very fast as we have seen many times in the past 18 months. For now, enjoy the sunshine while it lasts.

So what can we expect in the market?

In the past week, the market has risen quite strongly, in what is a very welcome bullish run, which for most people is reliving some of the pain experienced in the past year. That said, the market did fall away yesterday and may continue to do so for other one or two days although this is nothing to be concerned about. I still expect the All Ordinaries Index to rise over the next 2 to 4 weeks from its current level through to 4200 points and beyond before experiencing a small pull back between 18 June and early July. Given the strong movements this week, my upper target for the yearly high is around 4900 points by late July.

I believe the market will fall heavily in September and then rebound in October before falling away again into the yearly low in November. I need to stress that now is not the time to be borrowing large sums of money to put into the market to make up for past losses unless you are a highly experienced trader. Even, if you are experienced, I would still be very conservative with any leveraging.

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 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