Good Marketing or Good Investment?

http://www.youtube.com/watch?v=Fy2LTjZbT5k

I received an interesting newsletter from a prominent investment institution this week attempting to allay investor’s fears in regard to the share market. Obviously many investors are either leaving the managed funds preferring to invest directly or they are simply losing faith that the funds can deliver.

What concerned me most about the newsletter was their continued barrage about the benefits of dollar cost averaging. When will the industry learn? If the events of the past 18 months have not been enough to prove that this technique is flawed then what hope has the average investor got? Maybe they should read my book – How to Beat the Managed Funds by 20%’.

It is basic common sense that if an asset is falling in value you do not buy more as this will increase risk. In my opinion dollar cost averaging is and always will be a marketing ploy used by institutions to keep ordinary investors channelling money into the managed funds so that they can profit rather than the investor.

So what can we expect in the market?

The bad economic news in the US has again rocked world markets over the past week, with the Australian share market falling below its low in November 2008. This highlights why I have continually said over the past 4 months that even though I thought the November low might be our long term low it was yet to be confirmed and investors needed to be cautious.

Our market has now been falling for 10 months since May 2008 and I cannot find another time in history that this has occurred. It would, therefore, be correct to say that it is extremely rare for our market to fall for so long without at least a few months trading up. The Dow fell 23% over 14 months without rising into 1978, and currently it has fallen 44% over the past 7 months without rising.

Given this, probability suggests that the bottom should occur on our market very soon. It is possible that today could be the bottom and that we will see a strong move up into around mid year to levels of between 4200 and 5000 points. That said it is possible that the current volatility may remain until the end of the month. As always we need to wait for confirmation that the down move is finished before acting.

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

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