Share Market Wrap 22nd August 2008
With the significant pull backs in the market of late, the managed funds have commenced their old clichés’ of ‘time in the market’ rather than ‘timing the market’ in an attempt to allay investor’s fears. The issue I have with this is that ‘time in the market’ is probably the most perpetuated myth in the industry. The reason why we hear the words ‘buy and hold’ or it is ‘time in the market that yields returns’ is because the industry cannot time the market. The funds are simply too large to manoeuvre with any speed. Consequently, the public is cautioned through advertising slogans about the perils of marketing timing.
Many in the industry claim that ‘market timers’ sell when a market is low and are out of the market when the inevitable rally occurs. They assert that market timers’ run the risk of being out of the market at the trough of a decline when sentiment is at it most negative and potential returns are at their greatest. To substantiate this argument they suggest that if you are out of the market on the 20 biggest days that the market is rising over a 10 year period, your return will fall substantially. However, the inverse of this argument is that if you are out of the market on the 20 biggest days that the market is falling, it stands to reason that your returns would surpass the market average over any 10 year period. After all, markets don’t crash up, they crash down.
So what can we expect in the share market?
Last week I stated that the All Ordinaries Index was displaying signs of indecision, and this week is no different. It is almost as if the market is in a holding pattern until reporting season is over given that the market has opened and closed within a 100 point range in each of the past four weeks.
Something has to give as the market cannot stand still. The institutions have accumulated $100’s of millions of dollars over the past year and they are waiting for the opportunity to enter the market. Once they do, it is highly likely that the market will rise. Before you get too excited, however, it is still possible that the market could fall to my next price target of 4300 points. For the market to indicate it is starting the next bull run, it needs to hold above 4800 points in the short term and rise to above 5111points over the next few weeks.
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
Related posts:
Print This Post
EMail This Post
