Share Market Wrap 20th April 07

The collapse of Fincorp two weeks ago and Westpoint late last year highlights the fact that the financial planning industry needs to be more responsible for the type of investments they recommend while investors need to be more realistic in regards to the returns they expect. Unfortunately the lure of high commissions will entice some financial advisors to overstep the line and while the majority of advisors do look after their clients, many investors are seeking higher returns, placing increased pressure on advisors to recommend high growth products in the hope of delivering better returns. It is interesting to note, however, that while clients want high returns they are not necessarily prepared to accept responsibility for the risks that often present themselves with these demands. While I believe portfolio managers should be responsible for the returns they deliver, I also believe that investors should be responsible, in part, for the decisions they make in regards to their investments.

So what is happening on the market?

Whilst the market has traded higher over the last week it has not been without its fair share of indecision. As I have mentioned in my previous reports, I expected the market to find resistance around 6160 points, which has occurred as the All Ordinaries has struggled to close above this level on any week. I also indicated that there was a high probability that the market would peak by April 18, which was confirmed when it fell on Thursday 19 April. Whether this peak is the actual yearly high I have been predicting is yet to be confirmed as we would need to see the market continue to fall away for at least 2 to 4 weeks. If it is the yearly high, then I expect the market will fall to around 5800 points.

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