Share Market Wrap 29th June 07
Today is the last day that people can take advantage of the Governments tax incentive to place up to $1 million in super funds. In speaking to a number of people who have set up Self Managed Super Funds as a result of this offer, it is evident that they are unaware of the compliance requirements of running a SMSF. This is supported by the recent Australian Audit Office report, which found that around 25,000 SMSF had failed to lodge a tax return. While I am a strong supporter of investors controlling their assets, three issues need to be made really clear; first, there is work involved in operating a SMSF in comparison to a managed super fund; secondly, if compliance issues are not handled correctly it will potentially cost the investor a lot of money, and thirdly, the individual is the investment manager of the fund, therefore they need to have a working knowledge of the various investments available to them. If people are not prepared to take the time to understand these issues, it might be better for their superannuation to stay where it is.
So what is happening on the market?
It is now 17 days since the All Ordinaries achieved its all time high of 6437.70 point on 4 June and in that time price has swung up and down within a 4% range. Last week I indicated that the current weakness in the market would continue for a number of weeks, which has certainly been the case. I also stated that there was an increased probability that the All Ordinaries was falling into its yearly low but to confirm this we need to see the market fall below the low of 6200.10 achieved on 13 June, which I expect will happen in the next few trading days. Once this occurs I believe the market will continue to trade down to between 6000 and 5900 points before it finds support. As I have previously indicated, it is highly likely that the fall will last into mid July after which the market will trade up strongly once again.
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