Share Market Wrap 23rd May 2008
History has demonstrated that investors, in their efforts to gain better returns, usually end up riding the investment merry-go-round. Every year we see advertisements from various managed funds espousing ‘fund manager of the year’ or claims that their performance is better in comparison to other funds. Obviously the objective is to attract funds from investors who perceive that their current investments are underperforming.
While positive returns always make for a good sales pitch, what investors fail to consider is that the high returns occurred in the past and only those who have already invested in the fund will receive these returns. It is a well known fact that the top managed fund in any one year rarely appears in the top listing the following year. So rather than ride the investment merry-go-round chasing short term returns, investors would be better off taking a medium to long term perspective on their investments.
So what can we expect in the market?
Last week I stated that I expected the market to peak in the second half of this week or early next week before falling away again. This week the market peaked on Monday 19 May, which was a few days earlier than expected, with the resulting fall occurring over the past three days.
The good news is that while the market fell 80 points yesterday, it rallied strongly to close 4 points higher than it opened. This indicates that the market is now more resilient and that the current down move will be short lived. I expect the market to continue to move down early next week before it turns and the bull-run resumes.
Dale Gillham
Chief Analyst
Wealth Within
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