As commodities fall

Published in the Daily Telegraph, November 2014 by Dale Gillham

As commodities fall and dollar drops, investors look for advice

Investors are currently not overly bearish but they are concerned about the market. Why?

The Australian economy is in a state of flux because commodities have been falling, the dollar is dropping, and is likely to continue to fall, our banks are facing tighter regulatory requirements, and the market is up one month and down the next, not to mention what is occurring offshore. With the recent market pull back, like many investors you may be wondering how you prepare your portfolio for 2015, and what stocks should you buy?' I have some answers.

Every week I receive emails through my website Your Trading Mentor with questions like these and in particular, from people looking for stock tips as they begin to learn the "how to". Can you recall the last time you took a stock tip? Was it yesterday, last week, or maybe last month?

The single biggest reason for the questions comes from many investors having a lack of confidence to make their own investment decisions, which really just points to a lack of knowledge. Of course, taking tips from someone you trust is easy, but in doing this what are you really giving up?

I like to think of the relationship between the tip giver and the taker like this - as an investor you can choose to be a fisherman or fisherwoman, or the taker of fish. While most people I speak to tell me they would rather be the former and catch their own fish, many fail to find out how.

As a fisherman, I learnt how to analyse Top Down, which is the process I touched on in a previous article. First, I analyse the All Ordinaries Index, which represents the overall Australian share market, to see where its headed, then I drill down to the sectors, where I believe the best fish will be next year.

My target for the All Ordinaries Index for 2014 is currently 5800 to 6000 points and although the market is this week trading well below that level, it has achieved short term targets.

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