Jewels to be found but plan essential

Published in the Geelong Advertiser, June 2015 by Dale Gillham

Australian investors are currently looking for ideas for where the best opportunities are likely to be in the market in the second half of the year.

Let me say that finding opportunities won’t be as easy as it was a couple of years ago, but there are jewels to be found.

Before I tell you my preferred sectors of the market to look for stocks, it is important you are aware of one of my golden rules for investing successfully — always have a plan to protect your capital.

A good plan includes setting a stop loss and there are two main types of stop losses that I demonstrate in my course on share trading — the Trading Mentor Course.

Most important is the initial stop loss, set at the time you buy.

This tells you how much you are prepared to lose if the share price were to fall after you buy.

I suggest an initial stop of about 15 per cent below your buy price.

Among the sectors I will be watching for opportunities are consumer discretionary, financials, health, information technology and industrials.

So what do we expect in the market?

Last week, the Australian share market closed at 5591 points, which was a positive sign of support above the 5500-point level.

You will notice that last week’s range and the range of the week prior were a lot lower than what the market typically experiences, which may mean volatility is settling down.

However, bear in mind that following the emotional fall two wee ks ago, the market may come back to test the recent low, being 5463 points, be- fore the low can be confirmed.

Overseas, there is a lot of attention on Greece and markets are reacting to any news on this front.

I fully expect a deal will be negotiated and the markets will focus on something else.

I suspect attention will return to the US Federal Reserve Bank’s pending decision to raise rates or Asian markets that look extended.

A rate rise in the US is unlikely until September or October, and provided this timing holds, I don’t expect markets to react strongly when the first rise occurs.

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