Punters should stick to a plan


Published in the Geelong Advertiser, May 2013 by Dale Gillham

It was only a month ago that I was getting calls from the media asking for my thoughts on expert predictions that we would see two interest rates rises before the end of 2013.

I said at the time that it had only been a month earlier when the opposite was predicted. 

And now that interest rates have been cut, some are suggesting they will continue to be cut instead of rising.

So what does the average person do? I learned a long time ago that predictions are just that. 

The market itself dictates whether it rises or falls, regardless of what anyone wants or predicts. The same can be said for interest rates.

We have to be pro-active not reactive. 

And this means having a solid strategy that we stick to no matter what is going on around us. 

News, world events and, yes, predictions will often make us think about changing our decisions.

So, if you are hanging out waiting for the lowest interest rate before you lock in your loan, you will probably miss out on doing so which is counter-productive to the big picture.

So what do we expect in the market? 

Looking back over the past two months, the Australian share market hasn’t advanced much. 

Some stocks have gone up, some down and others have moved sideways all further signs of a "normal" market.

This week the All Ordinaries Index only just managed to break through the previous peak of 5174 points from March 2013. 

The recent slowdown and the current rise typically indicate how money has been shifting out of stocks that may be approaching highs, or the price of which has changed direction to suggest an increased risk exists by continuing to hold in the short to medium term.

Despite recent activity, my target for the market between 5200 and 5400 points remains. I believe the next move is likely to push the index closer to the upper band of this range over the coming months.

Watch the signs and note the number of companies trying to attract investors through yield.

A move by the masses to an area of investment can suggest a change is on the horizon.


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