The Week That Was!

At the start of the week we sent out the email alert “The Rats Are Deserting the Sinking Ship!!”. This was followed up with an article in the Townsville Bulletin on Wednesday regards our view on the market. We saw some good strength at the start of the month with three days of a raising market, with the market topping out at 6435 on Monday. We’ve then seen the market fall to 6258 on Friday, which is down 2.7% from this week’s high.

Is this the start of the correction? Time will tell.

We’ve seen the market move from it’s lows in March of 5626 to it’s high on the 6435 on the 4th of June. This is a move of 14%, not bad for 3 months. From here we expect the market to pull back a little further. Please keep in mind that this is a correction, it will be short term and provide an opportunity for you to add to your portfolio at a lower price. Below I have included some of the stock which I still like for the long term and at some point in this correction there’ll be time to start adding these to your portfolio.

BHP, RIO, ABB Grain (ABB), Babcock and Brown (BNB), Toll Holdings (TOL), Woolworths (WOW), MFS Limited (MFS), Macquarie Bank (MBL), Woodside (WPL) and Alumina Limited (AWC) just to name a few. We‘ll keep a close eye on these stocks and let you know when the time is right to buy.  Just one of the benefits of a full service broker.

How long will this correction last? I wish I new the answer to this question. There are a number of factors at work, at a best guess we feel it should bottom around 5800 and we’d be looking to start buying back in around the 6000 mark.

For those of you who have investments in managed funds or want to get started to invest, now is a good time to start making regular contributions into your investments and dollar cost average through the correction. Under dollar cost averaging you will not get the bottom of the market but average out your entry price.

If you would like to know more about dollar cost averaging please contact your adviser at AAM Townsville on 07 4771 4577.