What is Happening in the Market?

The 10/10/2008 will be a date which goes down in share market history.

The market fell 8.2% on Friday and as I write this we are still waiting to see what the US will do over the weekend. By the time you read this we will know!

The market is back to the levels of March 2005, it has gone past our bottom of 4200 and at this stage we are not sure if it’s going to stop. What we do know is that the US will go into a Recession and most likely so too will Australia.  We are also confident that we will not see the market recover in the short term. This recovery will be between 6-8 months away.

So what to do.
1. If you have good quality shares in the market which are paying a good dividend hold on and ride out this weakness. However, expect a long wait.
2. If you have cash, buy good quality stocks for the income. My main picks are in the resources sector. I am comfortable to top up your banking and insurance stocks but not to buy large new holdings.

We are now looking for the market to have some strong positive days which will give us an indication that we have indeed seen the bottom. These indicators again will give us the confidence to be buying into this market.

Concerns.
There could be issues out there we’re unaware of… As such we could see the market fall further. If this is true I would expect to see them come to light over the next couple of weeks.

Please keep in mind that there is no rush to do anything. If you are concerned it is OK to sit for now… I don’t expect to see the market recover quickly which means there will be plenty of opportunity to get into the market.