Market Wrap - Week Ending Friday 2nd May 2008

By Jason Fittler

Last week we saw the market maintain the trading range as expected. Daniel has also predicted that we could see a small drop in the US in the next week which would be followed by a drop in the Australian market. This would provide a great opportunity to invest some of the spare cash you have.

In this market there are a couple of good opportunities, I would recommend that you pay your T3 second installment especially if you have held them since the float as this will also give you 1 bonus share in Telstra for every 25 T3 second installment you make. This is worth around a 10% return.

Second Wesfarmers is having their rights issue, which has been set at a 20% discount to the current price. As such, there is no reason why you would not take this up as well.

Over the coming 6-12 months I expect to see a couple of things happen, first a number of poor quality floats hit the market. These will be floats which were pulled due to the recent drop in the share market. Stay away from these, be aware that stockbrokers have had a large drop in income over recent months and will push these floats hard to raise their income. I have on average received two unsolicited prospectuses each week. All have been filed in the bin.

Second, at the start of 2009 I would expect to see some very good quality floats to come out. Why, because by then stockbrokers will only take on floats which are of a high quality knowing that suspect floats will no longer float. When this happens make sure you are in them. It is easy to be scared off by the recent events in the market but the facts are;

1. Only those in the market will recover recent losses.
2. You only win if you keep playing, do not let fear over come rational thought.

Until next week.