Market Wrap - Week Ending Friday 8th August 2008

By Jason Fittler

Buy low and sell high, a simple enough concept, but one which is difficult when emotions get involved. In the below chart the top line indicates fair value for the market at 6350 the bottom is where the market closed at 4950.

This makes our market 28% too cheap. If you saw a house marked down 30% would you buy? If you saw a new commodore priced to sell at $28,000 (normally $40,000) would you rush out and buy it? If a big screen TV was marked down from $5000 to $3500 would you buy it and then boast to your friends about what a great deal you got?

If you say yes to the above then you should also be buying into this market. 

The market is cheap right now and this happens approx every 20 years. The last time it was this cheap was 1984, sure you can wait until the next time in 2028 but I for one will be taking this opportunity now.

What about you?