Market Wrap - What Should You Do?

Last week was a week we would all like to forget but I expect that we will see history repeat itself again in the coming weeks.

First let’s recap. The week started on a bad note dropping 2.5% followed by two more down days before we were hit with intra day lows of 4% on last Thursday. The sell off was brought about by a number of major companies in the US falling over. One was saved by the Bank of America the other by the US Feds and poor Lehman Brothers was left to file for Bankruptcy.

This saw the US market fall 4% on Wednesday night which sparked a sell off in all major countries around the world. Our market fell heavily before recovering towards the end of trade to close down 2.5% for the day. On Friday we saw a massive bounce in the market as many feared that they missed the bottom with a 4.5% rally in the market.

On Thursday we saw fear grip the market with both Suncorp and Macquarie Bank being sold down as if they were going broke only to bounce back the next day. This sort of price action is a clear indication that there is a lot of panic out there in the market place.

So what should you do?

Traders – this sort of volatility is a great opportunity, however you must have the right risk profile, as this is a high risk, high reward game.

Investors – continue to hold your core stocks maybe look to sell any bad stocks on a rally. Take the long-term view and only review your portfolio on a weekly basis.

Conservative Investors – it really is too late to look to move to cash. Talk to your adviser and look to off load any high-risk shares. Hold your core stocks.  
 
What will the future bring?

Expect more volatility in the coming weeks. We expect to see 4200 before the pain stops. It is not time to get too excited.

Until next week.