Market Wrap 30-9-11 

By Jason Fittler

Another week, more panic selling, desperate news stories and investors once again not knowing what to do.

We saw the market dip below 3900 and bounce back strongly, our technical analysis tells me that it will lower yet perhaps in the next two weeks.

So what do we do?

Picking  the top or bottom of the market is not my game, certainly for most investors it really is not what they are looking for either. The fact is that humans are competitive, we feel that we are being left behind, that everyone is getting out except us, so we most follow suit. The herd mentality is safe and secure, inside the herd you are simply one of many, and you feel safe.

The fact is that we need to stay outside of the herd, and understand what makes up the market.

Understand that you are not invested in the market but in individual businesses. These businesses are strong. Their profit is not determined by their share price but by the goods and services they sell. It is the profit we are interested in, as long as they continue to make profit and pay dividends then long term you will see capital growth.

I am continuing to dollar cost average into the market. I still expect to see the market back up around 4500 points in the coming months and back to fair value of 5000 in the next couple of years. Right now we are looking at tough markets.

I was once told “if it was easy, everyone would do it.”

The next couple of years in this market will not be easy and only a few will tough it out and profit. 

For more information please call me on (07) 4771 4577.