Market Wrap 23-12-11

By Jason Fittler

The market hasn’t been at this low since August 2011.

All indicators point to the market moving higher in the near term.

The real questions are when and will it be able to maintain itself above 4500.

If we look at the year in review, the market started the year at 4745 and is currently 4140, this is a drop of 605 points or 12% over the past 12 months. The big catalysis was the European Debt Crisis, which brought renewed fear that another GFC was to follow. The high for the year was 4950 and the low 3850; the market was very volatile over this period.

We still have a week to play out before the year is over and I will not be surprised to see the market move lower once again. I suspect that this will be the last time before the market stages a noticeable recovery.  Fair value for me is 5200, however, in this market I would be happy to see the market above 4500 with reduced volatility.

Many broking houses are saying that 2012 year will see the market close around 4100, these are the same broking houses who put out figures at the start of this year saying that the market will close anywhere between 5200 to 6000. As such I pay no attention to their comments.

I expect that given the fundamentals of the major players in the market that we will have a higher close around this time next year.

2012 is the start of the recovery in my book and by 2015 we can expect to see the market back in full swing.

For people holding cash trying to get the timing right my advice is start to dollar cost average now.

Trying to time the market is too hard for the professionals so what chance does the average investor have.

Look to buy quality companies while they are undervalued and then hold for long-term growth.