Market Wrap Friday 18/02/2011

By Jason Fittler

Let’s take a longer view of the market.


The market held its own again this week, with the ASX staying above 4900 and the All Ords sitting above 5000.

The Dow Jones hit a yearly high on the back of positive news in the manufacturing sector.

This year we will see the US market to start to recover in earnest.

I wanted to go back in time this week and look at the market over the past 8 years as shown in the above chart.

What is clear from this chart is from the lows of 2003 the market move up around 150% in less then 5 years peaking around the 6800 level. What most of us remember however is the fall of 50% over the next 18 months with the market bottoming in March 2009. It is easy to lose sight of what you have gained when you focus on what you have lost.

Since the market lows we have seen a healthy recovery of around 1800 points or 56%, but you must be careful not to focus on short-term returns.

Since 01/07/2003 until now, the market has returned 10.5% pa on average. This is better then the expected return of 8% on average.

When we review our client’s portfolios we find that they have normally out performed the market.

What we are seeing now is a stronger market then we had back in 2006 and 2007. Companies have cut the fat, they are once more running lean, and they are well financed and profitable.

For those of you who have stayed in cash, now is your last chance to start getting back into the market.

I am not say invest all of your money tomorrow, but you do need to start focusing on getting back into the market over the next 12 months before it is to late.

If you would like more information please call me on (07) 4771 4577.