Market Wrap Friday 27-05-11

By Jason fittler

Market bounces late in the week.

Once again the market holds up in the trading range. As mentioned many times I expect this will be the case for a few years to come yet.

In the short term I expect that the risk is to the down side with a lot of economic and political unrest in Australia. We are starting to see the effects of a high dollar on some of our exporters with CSL announcing that their profits will be down due to the high Aussie dollar.

I expect to hear similar claims coming through from the big miners during the next reporting season.

On a positive note at current prices the banks are looking cheap and paying 8% plus in gross yield, if you have some cash it’ll be worth buying a few more for your portfolio.

Income is the key to a successful year in the market. Trying to trade the swings is a sport for the high risk investors.

Holding only cash may also prove to be a high risk play as well, as picking the top and bottom in this market is impossible.

As such, dollar cost averaging into the market on the swings will produce the best result with the least amount of risk.

If you are only in cash it would be time to start thinking about getting some of this into some core long term holdings.

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