This week has all been about two issues, interest rates and the budget.
There are always lots of leaks around the budget and this year is no different. What we do know is that it will not be pretty, the government will have spent many hours looking for ways to save money, the trick is to do this in a way where most people will not be aware of the cuts until they lodge their 2012 tax return.
What is clear right now is that the Government is broke and needs to cut costs. As such I expect a number of changes to the way expense claims are treated and reduced spending.
I do not expect any large tax increase as the Carbon Tax is the solution in this area.
Next issue is interest rates. It was no surprise that rates were kept on hold for now, but be assured that rates will go up in the future. Anyone with large debts needs to start using surplus cash to pay down the debt - if this is not possible talk to your bank and start looking at fixing in your interest rates.
The market this week has continued to slide back as expected, as you can see in the below chart it has moved back into the trading range.
This gives you the opportunity to start looking to accumulate more shares at lower prices.
My view is unchanged, the market will continue in this range for at least 2 more years.
The game play is to buy big blue chips paying high dividend yields and hold. These dips provide you the opportunity to pick these shares up at lower prices.
Do not miss the opportunity, do not put all of your cash in but make sure you keep dollar cost averaging into the market.
I know I will be picking up some bargains.