Market Wrap Friday 3-06-11

By Jason Fittler

Bottom of the trading range.

Last week our market took its lead from the US. We have seen the market approach the bottom of the trading range. This does not mean that it will bounce but it does provide a good buying opportunity at these levels.

We have quality companies in Australia and certainly our banks are of the best quality in the world and although their price is falling, the income is stable and the business is solid. We are hearing a lot about the US banks at present, do not be mistaken and compare US banks with Australian banks. The US has a different banking system and regulations then Australia. Always compare apples to apples.

Going forward we have to contend with a high dollar which is killing tourism and will affect our big exporters... interest will go up, it's just a matter of when... and the carbon tax. The Carbon Tax will affect your cost of living and put a large strain on household finance. These issues will affect the direction of the market.

In these times, you need to keep your eye on the ball.  

Remember that the market is made up of individual companies.  And although the large investors such as the Fund Managers will push the price of a company up or down, fundamentally a solid company with good cash flow and low debts will see out these times and provide your portfolio with solid growth in the long term.

In the short term, they will provide you with a solid income return.

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