It was a relatively flat week on the market last week.
Currently I am positive on the market as whole, but still cautious. Sounds like I am having a bet both ways. Here's why.
At present our market is looking overvalued as a whole but this does not mean that the market will pull back. Greed has taken hold. Investors are now more worried about missing out on the upside than they are about losing money. It is very dangerous when the market gets like this. It can cause a bubble. And when a bubble bursts there is considerable downside.
Alternatively the market may hold up or even go higher as greed know no bounds. If this is the case then we expect to see a time of very flat markets as share earnings try and catch up to their price.
The US is running hot. Investors are leaving term deposits chasing yield in the market. So I expect that the market will generally hold up. There could be a small pull back of around 10% when the US stops buying bonds.
In the past year to date the market has produced a return of 21% to the end of October. History is clear that this is well above average as such the market will pull back or run flat for a while.
For the value investor I see no reason to look at selling down.
Simply hold the good quality shares for the dividends.