The market had a good run up towards the end of the week. This was on the back of expected interest rate cuts.
What is also clear is that our economy is not travelling well over the past 12-months.
The 12-billion revenue hole in the 2013 budget is a clear indicator that perhaps we have not been given all of the information.
I do not expect that further interest rates cuts will stimulate the economy but it will provide a saving to the already debt laden companies operating within Australia. This should then provide better profits in these companies and aid them in these tough economic times.
We still recommend investing in companies, which have shown divergence from the ASX 200 over the past 6 months. This is where the value lies in the market at present.
Post the GFC we chased the high yield companies and as expected we have seen these companies have exceptional performance. We continue to hold these companies.
Now is the time to start value investing, this is investing in companies that are currently undervalued.
This is where the growth will come in the coming two years.