The Market Wrap 21-2-14

By Jason Fittler

A 6-year high this week with the market topping at 5452 on Friday after a 2-week rally.

This is why investing in companies needs to be long-term; price does not always equal value.

Since the start of February, we have seen the market move up 8% that is the sort of growth we chase in a year.

At some point, this rally will end, and profit taking will see the market lower.

The lesson here is simple. Investors will eventually realise good quality investments for their true value.

Six years ago we were in February 2008 and trying to understand the depth of the GFC issue. The market had lost 1400 points from the peak and was about to enter the death spiral for many investors.

The market bottomed a year later in March 2009 at a low of 3200, a fall of 2200 points from where we were in February 2008.

For those who do not understand the market they would point to this and tell you the market is risky, when in fact it was an opportunity.

The recent rally points to a pullback happening in the coming months. And like March 2009 will provide an opportunity to buy.

Median-term I expect to see the market move higher, and back to 6800 in the next 3 years.