The Market Wrap 12-1-15

The first six months of this financial year had a lot of action but no result.

As you can see in the below chart the market closed where it opened.

I expect the rest of this financial year to be flat.

The key take away is the volatility. The market got as high as 5640 and as low as 5160. This is an 8.5% swing in as little as two months.

The only stability was towards December when everyone was on holidays.

So what can we expect for the next six months?

More of the same is my call. Because... 

  • We have no direction from our government
  • A State election coming up
  • Unemployment at an all time high
  • Bankruptcy of small business
  • Low interest rates
  • No infrastructure spend happening, as the senate cannot pass any laws

Business is gun shy and not keen to expand in these conditions. Unless of course you make For Lease signs, as this business must be booming.

What should investors do?

  1. Continue to look for quality companies to buy.
  2. Take a long-term view as it is clear that short-term the market will miss-price companies as we have seen over the past six months.
  3. Focus on income and keep collecting the dividend cheques.