The Market Wrap 12-2-10

Is this the beginning of the end or the start of the rally?

By Jason Fittler

The market has dropped 10% over the past month; once again we have seen the market hold around the 4500 mark. As we have been saying for the past 12 months although the recovery is under way there are still many economic issue to be dealt with and Greece is one of those issues. These economic issues will see the market continue to be volatile over the next couple of years.

At present the technical analysis’s are looking for the market to re-test the lows, the broking houses are talking the market up saying that this is merely a buying opportunity.

For my money it is business as usual. Investing in general will only yield great results if you take a long term view and behave in line with this view.

The market is made up of individual companies; many of these companies have sorted out their finance issues, reduced costs and cut staff. They have done what is necessary to restructure for the changing economy. These companies will do extremely well over the coming 5 years.

Amongst the top 200 companies there are many opportunities to buy quality companies; I am focusing on those which are paying a high yield with a view to holding them for the long term.

A year ago it was hard to say which companies would survive the next 12 months; this is no longer a problem.

Dips in the market are an opportunity to buy quality shares with a 3-5 year view and hold them for the dividends.

Now is a time to look past short term gains, those days are behind us, and focus on what you want your portfolio to look like in five years time.