The Market Wrap 27-1-2012

By Jason Fittler

Our market continues to move up albeit at a slow pace.

As you can see in the below chart the rate of the increase is slower but steadier then the previous moves up. This could mean that we are moving into a period of the market stabilization. The volatility since the start of January is less than in the previous months.

It is still a common thought that the market will fall further and there is still worst to come.

As investors we must be careful not to get confuse from the media hype. Yes, a recession is coming or is already here. No, this does not mean that the market will collapse.

There was no recession in 2007. In fact most would describe it as boom time. A recession is the result of the GFC, not the cause.

Taking a look around the globe, all of the main markets have had a good start to the 2012-year. Although we still have a long way to go, I expect that 2012 will be a steady year.

I am not expecting any capital growth, I expect that we will continue to see volatility in the market but this will be less than last year. Companies will report modest profits and stable financial positions dividend will for the most hold steady and income will remain the key focus for investors.

The big change in 2012 will be social views; with the purse strings getting a little tighter I expect that 2012 will be the start of the change back to family and community values in Australia.

The 2013 election will be something to witness as will the Queensland State election this year.  Voters are doing it tough and are expecting that tougher times are ahead; they are focused on basic needs at present and will have little time for policy which does not provide services they need.

I will continue to look for opportunities in the market, chasing companies, which have been undervalued by emotional investors and buy these with a long-term view.