The Market Wrap 24-5-13

By Jason Fittler

The market pulled back around 4% on Thursday and Friday last week.

The week started with profit warning in the service sector related to mining which saw the industrial sector pull back.

We also saw the consumer discretionary, telecom, energy and utilities hit hard towards the end of the week.

The pull back started when the US Federal Reserve Chairman Ben Bernanke warned that tightening monetary policy could stall the US recovery while at the same time noting that continued positive economic data could lead to the central bank reducing the stimulus.

The smart investors have been well aware of this for some time as such cautious on the recent market gains.

The US economy has been held up by the Feds, this is also part of the reason for the gains in the US share market over the past 12-months.

At some point the music will stop and this was our first warning.

Expect to see further pullbacks in the market over the next 12-months as the feds prepare to ease stimulus.

Take these opportunities to pick up cheap companies.

Make sure you dollar cost average into the market.

Keep in mind that due to low interest rates, investors will be forced into the market to maintain yields. 

Buy out of favour companies with a long-term view.

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