FYI | May 07 2010
FNArena welcomes Michael McCarthy, Head of Dealing, Asia Pacific at City Index as a content contributor to our service. McCarthy joins the likes of Tim Price, Director of Investment at PFP Wealth Management and Craig Ferguson, Director/Strategist at Antipodean Capital who, among others, inform FNArena subscribers on a regular basis about their market insights and views.
By Michael McCarthy, Head of Dealing – Asia Pacific
Warren Buffet suggested that the path to investment success involved (in part) “being greedy when others were fearful” – that is, buying when most people were selling. This maxim may be useful to traders in the Australia 200 Index after the last three weeks, in which the market fell by more than 9% from its highs.
Although many of the fears being expressed are real, the question remains as to whether the market reaction is proportional. The recent focus on negative news flow around Greece, Chinese efforts to moderate lending and a proposed increase in tax for resource companies has obscured economic data suggesting a recovery is gaining traction. Employment and consumer related activity appear to be picking up around the globe, and in the medium to long term this means a better earnings outlook for most companies.
Recent experience suggests that the market will either under reach or overshoot the support level – for this reason, some more aggressive traders are buying the market now.
The above view had been communicated to City Index clients first. All copyright City Index. All investors should note: Trading involves risk. The material provided here is for general information purposes only, and does not take into account your personal financial circumstances or need.
Cityindex.com.au
