Energy, resources sectors stand out as 2012 equities landscape takes shape
I find that many people looking to buy shares just want to be told what to buy and sell, however it is not that simple. This situation was highlighted to me this week when one of my team received a call from a prospective student who had previously lost over two hundred thousand dollars and now they were asking for advice after losing a further one hundred thousand dollars. What would you say to them?
Firstly, I can’t comprehend losing that amount of money because if you know what you are doing then losing that amount of money is inconceivable. Further, if I toldthem what to do would they follow my advice? Evidence suggests not. Also remember that what is said must be taken in context. Are they looking to invest for the short, medium or long term? Are they looking for income or growth?
The sad fact of the matter is that for the majority of investors and would be traders, all they know is that they want to make money but have very little idea how to do it. Worse still this is only one example of many similar stories that I have heard in both bull and bear markets, and why my advice to you is that your best investment is in educating yourself as ignorance can be expensive.
What do we expect in the market?
Although the Australian share market took off at the start of the week the rise wasn’t enough to convince investors that the risk in the equities market has decreased to a level that justifies a significant increase in exposure to stocks just yet. This is evidenced by the fact that the index is still treading water below 4400 points. However, Australian investors have a lot to look forward to if the past few weeks are anything to go by. If the market continues to unfold in a predictable fashion I believe the next six to eight weeks will shape the equities landscape for the rest of 2012, with some nice opportunities setting up in a number of sectors including energy and resources.
That said we may see a road block in the short term until European leaders find a solution for Greece. But I have always said that a wise investor doesn’t follow news but instead has a plan for their portfolio.