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Time in the market, rather than timing the market

I have been watching your program on Sky News Business Channel after starting a self-managed super fund. I have been waiting for a chance to buy into the stock market. Do you think it is a good time to dive in? And what are your stock tips?

It is a better time now than in late April this year, when the market corrected and nearly became a bear market, which occurs after a 20 per cent dive. However, you never know – we could see another crash, though I am betting we won't.

History has shown it’s more about time in the market, rather than trying to time the market. That said, as a long-term investor, I like to buy good quality companies that pay good dividends when the market dives.

Recently, Charlie Aitken, a prominent broker from Southern Cross Equities, told me he expects a market comeback. Let's hope he’s right. In April, he surprised me with his negativity, but he was right as the market sold off big time.

On my stock tips, rather than giving you shares first up, let me give you my basic approach. I like 20 stocks and I have a big preference for great names that pay fully-franked dividends.

I hold for long periods and buy more when the market dives. I review my portfolio and re-weight so my asset weightings remain steady. I don't go shares-only especially when you can get seven per cent in fixed deposits at any one of big four banks.

And I don't worry when markets fall as I buy names like CBA and BHP, which I think will stand the test of time. I might hold a few small caps to get some alpha returns but I don't punt. I still want good businesses that maybe were beaten up by a very unfair market.

Good luck and keep learning.

For advice you can trust book a complimentary first appointment with Switzer Financial Services today.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Published on: Friday, July 23, 2010

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