Investors need to be better informed

Here is the latest installment of Dale Gillham's weekly market report:

The collapse of Opes Prime last week once again highlights the need for investors to be better informed and better educated. It seems that all too often we hear stories of consumers losing money because of companies going bust. Some of the blame needs to be placed squarely in the hands of the regulators who need to ensure consumers are properly informed before they invest, but consumers also need to take responsibility to ensure they understand what they are investing in.

Investors tend to focus considerable attention on returns and costs, and while these are important, consumers need to look beyond this to ensure they are fully informed and educated about the investment they are undertaking. As an educator and fund manager I see many investment opportunities come across my desk and on the surface they generally look pretty good but once I read the fine print, most end up in the bin. It seems that only after these disastrous events do the regulators and consumers look at the fine print and try to do something about it – but as we all know this is often too late.

So what can we expect in the market?

In my last report I indicated that the market was likely to find resistance to the current rise around 5666 points. On Friday, 4 April, the market traded through this level, however, it failed to close above it. On Monday, 7 April, the market tried to rally higher once again but there was not a lot of strength in the move, suggesting the market was about to fall again.

Over the past 3 days the All Ordinaries has fallen just over 2% and I expect this fall to continue at least into next week. If the market is bullish, it should find support soon and start to rise up next week, however as I have mentioned before I believe there is a high probability of further falls to around 4800 points before the market finds support and starts to rise in its next bull run. Remember patience is the key right now.

Dale Gillham is chief analyst of share investment company Wealth Within

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