Ask Colin

I think the share market is currently (end July 2001) in phase 2 of a Bear market, that is, Bear market phase 2, Do you agree? Do you provide a service for investors to receive say regular update of your thoughts on the market in general or in detail format?

I think the share market is currently (end July 2001) in phase 2 of a Bear market. Do you agree? Do you provide a service for investors to receive say regular update of your thoughts on the market in general or in detail format?

By choice, I am not a licensed adviser. I prefer not to give advice to people, rather to teach them how to arrive at their own decisions. I will respond to your question, because it is an interesting one in theoretical terms. However, my comments are in no way intended to be advice to pursue any particular trading or investment strategy. This you must decide for yourself, or seek competent and licensed advice.

In terms of what is happening around us - companies issuing earnings downgrades and announcing decreased earnings, combined with some high profile failures, it certainly feels like phase two of a bear market has begun. However, there is a problem, because the Australian share market has recently made new all-time highs and has not given a clear signal that the bear market has begun.

However, when we look at the Nasdaq, the S&P500, the FTSE100 and the Nikkei225, there is no doubt the overseas markets are in a bear market. Only the Dow Jones Industrial Average is holding up among the major indices.

So, how do we interpret this for Australia? I think that we have to say that the Australian share market is still in a bull market. However, the risk that it will follow the overseas markets down must be extremely high.

I have put my strategy ideas down clearly in my recent writing, so you must take those and decide your strategy.

I will be writing the Trend Trader column every month in Shares magazine. This column is devoted to my view of the market. As it is a monthly publication and the column is written about two weeks before printing, I take a medium to long-term approach.

The short-term picture is dealt with in my Trendlines column in Shares Weekly. I comment on the overall markets whenever there is anything significant to report. If not, I just discuss individual stocks as I do in the Trendlines column in Shares magazine.

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