Share Market Wrap 11 Aug 06

Telstra is once gain a major highlight in the news as the company continues to under perform the market. While Telstra is a favourite with many investors, I do not believe it is a good investment. Let’s face it since T2 was offered in 1999 the share has failed to perform falling nearly 52%, which means investors need to see the share price double in order to get their capital back, and this is unlikely to occur in the short term based on poor profit…….. During 2005, while the All Ordinaries index was rising strongly, Telstra fell around 20% and this year it has fallen around 5%. While many investors like the thought of receiving a divided when holding Telstra, unfortunately many have lost around three times the capital they have received in dividends and it’s not looking any better this year.

To say that the All Ordinaries index has frustrated investors and traders over the last few months is an understatement. Just when I think the market has settled back into its normal patterns, it turns around and does the opposite of what I expected. The good sign is that even though it has not risen like I have been expecting, it has not fallen either so we can still be mildly positive about the next few weeks. This lack of direction has held back many from investing including me, but what I know is that good times never last and neither do bad times, so eventually the market will pick a direction and moving strongly when it does. Recently I have been expecting the market to rise up to around 5200 points, but because of the lack of direction we could see the opposite being the market fall away. If it does start to fall away then I would suggest it will fall below the low of 4726 achieved on 14 June and when it does this will definitely confirm the longer term bull market as being over.