Share Market Wrap 17th Nov 06

This week I watched a documentary about the collapse of Enron which was reported to be the 7th largest company in the world prior to its collapse. While I was amazed at how they deliberately manipulated energy prices which they then profited from, I will say that I was not surprised. Whether we like it or not insider trading does occur and possibly on a more regular basis then we might think. While it is not always possible for the small investor to know the inside workings of a company I will say that it is important that they arm themselves with as much knowledge and independent information as they can prior to making a decision to invest. That said I also believe more needs to be done to ensure a higher level of transparency in reporting by listed companies, so that we don’t experience an ‘Enron’ in Australia. 

So what’s happening on the market?

Since the all time high of 5460.40 on 7 November 2006, the All Ords has fallen just under 2%, which suggests that it is now falling into the low I have been expecting. I believe the market will continue to move down for at least another week or two with the fall likely to be quite sharp in terms of price and time. I am still expecting the market to fall below 5200 points although it could go as low as 5000 points before it finds support. As I previously indicated the recent volatility has caused many shares to move strongly and erratically in both directions although I believe this will subside by the end of next week; therefore we can expect the market to return to more normal trading conditions.