Share Market Wrap 7 July 2006

The end of the financial year always brings a mountain of analysis on how the share market and managed funds have performed for the preceding year.

The All ordinaries Index achieved growth of 19.01% to 30 June 06 with the majority of this growth coming from the top 20 shares at 17.07%. In the first half of the financial year to 31 Dec 05 the All Ordinaries returned 11.32% with the majority of the growth once again coming from the top 20 shares at 9.98%. In fact the top 20 shares have been the top performing index within the All Ords for the past 18 months, while in 2003/4 the mid cap and small cap sectors were leading the way. What this implies is that the institutional investors prefer to invest in the big companies, which is why I recommend this is also the place to invest for the small investor as they will find safety in this uncertain market.

Although rising over the last week, as expected, the All Ordinaries Index is far from impressive as indecision dominates the market. This is not surprising given that it is highly probably that the bull-run is all but finished. The longer this indecision continues, the more my view will strengthen. Over the next week I believe the indecision will continue especially early and late in the week. While I believe the overall market will remain bullish, it is highly likely that the market will trade down in the next two weeks.