DIY and avoid the endless expertise

SPEAKING with people every day, it seems that Australians are now more than ever overwhelmed about where to go or what to do when it comes to generating wealth and retirement.

The common theme expressed is that while they know they must take control of their money, they feel at a loss as to exactly how to do this.

So while it is estimated that about 70 per cent of Australians are interested in learning more about investing, how many actually do something?

One person said his lack of action was due to being constantly confused by all of the information at his fingertips. He said, “it’s a bit like being a kid in a lolly shop — with so much information how are you supposed to make good decisions?” And he’s right.

Every day we are bombarded with mountains of information from so-called experts on interest rates, the market, recessions, housing bubbles, the Aussie dollar and more.

So how do you know what’s important?

I’ve found that when an opinion comes out about the market or a stock being either bullish or bearish, my analysis often suggests the opposite.

Different opinions are of little benefit if you don’t have the knowledge to understand what’s helpful and what’s not.

So my advice is to select one or two sources of quality information and follow it to confirm that it’s on-the-money.

Being constantly confused or trusting someone’s view can be costly, whereas, having the knowledge to look after your own money requires you to just follow a process, and it’s a lot simpler than trying to work out which opinion is right.

Meanwhile, what do we expect in the market?

Following the public holiday on Monday, the market rallied on Tuesday by about 80 points or 1.5 per cent, before it continued up a further 1 per cent on Wednesday to 5864 points. While this was exciting, the market dropped back, closer to 5800 points on Friday.

The rise indicates short sellers were closing positions while traders were rushing back into shares. To confirm the fall is over, the market must break strongly above 5880 points.

Interestingly, Tuesday’s rise was enough to beat any prior one-day gain on the market since the Trump election rally in November 2016.