We all want to have more money to live a comfortable life in retirement, but the vast majority of those who retire are hoping for some form of state pension. Why is this when we all have the ability to generate extra cash flow to create more financial security?
Unfortunately, when it comes to wealth creation, there are two major lies we tell ourselves that prevent us from investing or finding ways to generate extra cash flow. First, we tell ourselves we need to be right, but when it comes to making an investment decision, we can’t pull the trigger because we don’t want to be wrong. Historically, the most successful people in the world are like that because they have failed or made more mistakes than anyone else.
The second lie we tell ourselves is that we should not lose. As an educator and stock market commentator, I see this every day when people buy stocks that fall in price, just to watch them fall further. They tend to ignore the fact that they are losing money, and hold on to stocks in hopes of recovering them, instead of admitting their mistake in judgment and quickly going out to realize a small loss.
The Australian stock market has changed significantly over the last 20 years, and previous ways of investing are being challenged. So those who learn to fight it will win, and those who cling to the big lies will continue to fight.
The best and worst sectors this week
The best sectors include utilities as they are only in the green, followed by industry only in the red and the consumer sectors which fell by just over 1%. The worst sectors include a decline in information technology by more than 3%, followed by consumer goods and energy, which fell by more than 2%.
The best indicators in the top 100 S & P / ASX are shares of AMP, which grew by more than 9%, followed by Amcor – by more than 4% and Orora – by more than 3%. The worst stocks include Northern Star Resources, which fell more than 9%, followed by Allken Limited – more than 7% and Bluescope Steel – more than 6%.
What will happen next with the Australian stock market
In the last few weeks, I have stated that, given the way our market has traded over the last couple of years, we need to expect the unexpected, and this week has proven just that. While in the previous week the market traded higher at the beginning of the week only to show weakness and fall by the end of the week, this week the opposite happened.
Before the market closed on Wednesday, the Australian stock market fell nearly 3%, and many investors were worried, and talk of a market crash raised its ugly head again. Then on Thursday the market rose sharply, erasing almost half of the fall for the previous two trading days. Most investors are now wondering whether we should prepare for a further fall or view the current weakness as an opportunity.
Earlier this month, I showed that the all-around index could drop to 7,600 points before rising again. While the market fell to 7,514 points on Wednesday, where it will close today, it will tell us what we can expect to move forward. If it rises to close above about 7,700 points, it indicates that the bulls are not over and the current weakness may not continue.
For now, I recommend continuing to play the game wait and see until the Australian stock market confirms the direction. If it trades lower, then investors may need to sell to protect capital, however, if it trades up, as I suspect it will, there will be great opportunities to buy.
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