Market update

19 September, 2006 at 8:28 am | Posted in Markets | Leave a comment

A steady day on the JSE. Nothing really to write home about. The JSE All Share index gained just 37 points to 21418. Gold slipped back after initially performing well. It lost 0,64% on the day. Financials gained 0,3%. Value traded came in at around R6,5 billion.

Some days on the market are just not that exciting. As some commentators say, It’s just not meant to be a roller coaster ride each day, even though CNBC would like us to believe it is.

For the most part, share prices are priced realistically. That is, they are priced more or less where they should be, and the market as a whole has got it right.

At the moment, this appears to the case. Analysts forecasted earnings are quickly disseminated and factored into prices, while prevailing and estimated discounts rates are applied to these forecasted earnings to assess where share prices should be trading.

Prices have risen, as company earnings have moved up. Importantly so have the ratings of these earnings, both past and future, providing investors with a double whammy of improved earnings and ratings over the last few years.

While the ratings of earnings may be at high levels, company earnings could still come through strongly. Any earnings disappointments into the future however will quickly impact prices and so investors will now need to be more vigilant.

Buying value shares as opposed to buying the index becomes more important than ever.

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