wayneL
VIVA LA LIBERTAD, CARAJO!
- Joined
- 9 July 2004
- Posts
- 25,947
- Reactions
- 13,236
Might have something to do with the trillions upon trillions of helicopter money around the world, no?
Might have something to do with the trillions upon trillions of helicopter money around the world, no?It seems bizzare that the asx is rallying up, even if we are flattening the curve. We will still be stuck on restrictions for some time. The longer it drags on the more it should fall. Or at least stagnate.
I see the market as having a lot in common with the fact that Perth is having a heatwave at the moment.
The heatwave doesn't change the fact that it's now almost half way through April and we're rapidly running out of days where such a thing is even possible with winter fast approaching. Much the same with the market in my view - sure it's warming up at the moment but we're heading toward winter not summer so far as the seasons are concerned.
Might have something to do with the trillions upon trillions of helicopter money around the world, no?
Isn't the US treasury going to buy junk bonds now?Might have something to do with the trillions upon trillions of helicopter money around the world, no?
Given they're well known as being a somewhat conservative organisation in all regards and have a history that goes back 150 or so years, they've probably got a pretty thorough "no stone unturned" approach to financial risk.
There's a lesson in there - an organisation that is neither a financial nor a medical one but they identified and protected themselves from a risk that most others ignored.
Does that mean Large caps are immune? I am not so sure, but I guess time will tell...Time to short the XSO and go long ILC???
For what it's worth - I can't say I'm seeing a lot that's terribly cheap.
Big 4 banks are almost certainly priced too high.
Are you sure ?They still trading noticeably lower than they were in the last months before the pandemic. They will bounce back to those heights over the long term.
How long is the term you're thinking?They still trading noticeably lower than they were in the last months before the pandemic. They will bounce back to those heights over the long term.
Does that mean Large caps are immune? I am not so sure, but I guess time will tell...
How long is the term you're thinking?
Months?
Years?
Decades?
It's bloody long term if your normal trade horizon is a few minutesHow is months long term?
Think 5 - 10 years from current levels
Interesting. Not happening in the short term though. It's the small caps that are having a big rally at this point in time. But that could be short lived if there is any hiccup in the current rally. The punters will run for their life, so you might be proven right eventually...No not at all, but the spread between 2 may increase
Not the same for Australia, please post supporting data.
Most recent GDP figures for Q4 2019 put annual GDP at $1,994,874,000,000.
The most recent total market cap figure on the ASX from Feb is $2,026,292,000,000.
Assume Q4 2019 GDP number will be steady for Q1 2020 (let's say we grew in Jan+Feb and wiped out in Mar because of slow Gov response).
That puts TMC/GDP in Feb at 101%
All Ordinaries, as a crude proxy for TMC has declined 29.4% since end of Feb.
That puts TMC/GDP currently at 75%.
Now the TMC number comes from the ASX and assumed to be reliable. GDP comes from ABS but RBA also has their own copy of the data. So the "TMC/GDP" value depends a lot on how you calculate GDP. I used sum of last four quarters of "Gross national income: Current prices" numbers from the ABS to calculate above, but they themselves use "Gross domestic product GDP, Chain volume measures - Annual" which is slightly different. I notice you posted GuruFocus chart, they seem to use a different number for both GDP and TMC (WorldBank) which makes the chart look different.
My chart (up to Q4 2019)
View attachment 101646
GuruFocus, imputed to current using ASX300:
View attachment 101647
Some disagreement there about numbers, that is fine, the point is that neither shows valuations as measured by TMC/GDP to be "much the same for Australia", in fact both would show the current price as cheaper (by this valuation metric) than both GFC lows and tech bust lows.
That, of course, is based on the assumption of Q1 2020 GDP being flat against Q4 2019 GDP. GDP is notoriously revised a lot over the years so make of that assumption what you will, maybe all of 2019 GDP numbers will get revised lower over time.
Siblis Research purports to carry Shiller CAPE ratio for many countries. I don't have access to their private dataset but you can see a 5 year sample on their site: https://siblisresearch.com/data/cape-ratios-by-country/
The most recent reading they have up there is from June 2019 is a CAPE ratio of 17.94. You can imagine two Q of earnings data falling off the back of that series and two Q of earnings being added to the front since then. Probably since then the denominator hasn't changed all that much. If we impute a 34% decline in the All Ordinaries since end of June 2019, and assuming the cyclically adjusted earnings denominator is unchanged, we could say the CAPE might be something like 11.
Star Capital, a German fundie, tracks CAPE ratios (and other valuation metrics) for MSCI indexes. https://www.starcapital.de/en/research/stock-market-valuation/
For MSCI Australia they have the CAPE as 18.6 as of 28.02.2020. Now MSCI Australia index AFAIK is something akin to the ASX100, so only the top of end of town really and this will be using whatever is the latest earnings data provided by MSCI probably. But as another proxy we can check it. If we impute a 24% decline in the ASX:VLC ETF since the end of Feb, we could say the CAPE might be something like 14.
Compare this with the US:
- CAPE is approximately 20
- TMC/GDP approximately 100%
Not saying that Australia is cheap or US is expensive (see discussion here for that https://www.aussiestockforums.com/threads/market-bottoms.35299/#post-1062915 ) but only disagreeing with "much the same for Australia".
CC @kid hustlr
Fair but on the high side, so not a bargain and this is based on march market (low) vs march GDP(high)The latest data from ASX is updated with March total market cap.
I see the IMF is forecasting GDP to fall in AU by 6.7% this year.
https://www.abc.net.au/news/2020-04...onavirus-growth-hit/12147818?section=business
Plugging last sum of last 4 quarters GDP * 0.933 into the spreadsheet withthe March market cap figure puts TMC/GDP at ~85%.
View attachment 102266
which would put us approx in the "Fair Valued" category (based on assumptions from US markets)
View attachment 102267
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?