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Bear Markets have occurred within 5 calendar years of the last about 15 times in a row since 1960 and we were up to 4 (2012-2016) so it was likely to happen around this time.

Now that we've hit -20%, the good news is that there is nothing else that comes after a Bear Market apart from a Bull Market (and vice versa) so it's just a matter of time.
 
A little early in the month for me, but if these levels stick around for another week or two I will probably be pushing some cash and gold into the ASX to keep my allocations aligned - would be the first serious rebalancing in over a year.

Of course, if there is a rally in stocks and fade in gold I won't have to touch anything :)
 
shouldaindex said:
Now that we've hit -20%, the good news is that there is nothing else that comes after a Bear Market apart from a Bull Market (and vice versa) so it's just a matter of time.
Click to expand...

Well we will probably start a counter trend rally early next month. I think -20% is just the tip of the iceberg and until 3050 (GFC low) is at least re tested and probably broken through there is no point thinking about a bull market.

There is nothing great on the horizon, mining capitulated, manufacturing will be next to nothing within the next 1.5 years as 200,000 both directly and indirectly lose their jobs from the auto industry fallout, banks are getting smashed and more than likely property will follow in the years ahead to make the game complete.

When faith,confidence, and hope are completely annihilated within the masses, that's the time to get back into the markets.
 
gartley said:
Well we will probably start a counter trend rally early next month. I think -20% is just the tip of the iceberg and until 3050 (GFC low) is at least re tested and probably broken through there is no point thinking about a bull market.

There is nothing great on the horizon, mining capitulated, manufacturing will be next to nothing within the next 1.5 years as 200,000 both directly and indirectly lose their jobs from the auto industry fallout, banks are getting smashed and more than likely property will follow in the years ahead to make the game complete.

When faith,confidence, and hope are completely annihilated within the masses, that's the time to get back into the markets.
Click to expand...

A lot of the above has already played out, or has already been playing out for years, and yet Australia's economy continues to grow. Despite commodity prices falling largely back to where they were pre-boom, Australia continues to supply a large proportion of the world's ore, gas and coal. Low prices, yet still massive volume.

As far as there being nothing great on the horizon, in this technology era, new booms and industries can come from nowhere....if we could see it coming, investing would be all too easy.

Maybe you're right, but I think you are focussing a little too much on the negatives here.
 
craft said:
Nothing seems too disturbing here from a Big Picture Australian Valuation perspective.
Click to expand...

Hi craft,

Looking back on the start of the thread missed this chart. Appreciate the effort that must have gone into compiling the AU CAPE. Some questions just for my own edification.

* Is it calculated by yourself or from a resource?
* Is your AU CAPE for which index or universe?
* Are the component earnings weighted by market cap?
* Are you using the monthly average or monthly closing price for the P component? AFAIK Shiller uses the monthly average which provides a smoother metric.
* Would you mind providing the average CAPE across the timeseries?

In return I proffer the following for trade ;)

There is a CAPE chart I keep in my notes which came from
http://www.australiancentre.com.au/...ralian Shiller PE based on AED data_Final.pdf that goes back to 1975 but stops at 2012. One can approximately impute the forward values from there if desired but it looks like their 2011ish value matches close to yours eyeballed.
Screenshot_2016-02-12_13-50-25.png
(h/t The Australian Centre - australiancentre.com.au)

The AU CAPE as measured by StarCapital (German hedge fund AFAIK) almost exactly the same day as your post above has CAPE measured at 15.5. My guess is because they are tracking the MSCI Australia which has less stocks than your universe (about 80 IIRC).
http://www.starcapital.de/research/stockmarketvaluation - FWIW, On a relative basis we are near the undervalued end of the spectrum of global indices.

The "Retirement Investing" blog had ASX200 CAPE at 15 on the dot in early 2013:
http://www.retirementinvestingtoday.com/2013/01/the-asx-200-cyclically-adjusted-pe-aka.html but further updates were not forthcoming.
 
Junior said:
Maybe you're right, but I think you are focussing a little too much on the negatives here.
Click to expand...

That's I was told last year in April when the market was trading at 5900. Everything looked rosy back then.
Irrespective of current economic numbers we are set to follow the rest of the world down in an epic decline.You gonna get people continually buying the dips in search of bargains only to get burnt. Too much technical confluence for anything otherwise.
Precious metals are the only real money so the safest place to be is there, selected gold stocks or cash.
Sure there will rallies and opportunities but need to be very good to consistently win.
 
Junior said:
A lot of the above has already played out, or has already been playing out for years, and yet Australia's economy continues to grow. Despite commodity prices falling largely back to where they were pre-boom, Australia continues to supply a large proportion of the world's ore, gas and coal. Low prices, yet still massive volume.

As far as there being nothing great on the horizon, in this technology era, new booms and industries can come from nowhere....if we could see it coming, investing would be all too easy.

Maybe you're right, but I think you are focussing a little too much on the negatives here.
Click to expand...

Not too sure. The effects of lower commodity prices and the turn downs in manufacturing have not really filtered into annual figures yet. The other is the growing oversupply of residential units and warehouses. Only the last few months are second hand car dealers and wreckers starting to close.

We used to have 182 million sheep and 70 millioncattle, today 32 million and 18 million respectively, our recources saved us here. We can talk about new ideas and technology, but what and what of productivity generated by our people, don't see it.

And all the associated businesses and support services takes time to be recorded.

The next 12 months will see a clearer picture and when we add the darker international scene things are not going to be pretty in my view.
 
gartley said:
:D If you have anything constructive to contribute do it......
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Feel free to go back across nearly 3000 posts of contributions since 2008. Certainly more there to chew on than a throwaway paragraph which provides crystal ball forecasts on everything from property to manufacturing with nary a chart showing a little (let alone too much) technical confluence or substantiating source on any macro claims to be seen :rolleyes:
 
sinner said:
Feel free to go back across nearly 3000 posts of contributions since 2008. Certainly more there to chew on than a throwaway paragraph which provides crystal ball forecasts on everything from property to manufacturing with nary a chart showing a little (let alone too much) technical confluence or substantiating source on any macro claims to be seen :rolleyes:
Click to expand...

Maybe quantity but certainly not quality if they are anything like personal attack of #69....
 
gartley said:
Maybe quantity but certainly not quality if they are anything like personal attack of #69....
Click to expand...

You seem a little confused, to clarify it for you, a personal attack would be if I had claimed you were fat, or stupid or a fat, stupid, asshole. Sarcastically pointing out that a person can't predict the future is not a personal attack. It's merely fact. :rolleyes:
 
sinner said:
You seem a little confused, to clarify it for you, a personal attack would be if I had claimed you were fat, or stupid or a fat, stupid, asshole. Sarcastically pointing out that a person can't predict the future is not a personal attack. It's merely fact. :rolleyes:
Click to expand...

Maybe one can't predict the future all the time. But sometimes the market can be predicted with a high probability given reliable patterns of trend, time cycles and price levels. If you deny that then you are both ignorant and stupid. Back in Feb-April last year such conditions presented themselves, and the most likely terminal to such conditions is a re test of the GFC low. The market is trending down, there is absolutely no technical evidence it will change course any time soon. If you look the pattern of trend of the XAO when it's finished the most logical result is a pattern that looks like either oil or BHP ATM...

All you have to do is look over historical forecasts/predictions on this site made by numerous posters over the years. Every dog, including you will have his day at some time or another.
You prove to us here that no one can EVER predict the market. Even YOU think you can otherwise you would not be in the game.... IPDE (Identify, Predict, Decide, Act)
 
Junior said:
A lot of the above has already played out, or has already been playing out for years, and yet Australia's economy continues to grow.
Click to expand...

It could also be argued that there's a time lag with the effects due to borrowed money and consumption keeping the economy going.

It's like saying we entered a major drought. The crops and grass keeps growing for quite a while as the ground is still moist. Then the grass does eventually stop growing but it still takes quite a while for the animals to eat what's already there. Then we take the hay out of the barn to keep things going for a while longer. Only once that's gone are we faced with no choice other than to send the entire herd off to the butchers and it takes even longer for the dams to run out and the irrigation of crops to come to a halt. So the whole thing takes quite some time to play out, agriculture doesn't suddenly stop the moment it stops raining, but if it's not raining the ultimate outcome is inevitable in due course.

I see the economy as broadly similar. If you cut off or reduce a source of income then it takes quite some time for the effects of that to fully materialise. Jobs weren't cut in mining the day after the spot price hit the peak, it took quite a while, and those who did lose their jobs generally wouldn't have defaulted on any debts the very next day. Etc. It all takes quite a while to go through the system.
 
sinner said:
Hi craft,


* Is it calculated by yourself or from a resource? meself.
* Is your AU CAPE for which index or universe? XAO
* Are the component earnings weighted by market cap? Yes
* Are you using the monthly average or monthly closing price for the P component? AFAIK Shiller uses the monthly average which provides a smoother metric. Monthly close - too lazy to go to the detail of monthly average*
Would you mind providing the average CAPE across the timeseries? Average is 16.8 median is 16
Click to expand...

...
 
 
shouldaindex said:
Just a counter point to the long term trend for ASX Earnings on page 1:

When Inflation Adjusted from 1983, we're above instead below long term trend:

http://2.bp.blogspot.com/-g10Hya513TU/UBRrt35XE_I/AAAAAAAAA3E/dcEWhzHDlag/s1600/120728-2.jpg

That's the beauty of different points of view.
Click to expand...

I think if you updated that chart as it is constructed it would not show us currently above average. for a perspective on "real" earnings I prefer Nominal GDP Regressed earnings (avoids problems with interpretation of CPI as an inflation measure and helps put earnings in context of what seems to be a structural slowing of nominal GDP growth) we are below average on that basis, but not at historical deviations.

The Cape10P/E graphs are also constructed as inflation adjusted.
 

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