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Earnings and GDP numbers still subdued, Brexit, almost hung Aus parliament and Trump as President yet the market still hasn't yielded to the inevitable - 6 weeks left to fulfil an inevitability - what an opportunity!!!!
Optimist????
Fair value on the chart is just my opinion based on fundamental economic drivers.
Plenty of scope for the market to make noise in the short term , but the red line of physical economic human endeavour marches ever NE, though it has slowed a bit since the GFC. The big question to me remains whether that slowing is temporary or permanent.
Plenty of scope for the market to make noise in the short term , but the red line of physical economic human endeavour marches ever NE, though it has slowed a bit since the GFC. The big question to me remains whether that slowing is temporary or permanent.
Where are all the Bulls?
The green line on this chart is Macro driven - It should in theory be mean reverting. When it's reverted in the past it has driven secular bull markets of around 5 fold. Looks like it may have turned about the time this thread started. If it has peaked it would indicate we have started a new secular bull that should take us to somewhere around 24,000 over the next decade+ (time to achieve will be dependent on inflation rates)
How's that for Bullish?
The green line on this chart is Macro driven - It should in theory be mean reverting. When it's reverted in the past it has driven secular bull markets of around 5 fold. Looks like it may have turned about the time this thread started. If it has peaked it would indicate we have started a new secular bull that should take us to somewhere around 24,000 over the next decade+ (time to achieve will be dependent on inflation rates)
How's that for Bullish?
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I'm here - but I think I've always been a bull, just my bias - apart from the end of the dot com boom, which for some reason seemed obvious to me at the time - but I had not a cent in the market and was simply being a smartie trying to advise my Dad at the time. I think I followed the tables in 'Shares' magazine, and noticed that the divvy yield of the market was getting worse, or something like that.
Heaps of current stuff on US (for example) talks about it being too expensive etc. For whatever reason (and forecasting doesn't effect my investing plan ever), I tend to find the more obscure stuff appealing, where you can justify that the good time are yet to come.
I've not thought about this much. Totally off top of my head - but the planet just came out of a pretty serious funk, in good old, '08. Bet people 9 years after the crash of '29 weren't feeling that great - yet when you look at a chart in hindsight....
Hence, I'm the proverbial, perennial, bull.
Heaps of current stuff on US (for example) talks about it being too expensive etc. For whatever reason (and forecasting doesn't effect my investing plan ever), I tend to find the more obscure stuff appealing, where you can justify that the good time are yet to come.
I've not thought about this much. Totally off top of my head - but the planet just came out of a pretty serious funk, in good old, '08. Bet people 9 years after the crash of '29 weren't feeling that great - yet when you look at a chart in hindsight....
Hence, I'm the proverbial, perennial, bull.
There was once an old saying. Something along the lines of 'pessimists get to loudly express their fears and get a pat on the back before anything has happened, whilst optimists initially look stupid but eventually make money.'
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Hi craft,
I'm young so I want to be bullish, because bearish means a much worse future for me.
I own stocks (mostly LICs with low management fees and ETFs because I'm not a good picker) and I want them to be good investments over time.
I don't want drawdowns on those investments.
I don't want to get fired from my good job that I like because my (listed) employer suffered a massive drop in profits.
I don't want my AUD based nest egg to be worth 0.6 or worse USD again.
But asking myself, what has really changed in a good way or actually been fixed since the GFC (when I was in my 3rd year of Uni)? I mean, whatever caused the GFC...did we change our ways? Or learn a lesson? I struggle to find evidence of that. At least US banks are much lower leveraged than pre-GFC, can't say the same for us, more leveraged than ever
Why are interest rates and inflation forecasts so low?
Why aren't Aussie companies investing for the future? I look at this kind of data http://www.abs.gov.au/ausstats/abs@.nsf/mf/5625.0 and see new CapEx is down nearly half in only 4 or 5 years. This one really scares me.
If prices of important stuff like housing keeps going up at the current rate what does it mean for standard of living which was one of the bedrocks of our awesome society?
Why is our household debt so staggeringly high?
Another scary one I ask myself about: stock market is supposed to be about market mechanism causing efficient and robust capital allocation. But in Australia, every year, 9.5% of every salary earners real productivity is going into the stock market in the form of superannuation contributions, whether those companies represent a good or bad allocation of capital. It can't possibly be efficient, and has to be creating a base of bids for at least some companies that don't deserve it.
I don't mean to come on your interesting thread and be very bearish, just communicating my honest feelings, hope that is OK.
I'm young so I want to be bullish, because bearish means a much worse future for me.
I own stocks (mostly LICs with low management fees and ETFs because I'm not a good picker) and I want them to be good investments over time.
I don't want drawdowns on those investments.
I don't want to get fired from my good job that I like because my (listed) employer suffered a massive drop in profits.
I don't want my AUD based nest egg to be worth 0.6 or worse USD again.
But asking myself, what has really changed in a good way or actually been fixed since the GFC (when I was in my 3rd year of Uni)? I mean, whatever caused the GFC...did we change our ways? Or learn a lesson? I struggle to find evidence of that. At least US banks are much lower leveraged than pre-GFC, can't say the same for us, more leveraged than ever
Why are interest rates and inflation forecasts so low?
Why aren't Aussie companies investing for the future? I look at this kind of data http://www.abs.gov.au/ausstats/abs@.nsf/mf/5625.0 and see new CapEx is down nearly half in only 4 or 5 years. This one really scares me.
If prices of important stuff like housing keeps going up at the current rate what does it mean for standard of living which was one of the bedrocks of our awesome society?
Why is our household debt so staggeringly high?
Another scary one I ask myself about: stock market is supposed to be about market mechanism causing efficient and robust capital allocation. But in Australia, every year, 9.5% of every salary earners real productivity is going into the stock market in the form of superannuation contributions, whether those companies represent a good or bad allocation of capital. It can't possibly be efficient, and has to be creating a base of bids for at least some companies that don't deserve it.
I don't mean to come on your interesting thread and be very bearish, just communicating my honest feelings, hope that is OK.
Trembling Hand
Can be found on the bid
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That's an interesting one isn't it The bid is underwritten yet there isn't much to show from it on a long term trend. Divs I guess?
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XJO currency adjusted , Bullish ??
XJO x AUDUSD
XJO x AUDUSD
skc
Goldmember
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I guess not the full amount is going into the local stock market.... there'd be plenty going into those default "balance" funds which are probably 20-30% local shares (others are cash, fixed interests, international shares and alternate assets). Offsetting against that would be those who needs to take capital out of the market from time to time to fund their retirements.
Seriously though... the share market is ultimately a game of flow. When inflow > outflow the market will march towards the top right corner over time, short term volatility not withstanding. That's why Australian demographics is always scary for me.
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There's rather a lot of things like the ones you mention which give cause for concern. Housing, energy, capital investment and so on all point the same way really.At least US banks are much lower leveraged than pre-GFC, can't say the same for us, more leveraged than ever
Why are interest rates and inflation forecasts so low?
Why aren't Aussie companies investing for the future? I look at this kind of data http://www.abs.gov.au/ausstats/abs@.nsf/mf/5625.0 and see new CapEx is down nearly half in only 4 or 5 years. This one really scares me.
If prices of important stuff like housing keeps going up at the current rate what does it mean for standard of living which was one of the bedrocks of our awesome society?
Why is our household debt so staggeringly high?
We've got some serious problems in the Australian economy with distortions, hollowing out and things stretched to ridiculous extremes and I think the performance of the ASX is sounding a warning of that.
Does anyone seriously think we can continue down this path? Entire industries wiped out, high costs for practically anything and a huge reliance on ever increasing house prices. Something's got to give surely?
I take a look at longer term (10+ year) charts of a lot of stocks which I identify based on fundamental factors. Suffice to say there's an awful lot that have never come anywhere close to recovering from the GFC in terms of the stock price. It's not the odd random company here and there, if you start just bringing up long term charts and taking a look at them then you'll find there's plenty in that situation. The fundamentals of some of them don't look too bad but the stock prices are another story. Take out banks (which are somewhat tied to housing) and resources and there's not a lot holding up the index so far as I can tell.
Seeing this is along term thread, how about taking that chart back to the floating of the Aus $. Then possibility chart it on a semi-log scale and add an exponential trend line.
You might get a whole different perspective on deviation from mean of that ~5000 trough where we started this thread.
Bullish?? **** yer
I take a look at longer term (10+ year) charts of a lot of stocks which I identify based on fundamental factors. Suffice to say there's an awful lot that have never come anywhere close to recovering from the GFC in terms of the stock price. It's not the odd random company here and there, if you start just bringing up long term charts and taking a look at them then you'll find there's plenty in that situation. The fundamentals of some of them don't look too bad but the stock prices are another story. Take out banks (which are somewhat tied to housing) and resources and there's not a lot holding up the index so far as I can tell.
Over this longer term time frame you reference (10+ years) Dividends become increasingly important - especially so when growth is subdued as it has been since the GFC meaning companies need to retain less to fund growth. The only two industry sectors that have not surpassed their pre GFC highs according to their Accumulation Indexes are Materials and Energy. I appreciate your observed perspective but the big picture data paints a different picture. Sure there is plenty of capitalist driven constructive destruction of individual companies but at the entire market level things have resumed tracking upwards.
Why?
(A Case for the optimistic)
In relation to absolute population growth - there is no reason why this can not fall to zero or even negative and we can still be better off on a per population basis - the measure you experience as an individual/family.
In relation to age demographics - either increased productivity from technology unfolds and unproductivity of aging simply offsets the negative effects of what would otherwise be underemployment in the working demographic from technological productivity increases or if that doesn't net out Australia is very well placed with sensible migration of workers to counter the problem of falling productivity from aging if politics don't stuff it up.
If national savings outstrips economic expansion we will get an increase pricing multiple as excess cash chases limited investment opportunities - overpaying for investments undermines returns so it is something to worry about.
Possibly the best measure to keep an eye on it is this ratio and it doesn't look concerning to me at the moment.
Hey good to see at least one Bull.
I would rather be poor and happy than rich and miserable so there's no down side in being a perennial bull to me, though I guess the optimum should be to strive for data driven realism.
I think you are right in your observations of the GFC's effect on broad long lasting sentiment.
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Why are interest rates and inflation forecasts so low?
To some extent Interest rates are low because inflation expectations are low - As real returns (inflation adjusted) are what impact your future purchasing power, maybe this paradigm is not so bad.
Why aren't Aussie companies investing for the future? I look at this kind of data http://www.abs.gov.au/ausstats/abs@.nsf/mf/5625.0 and see new CapEx is down nearly half in only 4 or 5 years. This one really scares me. Less nominal growth expectations due to lower inflation.
If prices of important stuff like housing keeps going up at the current rate what does it mean for standard of living which was one of the bedrocks of our awesome society? The fear you express in to much capital chasing too little supply in the last paragraph is probably more relevant here than in equities.
Why is our household debt so staggeringly high? Household debt is 1.8Trillion and Superannuation Equity is 2.2T. The Market cap/GDP ratio seems to indicate these capital flows aren't effecting the equity market too much but my bet is that the cash component of the super pool is creating liquidity for the banks which is being converted into loans to buy housing. Will it cause problems? Will people simply payout mortgages with Super once they get access - If they do can our society afford to finance their retirement if the primary residence exemptions stay in place and they choose not to fund their own retirement but rely on the pension and pass on their housing wealth accumulation as inheritance instead? Do we become a class society based on housing inheritance?
All the big economic and social questions seem to be around housing! It is the wild card in the short to medium term IMO.
Another scary one I ask myself about: stock market is supposed to be about market mechanism causing efficient and robust capital allocation. But in Australia, every year, 9.5% of every salary earners real productivity is going into the stock market in the form of superannuation contributions, whether those companies represent a good or bad allocation of capital. It can't possibly be efficient, and has to be creating a base of bids for at least some companies that don't deserve it.
I don't mean to come on your interesting thread and be very bearish, just communicating my honest feelings, hope that is OK.More than O.K - thanks for the input.
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There was an excellent podcast presentation on Andrew Swanscott's "Better System Trader" that mentioned the risk of NOT being in the market (some time ago - I'd have to dig back for the episode). Basically that over the long term the trend is up, albeit with some very inconvenient drawdowns along the way, such that a long term investor can't afford to risk not always having at least some size position in the market.
With that in mind, a couple of long term graphs, on log scale, monthly timeframe.
Supporting trend lines I've sketched in (white) for All ords and All ords Accum showing 5.2% and 9.6% long term underlying growth respectively.
Its so easy to get caught up in the emotion of daily and weekly bounces sometimes its worth zooming right out to review the big picture context. I'm not saying for one minute I'd enjoy a bounce down to the white trend line now, or pretty much any time!
You have to also wonder about the relevance of comparing the current XAO market value to the overheated 2008 top.
On this long timescale, it seems possible the XAO might stay under 6000 as long as 2 years, but within that timeframe perhaps more likely it will pop up considerably higher.
With that in mind, a couple of long term graphs, on log scale, monthly timeframe.
Supporting trend lines I've sketched in (white) for All ords and All ords Accum showing 5.2% and 9.6% long term underlying growth respectively.
Its so easy to get caught up in the emotion of daily and weekly bounces sometimes its worth zooming right out to review the big picture context. I'm not saying for one minute I'd enjoy a bounce down to the white trend line now, or pretty much any time!
You have to also wonder about the relevance of comparing the current XAO market value to the overheated 2008 top.
On this long timescale, it seems possible the XAO might stay under 6000 as long as 2 years, but within that timeframe perhaps more likely it will pop up considerably higher.
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