The rally underway in the ASX is reaching pretty epic proportions. Most of the world is down today but not us, no! Here it is over one year:
And five years which shows the bourse rapidly closing in on its post-GFC high:
But the financial sub-index hasn’t waited to break out, it’s gone parabolic:
Industrials are closing in too:
Materials are lagging. Forget China!
The VIX volatility index is plumbing new lows:
The trailing PE is twirling towards freedom:
And the forward PE is 15, a full bull market condition. With EPS growth forecast for 2013/14 of 12%. I would have though anything above nominal GDP would be a struggle.
It’s put time!
I’m not getting much return on my bank savings anymore. You too, huh?
Let’s all take our savings and put them in the stock market, peeps.
Haha. Sure. Everything on black, please!
Burnt. Again. Many. Wont be.
Yeah I think there’s a lot of truth in that R2M.
Sure, but if you take a risk/return approach, then assuming the risk has not changed for either bank savings or stocks, because the return on bank savings is down it makes sense to increase exposure to stocks.
Can anyone chart the volume being traded? It might just be a small number of exuberant traders….
Once upon a time everyone talked about their housing investments. My ears a sore from everyone telling me how much they are taking out of their savings right now, today even, to pump into shares as they’ve become frustrated.
My taken puts look poo hnh
The disconnect between teh market and reality is epic – buy your shorts, she is goin to blow
As Faber said recently, markets will punish central planners (bankers), always have, always will.
Approx 20% return for Aussie stocks for the year so far and 10% for international stocks.
Don’t think anyone but the most bullish was thinking that – even if no puts then it would be a touch greedy not to just take some profits.
Although i guess now is the time most australians will pile on in through a margin loan…can those finance stocks get even more absurd?
What a rally!
Firstly I’m a bit lazy on a Friday to go looking but wasn’t there are very decent rally back in 1932 after the big initial crash?
After that peak it all went down hill for a very very long time.
(Past performances obviously don’t always predict future performances)
I have just one word – Megabank.
CBA at $65 a share.
It must be good because a taxi driver also told me that now’s the time to get back into shares!
That’s a sure sign of the twirling toward freedom phase.
Interesting, seems like it’s mostly driven through Financials. I’ve done quite well myself over the last year and a bit, although I have zero exposure to Materials or Financials.
It is no secret that I have been bullish about equities for some time now. But I stopped buying shares in early December last year.
I have been scratching my head about the performance of the financials.
The Basel debacle means that the mega-banks remain highly leveraged. It follows that a small error in their asset management will translate to a huge loss in their equity. And their track records of follies are simply dreadful…..
This train is bound for glory.
is that the glory hole?
to all the believers heres what can happen in a relatively short space of time
http://au.finance.yahoo.com/echarts?s=AAPL#symbol=aapl;range=6m;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;
http://au.finance.yahoo.com/echarts?s=HPQ#symbol=hpq;range=1y;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;
as I have said before.. anyone who wants to toss in a few $$$ to the HFT Algo casino can be my guest.. its interesting to watch the Aus divergence but I am sure it will be short lived
I love that the mainstream press has only just started reporting the rally. This should ensure that those that who invested 6 or so months ago can take profits without slippage as the average punter starts to buy in again because they’ve been told the bull market is here.
I’m not so sure why everyone here is so sceptical re shares. I think the key thing to remember is that the Asx is not comparable to property. Property was grossly overpriced before the gfc and then rose even more to be even worse. Shares were overpriced before the gfc but then dropped 35 percent and became good value. 5 years later I still think they are good value when you look at yields etc. no guarantees but I’m moving more of my money into index funds. And yes, 2% after tax in savings is a motivator,but what can you do.
They’re grossly over-valued again now. Folks are right to be scared. The rally is based upon financial repression in Japan (and a bit here), not earnings prospects.
Indeed, earnings prospects in Australia look poor moving into the second half.
All stocks are grossly overvalued now?
Bourse
I’m not expecting uch growth, but the question is whether base on existing earnings and the prospect of future earnings whether the current price is justified. A bank stock paying dividends of 7 percent is a fair investment. They must be generating enough income off existing loan books to pay that dividend. There would have to be loan contraction for the divs to reduce, not simply low growth. And hey, they are govt gteed which means very small chance of total collapse (in which case my deposit might not be safe anyway). Even if the share price drops 50 percent over the next 5 years based on divs I will still be ahead. No guarantees, but its about weighing up the risks.
Absolutely right.
But that’s not a real/secular/structural bull market or fundamentals for me. And therefore not a value or buy and hold rally either.
As I say, it’s a financially repressed rally, monetary rally if you like, with all of the associated risks.
I’m not saying it’s not worth playing. On the contrary, at Macro Investor we advised clients to get on board for the Xmas rally in early December. I’m arguing how it should be played.
As we like to say here at MB, this is a cyclical bull within a structural bear.
I think perhaps everyone here is reacting too much to the index and forgetting questions about longer term strategy. I hope no one is buying or selling because of where the ASX200 is. I hope they all continue to assess the allocation of their investments against the risks of each category and the returns. When TDs were at 8% allocation was easy, but it’s getting harder now.
Those warning against shares (vs property) cite headline index but not fact that a well selected portfolio offers value, growth, liquidity and income over long term.
Australia internationally is viewed as a safe haven, in the right region, with ASX stocks having growth prospects (vs Europe) and above inflation returns.
Is there any correlation between recent strengthening of Euro vs AUD making the ASX more attractive?
When they start talking about investing in shares on sunrise and the today show – you know its time to get out !