The following is my post from February from the "XAO Analysis" thread. Thought it is still of interest:
In 1930 and 1955 the American share market (Dow) was at the same value, after 25 years.
In 1965 and 1982 the American share market (Dow) was almost the same value after 17 years.
From the Dow's high in (1929 at 330) to (2007 at 14000) the American market has increased by 5% compounding over 78 years.
However the market in 1929 was so over priced that 3 years later the Dow dropped by 87% from approx' 330 to 43.
From 1932 (the low at 43) to 2007's high the Dow had increased 9% compounding over 75 years.
From 1982 to 2007's high the Dow had increased 12% compounding over 25 years.
From 1982 to 2003 the Dow had increased by 11.5% compounding over 21 years.
From 2003 to 2007's high the Dow had increased 13% compounding over 4 years.
Australia (XAO / All-Ords)
From 1982 to 2007's high the XAO had increased 11% compounding over 25 years.
From 1982 to 2003 the XAO had increased by 10% compounding over 21 years.
From 2003 to 2007's high the XAO had increased 22% compounding over 4 years.
If we had another 22% rise in Australia in 2008 and the Dow had no growth, this would bring us in line with the Dow's 1982 to 2007 figure of 12% compounding as above.
My guess is that mining in Australia from the likes of BHP over the past 5 years has only added a few percent to that 22% compounding figure above. For example both CBA and WOW both have increased 20 odd percent compounding over the past 5 years.
So the over all market was flat for 20 years, then raised for 15 years, then went flat for 15 years and raised again for 25 years.
What next? Just thinking out loud and tring to work out what I am going to do...
I don't feel safe with my superannuation in shares over the next 10-20 years! I guess alot of people just added to their share super'. Hmmmm
Look out The Debt Bubble.....
Debt bubble.... What Debt Bubble! Hmmm
So what did I do? Put 100% in cash from shares. Taking loss from Japan. Then slowly went back in 20% to ASX shares (D HEAD) and got burnt. (still own some in GRR & GBG only and still burning).
Next is property.
Bought an Acre with a house and a big shed. Will use shed and land on the quite for work (what work I don't know yet). No commercial rent. Also from here I can protect any equipment from any undesirables. Remember they've had jobs in recent years.
Have not sold original house yet. Should have done the transition sooner than now but it took some time to find the right acre. But I still think its not too late to sell and it is on the market now. However I am expecting some decrease from all the media down grading property.
Shares should bounce soon. What you do during the bounce is your choice. Shares are oversold for now.
What have others done or been doing?