Why has our stock market NOT followed the US this time?

Tradestation · 4 February 2013

As I noticed that the Dow Jones as hit all time highs our asx 200 is still very far from reaching its peak, yet when the US crashed half a decade ago we were following it both to the peak and through the crash. Why are we not following it upwards as we almost always do, but will probably feel a correction immediately?

Uncle Festivus · 4 February 2013

Re: Why has out stockmarket NOT followed the US this time?

Not yet all time highs, and even less inflation adjusted....

I heard an analyst the other day who said that we are back to all time highs, if you measure in $USD terms?

tech/a · 4 February 2013

Re: Why has out stockmarket NOT followed the US this time?

Tradestation said:
As I noticed that the Dow Jones as hit all time highs our asx 200 is still very far from reaching its peak, yet when the US crashed half a decade ago we were following it both to the peak and through the crash. Why are we not following it upwards as we almost always do, but will probably feel a correction immediately?

We arent printing Money for one thing---to inject into our economy.
We dont have interest rates at next to nothing.
We arent as stupid as the Yanks.

While they will fall fom dizzying heights
we "May" just avoid terminal injury as our height will
be a great deal lower.

tech/a · 4 February 2013

Re: Why has out stockmarket NOT followed the US this time?

Uncle Festivus said:
I heard an analyst the other day who said that we are back to all time highs, if you measure in $USD terms?

If the yanks keep printing money then it has to
dilute their currency against most stronger currencies.
AUD being one of those.
Doesnt help us much though as we look expensive.
But make good investment targets.

craft · 4 February 2013

Tradestation said:
As I noticed that the Dow Jones as hit all time highs our asx 200 is still very far from reaching its peak, yet when the US crashed half a decade ago we were following it both to the peak and through the crash. Why are we not following it upwards as we almost always do, but will probably feel a correction immediately?

Relative strength of S&P500 (Yellow) and XAO(Red). Both in AU$ terms.

craft · 4 February 2013

craft said:
Relative strength of S&P500 (Yellow) and XAO(Red). Both in AU$ terms.

View attachment 50795

Before getting too excited about S&P500 outperformance in the last chart and equate it to money printing or whatever justifying story you prefer in the short term, it’s probably worthwhile considering a longer view.

The real story of fluctuating outperformance is likely to be that one country is largely a resource economy the other is a service/innovation economy.

tech/a · 4 February 2013

equate it to money printing or whatever justifying story you prefer in the short term,

Short term?
Theyve been doing it since the Bush administration (the old man Bush).
Gold standard to the Fiat monetary system.
Just that they are now parabolic!!

I think you under state the situation.

McLovin · 4 February 2013

craft said:
The real story of fluctuating outperformance is likely to be that one country is largely a resource economy the other is a service/innovation economy.

If you compare it to XNJ, the result is probably that we are not too far from where we were 10 years ago.

RandR · 5 February 2013

Tradestation said:
As I noticed that the Dow Jones as hit all time highs our asx 200 is still very far from reaching its peak, yet when the US crashed half a decade ago we were following it both to the peak and through the crash. Why are we not following it upwards as we almost always do, but will probably feel a correction immediately?

IMPUTATION! DIVIDENDS! FRANKING CREDITS!

Because of imputation australian listed companies distribute capital via dividends. (most of the time) they dont hoard capital chasing cap gains for stockholders. The reverse happens in the usofa. You may have noticed a lot of companies in the usofa either dont pay divs at all or small ones at best. Its not as tax effective over there as is here. Its truly amazing when you think about the effect of distribution and allocation of capital that occurs because of imputation.

Absolutely useless comparing two market cap indexes against each other. Try comparing the accumulation indexes over the same timeframe which will give a better indication of the true performance received from holding either.

craft · 5 February 2013

RandR said:
IMPUTATION! DIVIDENDS! FRANKING CREDITS!

Because of imputation australian listed companies distribute capital via dividends. (most of the time) they dont hoard capital chasing cap gains for stockholders. The reverse happens in the usofa. You may have noticed a lot of companies in the usofa either dont pay divs at all or small ones at best. Its not as tax effective over there as is here. Its truly amazing when you think about the effect of distribution and allocation of capital that occurs because of imputation.

Absolutely useless comparing two market cap indexes against each other. Try comparing the accumulation indexes over the same timeframe which will give a better indication of the true performance received from holding either.

Good point R&R, but worth considering that:

Because of the tax system USofA companies distribute a fair proportion of their excess capital via buybacks. When you add buy backs to dividends the distributions are not that dissimilar.

The S&P 500 is a capitalization weighted index. The comparison is not as distorted as it may appear at first glance. Against the Dow Jones Index your point has more impact.

Rebalancing is another issue for comparability, but the major adjustment to me from the OP’s original question is to get the indexes measured in the same currency before comparing.

Ignoring distribution as part of total true return picture is a different question then comparability, on that point I think we sing the same tune there.

Tradestation · 5 February 2013

tech/a said:
Short term?
Theyve been doing it since the Bush administration (the old man Bush).
Gold standard to the Fiat monetary system.
Just that they are now parabolic!!

I think you under state the situation.

Even before I believe, all the way back to the 'Nixon shock' incident.

How come they can keep printing but all other countries would collapse if they did?

tinhat · 5 February 2013

Tradestation said:
How come they can keep printing but all other countries would collapse if they did?

.

Because up until now it has been the global reserve currency - the currency generally used for trade and international commerce. Oil is primarily traded in $US. Many countries peg their currency to the $US.

This is changing however.

Why has our stock market NOT followed the US this time?

Tradestation

Uncle Festivus

tech/a

No Ordinary Duck

tech/a

No Ordinary Duck

craft

craft

tech/a

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McLovin

RandR

craft

Tradestation

tinhat

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