Skip to main content

Is the australian stock market overvalued

The Australian Stock Market

With the asset prices of residential housing out of control, what about other asset classes such as stocks? Are they overvalued as well?

As mentioned, the wealth effect stemming from over inflated house prices and high consumer confidence has helped to drive the economy or if anything, overdrive the economy. The effects of this have been seen in the Australian Stock Market.Ooops..

Double digit growth has been the norm for the last three financial years, with the ASX 200 index doubling in four short years from April 2003 to April 2007. Prior to April 2003, it took 11 years for the ASX 200 index to double. The solid growth has seen just about everyone have a flutter, as it is almost impossible to lose money in this present environment. Lets just hope, investors don’t get too complacent.

Australia has about the highest recorded level of per capita participation in the share market in the world; a majority (55 per cent) of adult Australians own shares, either directly (44 per cent) or indirectly (Australian Stock Exchange 2005). Fluctuations in the value of oft-cited indices of market performance, the S&P/ASX200 and the S&P/All Ordinaries, will naturally be a matter of concern to these investors because share prices reflect estimates of future profits. Perhaps everyone, not just investors, should follow the twisting fortunes of the market because they also foreshadow what’s in store for the real economy.

As it happens, the theory and evidence on the association between changes in share market prices and the economy do not support such an inference. There are at least three reasons why there is not a strong association between share market prices and economic growth: competition, market efficiency or rather inefficiency, and alternative sources of capital.

Popular posts from this blog

Best Australian stock forums online ( finance forums)

Many traders and investors use forums to share ideas, learn from the more experienced, or simply to stave off boredom during long hours at the computer. Here we list the known universe of forums, complete with costs, member numbers, extra benefits and popular forum topics. Please post a message on Your 2 Cents if your favourite forum isn't listed here, or if you feel that there's more to add about the day-to-day goings on in your online community.Forum
Cost
Stock comps
Forum areas
Comments
AussieStockForums.comFreeASX by share code, General, Beginners, Derivatives, Commodities, International, Strategies/SystemsEasy to use, independent forum. Aussie Stock Forums has a group of very active and knowledgeable traders. Private messaging available. Australian forum.
Chimes in ExileFreeASX stocks, fundamental analysis, technical analysis, commodities, economics, investment tools The forum has a small group of regular contributors that form a genuine community of investor…

The diggers and dealers forum meet 2011

The diggers and dealers forum has just begun August 1. Its a three day annual event happening every year  at the WA country town of kalgoorlie.2011 Diggers & Dealers forumBig name brokers  keenly watching the event will be MacquarieDeutsche BankBell PotterGoldman SachsRBS MorgansEvans & PartnersHartleysBlack Swan Euroz.Well most other websites will give you the  finer details of the annual meet and greet that happens at kalgoorlie , so we will just stick with the bare minimum of details  and focus on the more enjoyable bits  of information that the dealers require to strike a good deal while in town.Bare detailsWebsite : Diggers & DealersEvents : Program and scheduleWatering holes and entertainment at Diggers and dealers forumPubs , clubs  and skimpy (barmaids) culture in kalgoorlie . There are about 25 pubs in Kalgoorlie-Boulder area and for a city that stretches just 67sq km the number of pubs makes for  a good choice on drinking holesand entertainmentExchange Hotel ( Pa…

List of Australian blue chip stocks

Australian shares gained 0.6 percent on Wednesday led by blue chip miners and financials on strong resource price


The biggest Blur chip stocks traded on the ASX, in terms of their market capitalisation, include:
BHP BillitonCommonwealth Bank of AustraliaTelstra CorporationRio TintoNational Australia BankAustralia and New Zealand Banking GroupRio tintoWestpac
The only stock to do worse than the S&P/ASX 200 is Harvey Norman Holdings Ltd [ASX: HVN]. Even so, it’s a better-than-the-bank 8.3% gain. The others have done much better: Qantas [ASX: QAN] up 36.1%; JB Hi-Fi [ASX: JBH] up 20.5%; Toll Holdings [ASX: TOL] up 25.3%; and Myer Holdings [ASX: MYR] up 37.1%. The benchmark S&P/ASX 200 index rose 27.1 points to trade at 4,977.3 by 2310 GMT. It fell 0.8 percent on Tuesday, its lowest close since February 7.