NZX Gross Index: Wheres it Going?

I think I seem really uninspired to write much because of what I have been through, about the side effects from the drugs I am taking and the ongoing outfall of things around the family.

BUT, there seems to be one thing that is in my uppermost in my mind. The continued march forward in value of the NZX. It is as I write 7479.

Up over 30% in ONE YEAR!!

I do think - if the current reporting season holds up and so far it has - it is headed north of 8000.

You have got to be kidding yourself if you think this is going to go on forever.

It wont.

No matter if your cash is earning close to 3%  - and dropping sticking your money in stocks and shares is not the way out - unless you know when this bubble is about to burst.

And you know what I think about houses.

You should keep your money in the bank you will be ready there when it all turns around and we begin to face inflation and rampant central bank monetary increases.




Share Investors Portfolio @ 19 Aug 2016

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c Share Investor 2016

NZX 50 in Two Year Bull Run

The NZX 50 Gross Index reached a low point of 2418 on 3 March 2009 and since that point has risen 1074 points to close at 3492 on April 21 2011. A rise of 44.5% in just over 2 years.

Almost half that gain has been since mid 2010.

One definition of a bull market (there are others) is that it has moved by 15 - 20% over an extended period and the more than 40% rise in the last 2 more than covers the meaning of a bull market for me.

One way of looking at this is that the market as a whole has come off an incredible low after the October 2008 financial crises and that it is still far from the high of 4333 reached in May 2007 but 2007 was a heady time for stock markets the world over and they were set for a correction from these levels as P/E multiples and other crucial financial data were fast separating from any semblance of real value on the stock market.



I prefer to look at it as more of a realistic valuation of the companies listed on the NZX and anything north of current levels risks going over real valuations. Of course there are some companies that are undervalued still and others that are well overvalued but as an average the NZX is fully priced and at the right level.

Of course the market can still add points from the closing prices last week and it remains uncertain as to whether the current bullish sentiment will remain over Winter without signals driven by results. Look for positive August results to propel the market higher but a good indication of where Winter 2011 was will be profit results out in February 2012.

My stab in the dark 3 years ago on a bullmarket run for 2011 (albeit for different reasons than a 2011 World Cup and post a financial collapse) still looks like a 50/50 call to me.


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c Share Investor 2011

NZX 50 Gross Index: Ready for a Correction?

Just looking at the NZX 50 Gross Index, since mid February it has put on nearly 10% since a market correction in early 2010 dropped the index by a similar percentage.

The index has flattened over April and seems to be taking notice of the similarly flat economic outlook. I see a poor economic "recovery" with flat to less than zero for a couple of years at least (I'm always this cheery on a Monday) and consider that the stockmarket is a little overoptimistic in terms of its overall direction.

If you look West you can see the DOW index (see 2 year chart below) as a more extreme example of ours. It is close to its September 2008 pre-crash levels and you cant tell me their economy is in a better state now, in fact things are worse - see debt levels for an answer there.



As stockmarkets are traditionally 6 months ahead of the economy (that is what the experts say but are they really?) our market seems to be expecting a good recovery but I think investors will be disappointed when reality sets in over the August reporting season and the coming 12 months of real economic facts and figures.

Watch for more opportunities to buy over the coming year as even this flat market will see some good buying opportunities when the stockmarket drops.

Hey, I could be wrong but the market looks overbought.


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Recommended Amazon Reading


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c Share Investor 2010