...It's the market . There is very little doubt that the All Ordinaries is heading to 6000 by July 2007 . Forecast earnings are suggesting we are at 14.5-15 multiples . Latent inflation is pretty strong , justifying companies to uplift their selling prices , coupled with sloshing cash that fires up private and governments demand , and the Indo China sybdrome that sucks in every available ore/metal tonne we are able to produce .
A triple positive whummy + only one negative ( shortage of skilled and non skilled human resources ) . In such an environment the monetary policy of RBA is pretty useless IMHO ( RBA cannot produce laborforce and cannot stem IndoChina perpetual growth ) .

Therefore the duopolies of the Aussie market are feasting . Their profits won't stop . They will achieve DOUBLE DIGIT GEPS . And these will push SPs higher n higher .

the market has been aware of this scenario for some time . That is why the ASX indecies are moving up unabatedly . Now this is the FA logic . The sentiment is colateral and can change to produce a much sought after another mini correction . Like its siblings from May and September 2006 they will be short lived .
Just to show how markets are so hot . In our portfolios most stocks are at their near , either highest ever or 12 month peak . Some however have today achieved highest ever : JBM 15.92 , MND 9.12 , PEM 5.64 , SAI 3.80 , TRS 9.35 . This is hot stuff ( multiples are optimistacally stretching out ) , no doubt it is .I say to myself : Whatever corrections are likely to occur , just stay cool eGilmore ...Cheers eG

eG

The total value for my shares has gone up hugely over the last twelve months. I keep thinking we can't have gone up this much and I go back to my spreadsheet looking for the error.

In Sept 03 I bought Centro CNP for our super fund at $3.23. Since then we have had around $1.25 in return of capital and the price of CNP today is over $9. This is a boring old property trust bought as a safe share for a SMSF.

It can't be sustainable in real terms. We have to be heading for either a huge crash or a huge run of inflation. The cpi does not measure inflation correctly because our recent run of asset price inflation (property and shares) is not factored in. How these guys can look at fluctuations in the price of bananas and petrol and ignore the huge increase in house prices amazes me.

There are a lot of baby boomers out there with money in the sharemarket who would be increasing in wealth at a huge rate, without even including the increase in price of their home. Even boomers who have never saved may find themselves wealthy by selling their home and downsizing. Amazing luck for these people.

This newly created money will be chasing the same goods and services, so wages and prices will have to go up. It will also be chasing income, from rent or dividends, and as share and property prices go up, more and more money will be needed to get the same income.

Cheers

LJ

The party will definitely be spoilt by the slow down in US economy and the catch-on effect it will have on the rest of the world. I am sure 2007 will be a rough ride.

Deja Vu ? - I remeber people in the forum saying exactly the same thing in 2006 -, I for one am getting very uncomfortable with my portfolio. All these gains without much effort. To sell or not to sell !

I agree entirely with lainie-jean re inflation and like muhaha am also uncomfortable about share portfolio. Have for some time only been investing in shares with substantial free cash flow and even those keep going north. My biggest holding is cash - am i right - i really don't know.

I know quite a few young couples who have bought houses, started families and have borrowings invested in share market and have quite
high percentage (paper) gains.

I shudder when I read comments of 'this time its different'. The party always ends sometime- meanwhile i prefer to be debt free and am quite prepared to sit on the sidelines and watch.

Cheers
Lyonthom

“We have to be heading for either a huge crash or huge run of inflationâ€

yep, I don't like prediction.

Don't mind positioning, though. We have to learn to lose our sensitivity to daily price, and put ourselves in a position where the assets held produce reliable income streams that will withstand fluctuations. A few flutters on the side are OK, though.

(SK would have put it better.)

CNP n WDC are moving in tandem with either insiders KNOWING that the Christmas sales period was a bumber or / and market positive sentiment that the shopping centres have experienced a cashregister blockbuster .
Both get percentage of turnover I think . Both have overseas shopping centres where similar sprees have taken place .We do not hold property trusts shares bar FKP which has also moved strongly lately ...enjoy the ride , ladis and gentlemen ...cheers eG

Good call, EG

others agree

http://www.sharesguru.com/forum/viewtop ... 9436#39436

Mark Faber is talking of severe correction in assets of all kinds ...That sounds very pessimistic . Non producing future earnings ( such as art n residential property ) could suffer . They usually do .
Other pye in the sky stories definitely will , like the 2000 hitech boom that ended in crash . So far I concur with the greatest guru .
Commodities : If medium term supply is there , severe correction is inevitable . If the demand would still outstrip supply ( that is my understanding with ZINC LEAD and Nickel ) the copper equilbrium would drag them until that point that shortsupply steps in .
EPS producing equities : I see them still able to produce their historical 5 year GEPS ( high single digit , low double digit growth ) here downunder and overseas .
Property trusts , office ,industrial and shopping centres . A mini correction is possible , especially with those that are high in debt , but general economic activity drive their biz usually , and given the expanding economies around the globe , I would say that they might correct for a short period only before going back again
My conclusion is still:Stay cool , eGilmore ...cheers eG

In 87, stocks were obviously overvalued. You could pull out of shares and get 12% interest, or straight into resi property and get 8% rental yields in a capital city. Much more in a bush town. Where would one put cash today if not equities?

I dunno, but I can still see value. Banks, even though they are more expensive than for decades, you can still get 5+ % dividends, fully franked, and they are still talking 10% earnings growth. That's still not bad if interest rates stay low. Property trusts do look expensive though.

Faber is a resources bull isn't he? I know he likes softs, as in grains. I suppose with an economic meltdown it all goes out the window.

I dunno.

Cheers.

The high yielding shares have done well in recent times haven't they. Property trusts especially. Banks now on fairly high PE's.

I wonder if the rush into super is doing this? Here is a report from a paper,..

http://www.smh.com.au/articles/2007/01/ ... ?from=top5

Super is just going from strength to strength.I can't see that changing for a while. Really, shares at 4/5% dividends, and companies with decent growth, in low interest rate times, I find it hard to see how a crash could happen.

OK, I know, an economic meltdown, and it's all out the window. Wheres that crystal ball gone.

I still dunno.

Yeah but all you need is a strong rumor to bring the markets down. Once the media gets involved it starts becoming a self fulfilling prophecy. If enough people get paranoid about it then there is no stopping it.