Sharemarket news

Posted on Posted in Finance, Research, Thoughts

Tech bubble about to pop?


Original Post 6/2/18

It’s been a while since we have had a “correction” in the share market (“10% to 20” drop in the value of the sharemarket from peak).

Though the Australian share market hasn’t risen as stupidly high as the U.S. share market, it was at the same high as it was in March 2015 aroun 6000 points (XJO = ASX 200 = Top 200 largest valuation companies on the Australian Stock Exchange).

Going back to October 2007 it was up to 6700 points!

Looking at the historical graphs, if you were ready for it and bought in at the low of March 6 2009 at 3145 points, you would still be (5839-3145)/3145 = 85% up if you did absolutely nothing.

Of course, if you dollar cost average, and regularly bought along the way, you would have a different return.  I’ll do a post on that in future posts.

Going by historical figures, if we go back to the previous recent low, we should drop to around 5000 points which will be a 16.6% drop from a peak of around 6000 points.  Go for a “crash” of 20% or more, then you are hitting 4800 points or less.

If you had the absolute worse luck and just bought in at the peak at 6700 in 2007 and sold at the low of 3145 you would have lost 53% (ignoring buy and sell costs, and dividends).

When I was studying sharemarket stuff a while back, the current event is a “double peak” where often a share would go back to a previous high but won’t go past it and start heading down again. So much psychology in the sharemarket, with fear and greed being a very big movitator.

Still, over the long term, it is said to be still the vehicle to wealth. I’ll have a closer look at that too and see what would have happened to your money if you did certain strategies.

Leave a Reply