Share market major correction 2019?

Hi,

What are your thoughts on a major correction for the stock market this.year? ASX 200 close to it's high while overall economy is not doing well and more interest rate cuts to come are we in for a major fall to the indexes ?

Thanks.

 

It's only expensive if interest rate will increase. At this stage with rates heading to zero, it may even be under valued.

 

Hitting a high does not necessarily imply we're due for a correction.

 

All signs point to a correction being on the cards. But with rates continuing to fall It might still be a while before the music stops.
I don’t see rates going up anytime soon, which is what I think would cause a major correction. Though it doesn’t mean we won’t have a minor correction even with rates going down. But I don’t see how we will have a major while governments around the world keep intervening.

 

If you think sharemarkets should reflect the economy, it seems the risks are to the downside.

 

Marc Faber Blog

As all markets are linked in one way or another the above link is always worth a read..

 

Amateur here. Can someone please explain something to me. We are at all time highs after all these years since the gfc. The top company's have double the PE ratios as to what they were at just prior to the gfc. So although it's an all time high again, people are paying twice as much for the same return in these company's.

Commentators are saying our market isn't overvalued as we only recently hit these highs again, but if I'm paying twice the price for the same return as before, Is this not a massive risk and an over priced market?

 

Have you got a link you can share that shows the current P/E as double the values just prior to the GFC?

I'm looking at this site:
Market Statistics
It suggests PE around average (15 or so) prior to the GFC. And not much more than that now. 16.26 in May 2019. And VAS is quoting PE of 17.5 as at 30 June.

 

What company PEs are you referring to? I doubt that’s the case across the board.

For interest rates at low as they are, the market PE being well under 20 and trading on a 4% dividend yield (plus franking), it doesn’t look all that expensive to me.

As always the market could fall at any time without warning. That’s the risk. If you’re a long term accumulator you’ll welcome that.

 

Hi eternity, are you still waiting for that 20% drop from the 4 year low in feb 16 when you thought you could time the market. Are you still trying to time the market? May be it doesn't pay to time the market .

 

Amateur her also--look back to Nov 2007,all ord's was in the 6600 range --March 2009 the low range was in the 3200 range ,and now as of late last week we are in the 6800 range ..
There are several different scenario's out the but look at just one BHP ,investors line up each day to buy or sell that equity ,and mostly 3 times the value when it was trading just above 15--16 bucks a few years back when it was subjected to varying levels of uncertainty..
Things are always obvious after the fact..

 

Sorry guys don’t have a link now, I’ll try and find it. I was listening to peter Switzer and his team and they were referring to many of the top stocks. CSL/wow/tcl/shl/syd are some I can mention as I’ve recently looked.
I also don’t know what the P/E ratios were prior to the gfc, I’m only going by listening and looking a few stocks up

 

The index denotes nominal 2001 dollars, in real terms the market needs to get to about 8800 to be higher than 2008. Another way of putting it the market is much lower than 2008 because 7000 is only less than 5000 2008 points.

 

5 Myths - VectorVest

 

Why do people get so fixed on the price index. It is only comprises half the returns of the market. truth is if you invested all your money in the market just before the GFC (and didn't sell) you would have been back to your original position by sometime in 2013 and now would have nearly double.

 

Too much success is the enemy for some of the rich and famous..

Dent Research - Capitalizing on the Predictive Power of Demographics

World Debt Is The Achilles’ Heel of This Bubble | Economy and Markets

 

Because doubling your money in 12 years is pretty pathetic when the long term sharemarket return is double that.

 

I'm not sure of the point you are trying to make. If you happen pick the very worst time of the last 20 odd years to invest every cent and still come out OK, what's the problem? Do you know anyone who sat on cash and then invested every cent on the very worst day possible? Most people inest over time and get the long term results.

 

Without providing any hard evidence and statistics to back up my belief here, but the other consideration is if one was to buy now and it rallied another 20% over the next 2 years, and then we had a significant crash of approximately 30%.. is it really all that bad? Theoretically, you could be 10% worse off. While the above scenario is likely to be improbable, is it still possible. Particularly given the 2008 Index in real terms is much higher now than it is today.

Just a thought.

 

The absolute value of the index is not the way to compare and with similar logic an all time high is irrelevant.

The important things to consider are interest rates, exchange rate with USD, other fundamentals such as price to earnings (PE), credit/debt, and CAPE etc.

Interest rates look likely to continue to fall. AUD is weakening. What does that mean for ASX?

That being said, no-one can predict the crash with the accuracy required without having some sort of insider knowledge, which wouldn't include any of us.

All one can do is manage the risk. When the risk is above your tolerance, reduce your risk, and vice versa.