Thursday, August 06, 2009

Analysis of The All Ords and the Dow Jones

Analysis of the All Ords

I received an economic report with some interesting graphs today... and was playing around with trends and where we are in the cycle...

Below are some of my observations. I would be interested to hear your views.

The All Ords are up by 37 per cent since its low on the 6th of March. But it is still 33% less than the peak in 2008 of 6,500.

Is the following a reasonable projection?

From 1990 – 2000, the Index has gone from 1 – 3
From 2000 – 2010, Is it reasonable to project the Index going from 3-5 (trading currently at 4. Is there potentially a further 20% growth in the next 18 months?)
From 2010 – 2020, Is it reasonable to project the Index going from 5 – 7?

Have the fundamentals changed so much?

Do the BRIC Countries still need to develop infrastructure at a rapid rate, and have they got the MAD (Motivation, Authority and Desire) to do so?

It is my view that it is still a good time to invest in the markets.

I have no doubts that there will be fluctuations during the next 10 years, however, I believe the fundamentals of the the Australian Economy is strong. The Financial System and Infrastructure is robust, It is politically stable, the government is committed to continue to invest in Infrastructure and Innovation, and all political parties are open for business.

Analysis of the Dow Jones

• From 1980 - 1990 the Dow Jones went from an index of 1-3
• From 1990 – 2000 the Dow Jones went from an index of 3-11 (should it have gone from 3-5? Was there an accident waiting to happen?)
• From 2000 – 2010 the Dow Jones went from an index of 11-7-14-7(should it have gone from where it should have been (at 5) -7 – which is where it was in 2008.)
• From 2010 – 2020 should the Dow Jones go from 7-9? It is currently at 9….

Is the USA economy goinig to stay flat for the next 10 years? What are the factors that will enable the Dow Jones go from 9 – 14 in the next 10 years?


The information contained in this publication is of a general nature and is not intended to be nor should it be considered as professional advice. You should not act on the basis of anything contained in this publication without first obtaining specific professional advice. To the extent permitted by law, Ivan Kaye, Ark Total Wealth Pty Ltd; its related bodies corporate, employees and contractors accepts no liability or responsibility to any persons for any loss which may be incurred or suffered as a result of acting on or refraining from acting as a result of anything contained in this publication.

1 comment:

Ivan Kaye said...

Its amazing that the index has now reached 5 (a month after index was published!! where to now??