correction is near, page-2

  1. 3,794 Posts.
    re: correction is near/it's crap Some points for anybody who reads that article as I am doing now.

    When looking at the graph yep the 2 price spikes look very similiar but there are some HUGE differences.

    The 1985-1987 spike saw the market TRIPLE in value over the period wile the 2003-2005 spike is showing a measly ~40%.

    Hardly similiar.

    Also concerning the same graph.

    Before rising in 1985 the market ALREADY had 3 years of solid growth behind.

    March 2003 was a 4 year LOW!

    Look for yourselves what the writer is using as evidence

    From the article;;

    The similarities of events are:

    1. The rapid rise of the market.
    2. The time frame in which it is happening.
    3. The sustainability of earnings multiples greater than 23 times.
    4. The frenzied flood of money entering the market.
    5. Nothing lasts forever.

    My Answers,

    1; it's not so rapid when using percentage terms is it & the base price was much lower & coinciding with a potentially(some thought) apocalyptic style event.

    2;well, even if thats right we have another 10 months to go using the time frame theory

    3;Average PE's of 23??? Not from where I am sitting try 16-18 quite normal as far as long term averages go.

    4; Of course floods of money are entering the market. IT is the best value asset class in Australia.

    5; lol. I gotta give him that, nothing does last for ever. Sometimes though things last much longer than what analysts(if he deserves the term) thinks.

    Drawing simple lines on a chart is childsplay. Some draw triangles & they look more educated.

    Understanding the fundamentals behind the chart is the tricky bit.

    Watch for a breakout from the above chart pattern it is more likely than not.

    Resources will lead the Market through.


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