Stocks at new highs
Aussie stock indices as measured by the ASX 200 (ASX: XJO) increased to 7,179 today, now exceeding the highs of 2020, and indeed the pre-global financial crisis peak of 2007.
Miners have performed lately on the back of supremely strong commodity prices, and net worth on Aussie household balance sheets has continued to expand to all-time highs.
There are some obvious risks, since globally stock markets are priced at nosebleed levels, largely due to the heavy weighting to U.S. markets.
You can listen to my Livewire Markets buddy Patrick Poke discussing why stocks are (or may be) in a bubble with investment legend Jeremy Grantham in a forthcoming two-hour podcast here.
As Patrick notes in his summary article here, the outlook for commodities may be relatively bright, but there are other risks, and indeed Grantham suggests that global stocks are in a bubble that is about to burst.
The bigger picture for Australia is that global demand for commodities is likely to be very strong over the coming decade, as international countries pledge almost in unison to 'build back better'.
And since Australian stocks have generally speaking not been priced quite so extravagantly, the decade ahead could well prove to be a good one, even if there are some setbacks along the way.
Record household wealth
Australian household wealth already increased to a record high of A$12 trillion in 2020, with land and dwelling assets climbing towards $8 trillion, and it looks like this trend has only accelerated in 2021.
The mean wealth per capita in Australia has thus already increased to above A$450,000.
And indeed, if you think about it, the mean wealth per household in Australia now stands at over A$1 million, which represents a staggering increase from only half that level in 2006.
Drivers have included rising city land prices, the recent strength in commodities, the popularity and success of Australia's tax-favoured superannuation system, and the long global recovery in stock markets since 2009.
Policy has also been largely successful in avoiding dramatic or protracted economic downturns in Australia across the past three decades.
If the prevailing housing and stock market trends persist in the second half 2021, Australian households will prove to be the world's wealthiest by some margin (possibly excluding Switzerland, depending on you preferred metric), as total net worth increases towards A$15 trillion.
