Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Friday, 6 February 2015

Shares breaking records

New 7 year highs for shares

With interest rates set to fall share markets are on a tear, recording 11 straight days of gains taking markets to a 7 year high.

And futures markets suggest that today will make it 12, with the SPI reading +33 points following gains in the US overnight.

Bank gains

Commonwealth Bank (CBA) has gone ballistic adding another 2.7 percent yesterday to a new record close of $93.27 valuing the stock at more than $146.5 billion.

The major banks are opting to pass on the latest interest rate in full to borrowers.

Record stretch

11 positive trades in a row for the ASX 200 (XJO) represented an equal record from 2003, and today will likely see a new record stretch of gains.

The All Ordinaries (XAO) chart above shows the problem with simply waiting for share markets to crash before investing - the market can continue to rise for a long period of time without correcting, meaning that there can be a significant opportunity cost associated with dividends missed.

This is particularly so in an era when 'bad' economic news can be perceived as good news since it may lead to lower interest rates and/or stimulus.

This one of the arguments in favour of a simple averaging approach to investing.