Wry & Dry

ASX: Jolly July

The ASX has just had its best July since the euphoria of the post-GFC rally in 2009.


Rewind to 2009

That July (2009), the ASX, including dividends, rose 7.7%.  And those were euphoric times.  Consider the market then rose 47% in seven months!  Nice work, if you can get it.

But remember, then the market was coming off an over 50% fall from its October 2007 peak.  Ah, those were the days.


July 2016 is a different kettle of fish.  There is little market euphoria, just a little buoyancy with the expectation of lower interest rates.

And in 2009 the ASX was trading on a (forward) P/E of about 11, well below the long-term average of 14.7.  So then the market was inexpensive.

In July 2016 the ASX is trading on a P/E of 16.5, and would be higher but for the boost from higher expected profits from recovering resources companies.

So now the market is expensive.

What now?

This is a mini 'break out' and might continue for a few months.  And, after all, it's just the market.  Not your portfolio.