Just digging through some data I have, unfortunately I have data for commodities going back hundreds of years, but not really for Australian Stocks, only back to 1981 or so.
What I have to show you here really annoys me as I don't like to use a index seeing the components of a index change and thus change the underlying nature of the index, also I think index's are bias as they always incorporate the top stocks - growing companies and the other companies often a fair percentage are simply forgotten about which gives a false perception of the true nature of the stock's which I consider most important. The Dow might have been to the 14,000's but of the 12 original companies, only one remains strong with the rest dissolved, broken up or absorbed over time... stocks always go up... such is the false impression index's have given to the financial arena..
Bellow is a graph of the Australian Market back to 1875.
The slop of which is about 5.5%pa (compounding rate). Evidently running on the blue line is not sustainable long term.
The US markets, when doing this, have a tendency to simply go sideways for 20yrs or so which is what happened during the early 1900's and in the 1970 & 80's, naturally the crashes of 1836-1840 (from memory) and 1929 - 1932 took it right back to the cheap line. The S&P 500 is suggestive that this could be the case again, just a long term sideways move. Although the Dow Jones has done much better, my point above about what stocks are included should be taken into account with only 30 stocks in the index, stocks such as Boeing have been principal drivers of the Dow's rally. GE is generally a good stock to look at and its price action is supportive of the S&P 500, in fact GE is hardly even off its 2002/03 lows which might be a good long term indication to the health of the US markets as a whole.
The Australian market hasn't shown a tendency to go sideways to correct a long term overbought position, although once again the stocks in the index these days might change all of that. However what the above graph shows, when the Aussie market corrects long term, its just a slow long term bull market which corrects itself.
The point is, it could be time, long term to look elsewhere for returns. Without having data, one could only imagine where the Japanese market is at the moment in relation to its long term thresholds. If this market (Japan) is further belted in this down turn, then investments could be made here with mammoth long term potential.
(20min delay)