"Whilst the 2001-2003 bear market was severe in the US markets it was kinda muted in the XJO, although thats still some pullback in percentage terms, its just the last move from 2003-2007 was freaking HUGE.
I mean seriously what they heck was going to cause a rally of that magnitude?"
One key factor leading to the huge run in Oz market back then was the mineral sector boom on the back of China joining the World Trade Organisation and its industrialisation and infrastructure build-out making a major impact on commodity prices. Eg iron ore and coal exports from Oz to China has exploded, and we saw a lot of companies starting up to grab some interesting looking tenements with a view of exporting our dirt to China (or even to India). Have a look at MMX's chart as an interesting example of what happened to one iron ore exporter with big ideas.
This sort of chart can be found for companies that had hopes of mining coal, iron ore, gold, base metals, PGM, and in the oil and gas sector (including coal seam gas). The lucky ones got taken over during the booming commodity prices. Since then commodity prices have fallen back and the high project construction and production costs in Oz have meant that expected profit margins are much lower or not there. Finally global mineral supply has increased and the slower rate of growth in China's demand for such products means that future profit margins will continue to be pressured - all of which impacts share prices.
During the period in question probably most markets went up a lot (except perhaps Japan's market). I suppose this may have been due to credit expansion.
Finally population growth in Oz was higher due to much higher immigration levels than what had been the case over the previous 25-30 years.
So it was also part of the "virtuous" cycle of the expanding ponzi finance system combined with a mining boom which spilled over into higher wages and asset prices etc.
No doubt there were other factors that others may want to cover. I note that our boom compared poorly with the US boom leading up to 2000, and our market PE multiple would have peaked out far below what the US experienced back in 2000.
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