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 Financial Happenings Blog 
Wednesday, December 10 2008

The latest edition of our fortnightly email newsletter was sent to subscribers Wednesday 10th December. 

In this edition we consider the opportunities for investors in the current climate, take a look at the National Bureau of Economic Research Business Cycle Dating Committee, provide a summary of the movements in markets over the past fortnight and look at BT's perspectives on what's going on, why keep investing, and what about super.

 

We are also pleased to continue with the new section looking at case studies this week looking at the topis of superannuation splitting between couples.

 

If you would like to be added to the mailing list please click the following link to be taken to the sign up page - The Financial Fortnight That Was Sign Up Page.

The following is the market news section for the latest newsletter:

 

ASX P/E Ratio and Dividend Yields

 

The P/E ratio is a common broad indicator of the price of shares.  It is a calculation of the price of shares compared to expected earnings.   A higher ratio indicates that share prices are more expensive.  The historical P/E ratio for the ASX has been between 14 & 15.  The dividend yield is the calculation of dividend payments divided by the market capitalisation of the company or index.  The historical average in Australia is around 4%.

 

As of December 2nd the P/E ratio for the S&P/ASX 200 was 8.46.  The dividend yield was 6.71%.


Volatility Index (VIX)

 

Another index we are keeping an eye on in the USA is the CBOE Volatility Index.  This index purports to be a key measure of market expectations of near term volatility conveyed by the S&P 500 share index.  The higher the level of index, the higher are expectations for volatility in the S&P 500 index.  For more information on how the VIX is calculated please take a look at  - www.cboe.com/micro/vix/introduction.aspx

 

As at the 5th of December the index closed at a level of 59.93.  This is significantly down from the 72.67 level reached a fortnight ago and down from the 80.1 level it has reached at its peak.

 

Market Indices

 

Since our previous edition, all growth asset classes have rebounded in value.  The S&P ASX200 Index has risen by 2.15% from the 21st of November to the 5th of December.  It is now down 46.38% from the same time last year and down 44.95% for the calendar year so far. 

 

The MSCI World Index - ex Australia, a measure of the global market, has risen 6.32% over the same period.  The index is down 43.96% from the same time last year and down 43.37% for the calendar year so far.

 

Emerging markets have also experienced positive movement with the MSCI Emerging Markets Index rising 6.52% since the 21st of November.  This index is down 51.98% from the same time last year and down 51.13% for the calendar year so far.

 

Listed property has also risen over the past fortnight.  Australian listed property trusts have risen 0.22%.  The index is down 60.91% from the same time last year and down 56.98% for the calendar year so far.

 

The S&P/Citigroup Global REIT - Ex Australia Index has risen strongly over the fortnight by 14.99%.  This measure is down 31.70% from the same time last year and down 28.23% for the calendar year so far.

 

Exchange Rates

 

As of 4pm the 5th of December, the value of the Australian dollar was up 4.12% against the US Dollar at .6441.  It is now down 26.02% from the same time last year and down 26.94% for the calendar year so far.  Since November 21st the Aussie has risen 3.26% against the Trade Weighted Index, with the index now at 53.8.  This puts it down by 20.53% since the same time last year and down 21.69% for the calendar year so far.  (The Trade Weighted Index measures The Australian dollar against a basket of foreign currencies.)

 

General News

 

Since our previous edition, the Reserve Bank of Australia Board has taken the decision to reduce official interest rates by a further 1.00% leaving the official target rate at 4.25%.  This is the lowest level seen since April 2001.

 

The Australian Bureau of Statistic has released the latest economic growth data to the end of September 2008.  The figures show that the economy grew by 0.1% over the September quarter and grew 1.9% over the year to the end of September.

 

The ABS has also released the latest population estimates placing Australia's population at 21.374 million, an increase of 1.7% over the past year.  Western Australia (2.7%), Queensland (2.3%) and the Northern Territory (2.3%) have experienced the largest growth.

Posted by: Scott Keefer AT 07:00 pm   |  Permalink   |  Email
 
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