In writing my latest Eureka Report article, I stumbled across some sharemarket data from the Reserve Bank of Australian website, here.
The great thing about the data that provided is that it is in excel format, and so you can do calculations on it.
There were three data series that I found particularly interesting. The first is the accumulation index. It started from 1 January 1980 valued at 1,000 and is now valued at 34,000. To put it another way, $1,000 invested in the index in 1980 would now be worth $34,000, assuming dividends were re-invested.
The second interesting data series is the monthly PE ratios of the market. The PE ratio (Price Earnings) is a good measure of market value - the lower the PE the lower the market value. The current PE is 14.8, while the average PE from 1980 until now was actually 18.7. This suggest at the very least that, even after three years of great returns, the market is not widely overpriced.
There is also data on the average monthly dividend yield of the market, currently at 3.73%. This is a little below the average of 4%.
All in all some interesting data, and reassurance that on the basis of earnings and yield the market valuations look reasonable.