Wednesday, September 21, 2011

All Ords Dashboard Update

The Dashboard says:
1. Should have been in 100% cash or 100% short by now (if you short), (but it may be too late to start selling now - see below).
2. There is no uptrend to buy into so don't buy now.
3. Various percentiles of growth and volatility are at about the types of levels for an average/median bottom (based on performance since 1987), so look for a change to an uptrend to buy into.
4. It could still get markedly worse as 2 month, 1 and 2 year percentiles are only at moderately, not extremely low levels.

The macro fundamentals remain negative as Greek interest rates indicate the market thinks default highly likely within 6 months.

The Japanese post bubble experience would treat the All Ord's current  negative growth levels as only around or slightly below median performance (other than for 3 month) and the expectation would be that a bottom was not really likely until negative growth was more extreme (say around 15th percentile) at at least 2 of  1, 2 and 3 years.

Given Zombie Consumers in US and Zombie Sovereigns and Banks in Europe it is quite possible our next ten years will be much more like the Japanese experience than our last 10 years.

David Murray, CEO of Australia's Future Fund is reported (21 Sept 2011- ABC On Line) as saying we likely have 20 years of deleveraging and low growth from major developed countries in front of us.

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