Rejoice, investors!
Today's 0.92% jump in the local S&P/ASX200 (ASX: XJO) (Index: ^AXJO) has pushed our market to a fresh seven-year high of 5,983.10 in early afternoon trade.
Not since 16 May 2008 – following what proved to be the beginning of the Global Financial Crisis – has the local sharemarket traded above 5,931 points.
S&P/ASX200 over 10 years. Click to enlarge. Source: Google Finance.
Fuelled by a resilient economy, rebounding property market, low levels of unemployment and falling interest rates; many of Australia's largest companies have experienced exceptional share price appreciation in recent years, pushing the market higher.
The winners
| Company and Stock Code | Share price movement since 16 May 2008 |
| Commonwealth Bank of Australia (ASX:CBA) | 106% |
| Westpac Banking Corp (ASX: WBC) | 48% |
| National Australia Bank Ltd (ASX: NAB) | 21% |
| Australia and New Zealand Banking Group (ASX: ANZ) | 56% |
| Telstra Corporation Ltd (ASX: TLS) | 39% |
| Wesfarmers Ltd (ASX: WES) | 13% |
| CSL Limited (ASX: CSL) | 133% |
The Losers
| Company and Stock Code | Share price movement since 16 May 2008 |
| BHP Billiton Limited (ASX: BHP) | -21% |
| Rio Tinto Limited (ASX: RIO) | -53% |
| Newcrest Mining (ASX: NCM) | -48% |
| Fortescue Metals Group Limited (ASX: FMG) | -70% |
| BlueScope Steel Limited (ASX: BSL) | -98% |
Looking ahead
With interest rates expected to be cut to a record low of 2% when the Reserve Bank of Australia meets tomorrow, many market commentators believe the ASX could have a lot further to run in 2015. Indeed, despite the ASX already trading at an average of 16x last year's profits, if the Australian dollar continues to fall against the US dollar the local market could be buoyed by a larger flow of funds from international investors.
However, whilst it may be great fun speculating over the market's direction, it's vital investors focus on what's knowable (i.e. the businesses which are attached to the three-letter stock codes) and important. The market's direction isn't important nor knowable.
Instead, moving forward, focus on investing as best (and as much) as you can no matter what the market's direction. This is the investing philosophy which has helped Warren Buffett – the world's greatest investor – and his partner Charlie Munger, deliver an overall gain of 1,826,163% between 1964 and 2014 from their company, Berkshire Hathaway.
