Not bad this stock market lark, huh?
Last week the S&P/ASX 200 Index burst through 5,500, hitting a three-month high. Commodity prices and commodity stocks continued their death-defying feats, with BHP Billiton (ASX: BHP) jumping 10% over the week.
Over in the U.S., the stock market is partying like it's 1999, with the four major benchmark indexes hitting all-time highs.
According to Bloomberg….
"Investors kept piling into equities…"
"With equities booming, investors are now showing some fear of missing out on the stock market action."
No such exuberance here in Australia… or none that I can detect.
What are we Aussies waiting for before buying into this market?
Interest rates to rise? We'll be waiting a while.
The next market crash? We'll be waiting a while.
Next year, by which time the ASX could be trading as high as 5,900?
Speaking for myself, I've been sitting back, enjoying the party in my portfolio, lead by the massive recovery in my BHP Billiton shares.
What a ride. And fun too, especially as it was unexpected. Blue chip stocks like BHP Billiton rarely gain 10% in a single week.
And now I wonder how long the party lasts. After all, this next four years of a Trump presidency will be — like the man himself — very unpredictable.
When stock markets hit all-time highs, people naturally wonder is it time to sell.
It's a bubble, right?
This whole Trump-effect will wear off in a few weeks, with BHP Billiton shares falling back towards $20, right?
And then there's the upcoming Italian election, with a headline today in the Australian Financial Review saying "Investors worry about looming Italian turmoil."
The Italians go to the polls on December 4, voting on a referendum which proposes stripping much of the power of the Italian Senate.
Italian politics are forever unpredictable. The Italian economy is shot, crippled by debt, an ageing population, shackled by the single currency. According to Karen Marley writing in the AFR…
"The fear is that a political backlash could sweep the deeply eurosceptic Five Star Movement into power, raising doubts about whether Italy could itself question its continued membership of the eurozone."
Brexit, part two, here we come? Itexit doesn't quite have the same ring, huh?
Another nail in the coffin of the euro?
As a reminder, the ASX is up close to 8% since the shock Brexit vote.
The ASX is up close to 7% since the shock Trump win.
So much for the market hating uncertainty, and shocks.
Today, the only thing being hated is this bull market itself.
Hated by investors because they have been sitting on the sidelines while it keeps chugging higher and higher.
Hated by any investor who was scared into buying gold anytime over the past few weeks. Last week, the so-called safe haven fell below $US1200 an ounce, with Bloomberg quoting one pundit as saying "It's not looking great for gold."
You can say that again.
While markets are partying like 1999, they are not in a state of irrational exuberance like they were at the turn of the century.
You remember? When One.Tel was capitalised at $5.3 billion? Less than two years later the company went bust.
Almost by definition, markets are always making fresh highs. As are individual stocks. If you never bought at a high point, you'd never get wealthy investing in the stock market.
Great companies keep delivering. The stock market keeps delivering, over the long-term.
Think blue chip stocks like CSL Limited (ASX: CSL) and Ramsay Health Care Limited (ASX: RMC).
Think mid-cap stocks like Domino's Pizza Enterprises (ASX: DMP) and Corporate Travel Management (ASX: CTD).
Think smaller-cap stocks like Altium Limited (ASX: ALU) and Webjet Limited(ASX: WEB)… although they are not too small any longer, given their strong share price appreciation over the past few years.
Webjet is now one of my very largest personal holdings, courtesy of buying when the shares were cheap, adding to my holding on the way up, holding for the long-term, and pure share price appreciation.
On Wednesday last week, Webjet shares jumped 10% higher after it said it was experiencing strong bookings growth so far this year, and guiding to net profit growth of more than 75% for the first half.
Webjet shares have soared 90% higher so far in 2016. A very good company that keeps delivering, keeps hitting record highs, and with a long growth runway still ahead of it.
Not bad at all this stock market lark.
