CIP INVESTMENT MARKET COMMENTARY
Prepared by Peter Collerton, Capital Investment Planning Ltd
2008 was a once-in-a-lifetime event. To find comparable falls in stock markets you have to look back to the depression of the 1930s. Reliable long term data is available on the S & P 500, the index of the largest 500 US publicly listed companies in USD. In the last sixty years there have been ten bear market periods in that index. Below is a table showing their extent and duration with information current at January 9th. (The records for New Zealand are more difficult to illustrate for this time frame because of changes to our indices over the years.)
|
|
|
|
|
August 1956 - October 1957 |
14.7 |
-21.6% |
|
December 1961 – June 1962 |
6.4 |
-28.0% |
|
February 1966 – October 1966 |
7.9 |
-22.2% |
|
November 1968 – May 1970 |
17.9 |
-36.1% |
|
January 1973 – October 1974 |
20.7 |
-48.2% |
|
September 1976 – March 1978 |
17.5 |
-19.4% |
|
January 1981 – August 1982 |
19.2 |
-25.8% |
|
August 1987 – December 1987 |
3.3 |
-33.5% |
|
July 1990 – October 1990 |
2.9 |
-19.9% |
|
March 2000 – October 2002 |
30.5 |
-49.1% |
|
This one, so far . . . Oct 9th 2007 – Nov 20th 2008 |
13.4 |
-59.1% |
Note that the 1987 crash, as we called it in New Zealand, was a mere “blip” in the USA compared to the meltdown that occurred here. Our market fell 55% from September 1987 to February 1988. It was a significant crash that started a little later than in the US, lasted longer and cut more deeply.
Here are the records for the last three NZ bear markets plus the current one.
|
|
|
|
July 1973 – October 1974 |
-36% |
|
September 1987 – February 1988 |
-55% |
|
April 2001 – September 2001 |
-13% |
|
This one, so far . . . May 2007 – November 2008 |
-37% |
We all know that shares move up as well as down and here are the details of some of the rises:
|
|
|
|
|
November 1957 - December 1961 |
50 |
+ 86.4% |
|
July 1962 - February 1966 |
44 |
+ 79.8% |
|
October 1966 - November 1968 |
26 |
+ 48.0% |
|
June 1970 - January 1973 |
32 |
+ 73.5% |
|
October 1974 - November 1980 |
60 |
+ 125.6% |
|
December 1987 - March 2000 * |
144 |
+ 582.0% |
|
October 2002 – October 2007 |
60 |
+ 101.5% |
* With a short period (7 mths in 1990-91) when the market fell then rose.
The S & P 500 dates back to 1923. Yale University has calculated the equivalent return back to 1825. Records show that there have been 129 positive years (70%) and 54 (30%) negative years. The second worst negative year was last year, 2008 (equivalent with 1937), and the very worst was 1931.
as at 31 December 2008
|
1 Year |
3 Years |
5 Years |
|
Avg % p.a. |
Avg % p.a. |
Avg % p.a. |
| Inflation (Jun 08) |
5.1 |
3.2 |
2.9 |
| GDP real (Jun 08) |
1.1 |
1.9 |
3.1 |
| Housing (Sep 08) |
-6.8 |
7.7 |
14.5 |
|
|
|
|
|
| Current 6-month rate 4.8% |
|
|
|
| 6 month Deposit |
7.6 |
7.4 |
6.9 |
| 90 -day Bank Bill |
8.0 |
8.0 |
7.4 |
|
|
1 year ago
|
3 years ago
|
5 years ago
|
| NZD/AUD (rate x years ago) 0.8320 |
0.8811 |
0.9368 |
0.8758 |
| NZD/GBP (rate x years ago) 0.3735 |
0.3801 |
0.3986 |
0.3699 |
| NZD/USD (rate x years ago) 0.5569 |
0.7686 |
0.6961 |
0.6466 |
|
|
|
|
| NZD/AUD (% chg) |
5.9 |
12.6 |
5.3 |
| NZD/GBP (% chg) |
1.8 |
6.7 |
-1.0 |
| NZD/USD (% chg) |
38.0 |
25.0 |
16.1 |
|
% return p.a.
|
% return p.a.
|
% return p.a.
|
| NZSX 50 Gross Index |
-35.5 |
-5.8 |
n/a |
| ASX All Ords Gross Index NZ$ |
-46.0 |
-5.7 |
2.3 |
Hang Seng (Hong Kong) |
-54.1
|
0.0
|
3.6
|
|
Nikkei 225 (Japan) |
-47.1 |
-11.6 |
-3.2 |
| SSE Comp (China) |
-69.4 |
22.2 |
7.0 |
| S&P 500 (USA) |
-41.7 |
-8.4 |
-2.8 |
| FTSE 100 (UK) |
-34.0 |
-5.5 |
0.7 |
| GDAX (Germany) |
-40.0 |
-0.8 |
6.3 |
| CAC40 (France) |
-45.0 |
-9.2 |
-0.9 |
| MSCI World Index NZ$ |
-26.0 |
0.1 |
2.6 |
|
|
% change p.a.
|
% change p.a.
|
% change p.a.
|
| Gold |
8.7 |
24.8 |
23.3 |
| Oil |
-55.7 |
-10.8 |
6.7 |
Prepared by Peter Collerton, Capital Investment Planning Ltd, January 2009
Capital Investment Planning Ltd, P.O. Box 22238, Christchurch, New Zealand
Phone +64 3 379 1913 Fax +64 3 377 2330
Important Note. This publication may be copied in whole or part provided Capital Investment Planning Ltd is acknowledged as the source. Investment and mortgage rates are indicative only and, whilst correct at the time of publication, are subject to change without notice. Text may be opinion only and should not be seen as a substitute for personal professional advice relative to an individual's personal situation.
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