MENU

ASX hits 2016 high: Lessons from the great 2016 share recovery

Credit: Steve Jurvetson

The S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) has burst through 5400 points today as the share market rally continues to pick up the pace.

Indeed, investors who sold out of their positions earlier in 2016 in what was the worst start to a year in history will be kicking themselves now. Up 1.2% today at 5404 points, the ASX 200 has risen in each of the last five sessions (today included) for a total gain of 2.5%, while it has risen 14.8% since bottoming out at 4706 points in February.

One of the catalysts behind the recent rally was the surprise interest rate cut from the Reserve Bank of Australia last week, which has led to plenty of interest in the country’s biggest dividend payers. Shares of companies such as Telstra Corporation Ltd (ASX: TLS) and National Australia Bank Ltd. (ASX: NAB) are leading the charge again today.

Others such as Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG) are also performing strongly, as is BHP Billiton Limited (ASX: BHP). The Big Australian’s shares have risen around 3% after the company unveiled new growth ambitions to the market.

However, the biggest thing to take away from this is how important it is to look beyond short-term noise and focus instead on the long term.

Indeed, share markets around the world plunged on near-term uncertainty earlier in the year, leading to wide-spread panic. While it might have felt like the volatility would never subside at the time, investors who gave into that fear and sold their positions have now missed out on the strong recovery.

Although the market is once again sitting around the 5400-point mark, there is no reason to believe it won’t go any higher. Indeed, the RBA could be forced to cut interest rates again in the near future which could attract plenty more investors back into the market in search of superior returns.

With interest rates stuck at just 1.75%, and looking set to fall even further, high-yield dividend shares could be one of your best options. The Motley Fool's renowned dividend investing guru recently revealed his newest dividend buy recommendation and short list of 3 Best Dividend Buys Now. Which means if you're reading this message right now, you're not on the list to uncover their names before they potentially go gangbusters. Simply click here to learn more about these shares.

Motley Fool contributor Ryan Newman has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.