Australia's ASX 200 is BOOMING: Is it too late to buy?

Next stop, ASX6000?

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Australian stock market is on a tear, with the S&P/ASX200 (INDEXASX: ^AXJO) (ASX: XJO) up nearly 20% from recent lows of 4,950 struck in February 2016.

At its current level of 5,912, the ASX200 is back within striking distance of the mythical 6,000 points. That level has been breached only once before, in 2007, when the market hit its all-time high of 6,700 points and began the precipitous tumble back to 3700 points.

With the large number of companies hitting new highs each week, surely it's only a matter of time before we break through the magic 6,000 once again? CSL Limited (ASX: CSL) trades at an all-time high of $130.11 per share.

Commonwealth Bank of Australia (ASX: CBA) shares trade at $87, below their all-time high of $96, but not by much. At $44, Wesfarmers Ltd (ASX: WES) shares are the highest they've been since 2007.

Admittedly, BHP Billiton Limited (ASX: BHP) is potentially heading down, not up, and Telstra Corporation Ltd (ASX: TLS) is not exactly a focal point for investor enthusiasm right now. So perhaps we won't see ASX6000 any time soon. Still, with this newfound enthusiasm for big stocks, investors should adhere even more steadfastly to the basic principles of investing:

  • Look for quality merchandise at an attractive price
  • Remember that big stocks generally move and grow more slowly than smaller ones
  • Always keep some cash saved for a rainy day, or a market crash
  • When the market is down 50%, aim to be a net buyer, not a seller

Now, I'm not predicting a market crash or anything like that. I have seen that a number of big companies are looking pricey, and several successful fund managers have commented that the market looks expensive. These investors are also increasing the amount of cash they hold in their portfolio, an action that speaks louder than words.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Telstra Limited and Wesfarmers Limited. Motley Fool contributor Sean O'Neill 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.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »