Welcome to my Friday afternoon musings…
A Year To Remember (so far, at least…)
So, it was a good day on the ASX.
A good week.
A good year, so far, actually.
As at the close of trade, the S&P/ASX All Ordinaries Index (ASX: XAO) had gained 0.67% today.
It's up 3.2% since last Friday.
And 5.74% higher in 2023.
Now, let's do some maths.
The average long term gain for the ASX is around 9 – 10% per year (depending on the index and the starting point).
And around 4% of that is dividends.
Meaning?
Well, we can shut the market for the rest of the year.
In just 9 trading days, we're already ahead of the average annual result.
So… we're done!
No, not really.
They won't close the market.
And anything could happen from here.
But remember how I've been saying no-one can predict the market?
I don't know anyone who said the ASX would rise almost 6% in the first two weeks of 2023.
And remember how I wrote that even though there's some concern about the economic outlook for this year, the market doesn't necessarily proceed in lockstep with GDP?
Mhmm.
Now, to be clear, I'm not taking any victory laps.
I didn't know what would happen, either.
And for all I know, we could give these gains back again by next Friday (quick, touch wood!)
No, the reason for telling you those things was to remind you of the folly of prediction.
And why I preach dollar-cost-averaging.
Can you imagine being the poor bastards who sold out at the end of last year because 2023 was going to be terrible?
How do you reckon they feel now?
Again, they might still be right in 50 weeks' time.
But remember, the long term trajectory of the market is 'up and to the right', even if that journey is a bumpy one.
Stop trying to time the market. And stop listening to predictions.
Please.
Quick takes
Overblown: The hot new thing. Not specifically, but generally. Remember the excitement about crypto? NFTs? Graphene? Cannabis? Maybe the next one will be Lithium. Or not. But fads often fall… hard. They always have, and they almost certainly always will.
Underappreciated: Did you know Kogan.com Ltd (ASX: KGN) shares (I own some) are up 47% over the past 6 months? No, I'm not bragging… I didn't know that either. No fanfare, no-one banging a drum – and no-one predicted it in July, 2022. Nick Scali Limited (ASX: NCK) is up 35%. All while interest rates and inflation rise, and the headlines scream about the coming downturn. Have I flogged this dead horse enough? Nope… not until my readers can say 'I don't listen to predictions, and I don't correlate the economy and the stock market' in their sleep!
Fascinating: I'm reading How The World Really Works, by Vaclav Smil. I'm only one-third of the way through, so there's still time for me to be disappointed, but some of the history and science in that book is incredibly interesting. Check it out.
Where I've been looking: I heard today that BHP Group Ltd (ASX: BHP) shares are near their all-time highs. Yet the P/E is still 9x, and the dividend yield is over 7%. That's not a recommendation, but I've started to dig deeper (no pun intended).
Quote: "You never can predict the economy. You can't predict the stock market." – Peter Lynch
Fool on!
