@Strawman Yes i agree, one of my hobby horses, Oz has a few great quality growth companies (30-40) so you either buy with hairs (risks attached), or pay an eye-watering price and wait 10 years for the payoff. the other way i have gone is international, the large number of quality growth o/s makes some of them better value, and the market being the market they throw them into the garbage bin every so often.

i only own WES above and agree it is too rich. I have looked at most of the others and can't reconcile price with prospects versus other opportunities.

Google not the best comparison though. Maybe Meta which is about the same but the insider sells there from Zuck have been phenomenal.

and it’s the best way to play the artificial intelligence game

Pretty sad indictment on the local bourse when the best way to get exposure to AI is through a property trust.

Maybe, but I'd argue that $360, $PME and $WTC are excellent ways to play AI.... looking at the AFR list.

The problem with going overseas is the hassle of opening another trading account and transferring money to the discount brokerages or you pay the fees through the ones offered by the CHESS accounts.

I've had past issues before where I locked my online banking access because I tried to wire funds to Interactive brokers - and I may add it was only 5K.

Anyway I'm thinking about Moomoo, apparently they have level 2 data for US markets if I open up an account - something which is lacking in IBKR.

@edgescape I use CMC Markets for buying/selling Australian shares and find that their international stock trading integrates seamlesssly into it - both Australian and international stocks displayed together, money from/to the same account, the process of trading is the same as well. I only have two international stocks directly and get most of my OS exposure via ETF's which makes much more sense for me so I personally don't do much international stock buying/selling.

Not that I care what people use just that it works well for me!

Overall the ASX has definitely been trending up in its PE ratio recently

(Source: https://www.marketindex.com.au/statistics)

Ignoring the COVID spike we are definitely well above the long term average at the moment. Presumably this is “macro” i.e. money printing, interest rates, AUD exchange rate, slow down in resources sector, insanity of big bank share prices. Might just hold off dollar cost averaging into VAS or A200 for the time being.

I’ve got IBKR and CMC markets for international trading. IBKR where I want to sell covered calls on my positions or acquire using PUT options or purchase on exchanges beyond the US. I also allows you to buy and sell currency so you can hold certain currencies in the account rather than just getting hit with the exchange rate at the point of trade.

CMC is nice because there is one bucket of money sitting in a Macquarie Cash Management account so it’s pretty easy to move money in and out of the account when you need it for other purposes. It also offers CHESS for Aus stocks and has no brokerage on <$1000 Aussie trades (good for Dollar Cost averaging into ETFs)

(Am consolidating into these two from Selfwealth which went downhill after they changed the international broker under the covers)

Just eyeballing these numbers. If current market P/E is 26 and long run average is 18, then that’s 3-4 years of annual eps growth of 10% to mean revert. I.e., 3-4 years of the "P" going nowhere.

But who knows: maybe eps ticks up higher over the coming years, and maybe it takes 4-5 years to mean revert, and maybe it doesn’t revert fully. But it is reasonable to argue there will be a muted price progression for the index from here.

Also, is the metric dominated by certain sectors … banks, big tech, ….? Yes.

Anyway, I’m with your conclusion. No way I’m putting money into ASX trackers. Stock picking is the place to be.

@RhinoInvestor

Thanks will take a look at CMC

BTW: Moomoo has transfer fees, currency commissions and owned by FUTU holdings. Not really worth it just to get the level 2 data. I noticed the trade execution is poor on the paper trade trial account.

I do wonder about the macro influence and monetary inflation in particular @RhinoInvestor, in that there may be some potential for a 'new normal' of sorts when it comes to market multiples. Maybe?

ie. in a debasing / stagflation scenario, fueled by excessive structural debt-funded deficit spending, investors may be more concerned about real capital preservation rather than nominal returns. EG. Maybe it's better to buy (say) woolies at an excessive valuation because you know it will, at the very least, preserve your purchasing power over the long term, which would be a superior outcome than something like fixed interest or cash which offer a seemingly reasonable nominal return, but potentially a negative real return.

In fact, for a few years post-covid we already saw this: major sovereign bonds like U.S. Treasuries, German Bunds, UK Gilts and (especially) Japanese Bonds yielded negative real returns as inflation outpaced nominal yields.

But let me hasten to add, this is just idle speculation. And i'm a big believer in reversion to the mean with things like PEs -- but it might take a very long time. A lot of traditional value investors have had a woeful run over the past decade, or at least suffered huge opportunity cost, waiting for things to get back to "normal".

My own views on residential investment property is another great example -- it doesn't matter how far out of whack things are from a historical (or rational) context, they've been this way for ages and only getting worse. I can shake my fist at the sky all day long, but people are still tripping over themselves to outbid each other for the privilege of a 2-3% gross yield (and negative net yield). It'll likely correct itself one way or another in the grand fullness of time but, as they say, being too early is often indistinguishable from being wrong.

Anyway, i'm with you @mikebrisy -- it's a stock pickers market.

This just dropped in my mailbox. Rudi as you know is a big supporter of buying on quality

That's why I bought Hub24 here recently just to test this theory with everything being equal (ie: the points of overvaluation posted here can be ignored)

Quality can sure make up for a lot of valuation sins.

You can also protect your returns by dollar-cost-averaging i.e. buying in 3rds or 5ths over a period of time, which will allow you to take advantage of drawdowns while also having some skin in the game.

Going back to the original article though, it is hard to justify paying up for quality here when equal or better quality is available overseas at more palatable multiples.

What is "level 2" data here @edgescape ? I have been with IBKR for years, and I quite like it overall.

Ironically @mikebrisy, I'm sure many investors (primarily active managers) who made the same broad argument a few years ago would have struggled to match the market return - it is ever thus!

@thunderhead

Level 2 includes market depth. This is default for all ASX stocks. But funny enough IBKR doesn't show this.

But When I select a US stock (in reference to buying something looking better value than on the ASX such as WES versus AMZN) I only get the top line and open an account to unlock.

So only having the top line makes it hard to get where you are on the queue, not that it matters much.

Right. So it's market depth. I haven't bothered to look either.

There was a time when IBKR used to charge for real-time price data (just a tiny amount, but it adds up on each refresh!).

@Strawman

On the subject of property, who wants to buy a defective shoebox/mcmansion or poorly renovated property that may need to be knocked down anyway when you can buy a rundown neglected property in a good location or lots of land with warts and all that has been standing for more than 20 years?

I know what I will buy.

In summary lots of things driving property and it is not just the above.

Yeah, new builds are a huge liability imo @edgescape

And why wouldn't you go a rundown/neglected property when you have next to no requirement to maintain things at a reasonable standard for those pesky tenants ;)

@Strawman

Full brick homes are definitely worth their weight in gold. And I mean the bricks without the "holes" in them. Even if it's a shell. Would add the same with apartments completed before 2000.

On the other hand...

Any new build comes with risk such as builder going bust

Any recent renovation or completed homes may come with potential of defects appearing in the future. Bit like hidden skeletons in the closet.

@edgescape Rudi is a laugh, he rabbits on about people being obsessed with share prices (which is true) then starts talking about them himself, with his selected data. Anyone who has read any of my stuff knows that my whole investment philosophy is based on quality companies (basically they are rare, find them, pay a reasonable price and hold onto them). I'm prepared to cut them a reasonable amount of slack regarding valuation for these special companies but not an infinite amount of slack. in a momentum-driven market, you will get excessive SP's. do you think valuation plays any part in LT stock prices? that depends on your philosophy.

beware people recommending shares that they own that have gone up alot, my experience is if it hits the fan, they will come back and say "well im still up" --buyer beware.

that my rant for today

@Solvetheriddle

I think you took my comment about Rudi a bit too seriously.

Just too be clear, I was merely citing an example where he highlighted quality and we fixate too much on price.

And to be clear I was not following Rudi in to buying HUB on Strawman. I was merely using his statement about quality and price.

In addition, there are also countless others pushing similar opinions. In the end, this creates a "Doom loop" where demand exceeds supply. Economics 101.

Promedicus is the best example here where the crowd won and Strawman lost. I also pointed out earlier when at $38 we were being too harsh.

Furthermore, there are probably countless other variables we do not know of that we use to determine some intrinsic value over the "financials"

So at the end of the day we all use various sources and assumptions to make a decision. Sometimes it works, and sometimes it doesn't

@Strawman I guess all these factors considered is why we have Bitcoin to insulate ourselves against the shenanigans of central banks and the devaluation of FIAT currency. Maybe I should be continuing to build my stack to a greater percentage allocation of my net worth, or maybe I’ve been listening to too many conspiracy theorists on Bitcoin podcasts.

Haha @RhinoInvestor

Bitcoiners are often their own worst enemy. Some of the more vocal ones love to tie it to other ideologies and worldviews (many of which is disagree with). And that (understandably) can be a real turn off for those with less extreme views.

You probably have to be a bit crazy as an early adopter, but I think it's gradually becoming more mainstream.