A Timeline of Bull and Bear Markets Chart: Australian Edition

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I recently came across the beautiful chart showing the bull and bear markets in Australian Equity Markets. This chart is similar to the chart for S&P 500 that is popular for the US markets. The Australian chart from Vanguard Australia also shows bull markets are longer than bear markets over the long term.

From 1980 thru June, 2022 the average bull market lasted for 7.8 years while the average bear market lasted 0.9 years.

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Note: All returns noted are in Australian currency based on the returns of the S&P All Ordinaries Index

Source: Vanguard Australia

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Disclosure: No Positions

Why Market Timing is Futile

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I have written many times before on the futility of market timing. The saying that time in the market is so important than timing the market couldn’t be understated. Market timing is impossible to achieve because an investor has to be right twice. Once when they sell stocks and again when they re-enter the markets. This is easier said than done since predicting the future is difficult. While selling stocks in a falling market is easy markets can turn in the other direction almost overnight.

With that said, the below chart shows how holding stocks for the long-term beats short-term declines and produces excellent returns:

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Source: Chart of the Week: A Bullish Case for Resisting Market Timing by Jeffrey DeMaso, Adviser Investments

An excerpt from the above piece:

Consider an investor who bought a U.S. stock index fund at the end of 2008. The S&P 500 index fell 18.6% over the first two months of 2009 and the investor likely felt discouraged by their purchase. However, by the end of 2009, the S&P 500 and our hypothetical investor’s fund were 30% higher than they were at the start of the year, despite the “early” entry into the market. And that’s before counting dividendsA cash payment to investors who own stock in the company.

Look out a little further and the results are even better. Three years after their purchase, the investor was up 46%. Five years on and they had more than doubled their money with a 112% gain.

In an ideal world, you could buy right at the bottom and ride the wave to the top. But you probably don’t have perfect timing (I’ve never met anyone who does). The remedy to imperfect timing is extending your time horizon—over time you’re likely to come out ahead of where you started

Related ETF:

  • SPDR S&P 500 ETF Trust (SPY)

Disclosure: No Positions

The 2022 Vanguard Index Chart: Australian Edition

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One of the key factors that differentiates successful investors from others is the ability to hold investments for the long term. Though assets such as equities can fluctuate in the short term, in the long run they tend to go up. The latest edition of the Vanguard Index chart for the Australian market shows how various asset values have increased over the past 30 years.

The following chart from Vanguard Australia showing the returns of various assets from July 1992 to June 30, 2022 for the Australian market:

Source: Vanguard Australia

US stocks were the best performers for the period shown. Australian stocks generated better returns then international equities. The chart also shows the leadership periods of various prime ministers of Australia and presidents of the US in addition to other major events.

The below table shows the financial year total returns for various asset classes:

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The above table shows the importance of diversification.

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Disclosure: No Positions

Mexico vs. China Manufacturing: The Cost Difference

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The Manufacturing industry is one of the major industries of the economy of Mexico. Manufacturing costs are cheaper in Mexico than China. In addition, Mexico offers many advantages over China with respect to manufacture of goods.

The following are few of the key cost differences between Mexico and China in manufacturing according to research by IVEMSA:

Labor – Wages in Mexico are 30% lower than wages in China.

Energy – Electricity costs are 4% lower in Mexico than China; Natural gas prices for commercial use are 60% lower in Mexico.

Transportation – Obviously transportation costs are very cheaper from Mexico to the US relative to shipping from China. The cost to move a 40ft container from China to the US in 2021 was about $10,000 and it took many times to arrive in the US. On the other hand, it costs about $240 to move a 53ft trailer from Mexico to the US. Moreover the truck would cross the border the same day.

Industrial Lease Space – The cost to lease an industrial building is 50% lower in Mexico than China.

Source: Mexico’s Manufacturing Costs, IVEMSA

The Vanguard 2022 Index Chart: UK Edition

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We reviewed The Vanguard Index Chart for Australian equities in an earlier post. In this post, let’s take a look at a similar chart for the UK market. British stocks have underperformed poorly relative to US stocks for the period from 1992 to 2021 as shown in the chart below. Since 1992, US stocks would have earned an annual return of 11.85% compared to just 8.01% for British stocks. Even Emerging and European Market equities yielded better returns than British equities.

The Vanguard 2022 Index Chart for UK market shows the returns of various asset classes from 1992 to 2021 . In addition, it shows the major world events and the periods of various British Prime ministers:

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Source: Vanguard UK

Related ETF:

  • iShares MSCI UK ETF (EWU)

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Disclosure: No Positions