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Lucky Country Stockmarket

The Australian stockmarket finished September with another strong rise. The All Ordinaries price index was up 4.1% for the month and 8.6% for the September quarter. Every quarter since June 2003 has been positive and the lowest quarterly rise was 2.7%. The market index is up 21.1%pa over the past two years, the highest two year rise since September 1987 before the big crash in October 1987 (down 42.4% in one month).

The pattern of recent quarterly increases in the stock market index is unusual based on historical volatility. While overseas sharemarkets have been fairly subdued, Australian companies have benefited from the long housing boom and the demand for natural resources from China's phenomenal growth. The late Donald Horne philosophised on how Australia survived by luck more than good management in his 1964 book 'The Lucky Country' http://www.findem.com.au/resources/displayResourcesArticle.php?id=93 . Some investment commentators and economists are currently raising similar sceptical thoughts about growth and stock market gains continuing at the recent pace.

Posted Monday, 3 October 2005

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