Originally Posted by
SailorRob
It's every serious investors benchmark, anyone using anything else is like comparing your reading skills to the IHC, just trying to make yourself look better. The exception to this would be the elderly who need to access a lot of their net worth and cannot risk the volatility. They could benchmark to a local currency fixed income of some sort.
Yes the good old NZ50C... I read a post by someone recently saying something like the NZ50C is one standard deviation below trend. Gobsmacked I was that someone would type this out! The NZ50C only regained 1987 highs in 2017 for gods sake, does this person thing the trend they were referring to is natural reality of NZ capital markets? The 'trend' was created by massive historical anomalous multiple expansion brought on by a decline to 5000 year lows in rates... the one standard deviation below trend is the beginnings of what could be 15 to 20 years sideways chop as things regain normality. Maybe it won't who knows, but it could.
The point I am making is the trend they were on about is not from rising EPS or success from NZ listed companies, so of course at some point it will mean revert, could be down the escalator or sideways for years while inflation takes a bite out, but this person is probably buying thinking that it's so far off the trend it was on that surely it will have to pop back... Bulls over brought I guess.