Oz market near record?

Confidence is all just a matter of how you measure it. And on one measure, Australian stocks are close to record levels.

Need a confidence boost?  If you believe all those endless surveys, we all do.

Well how about this bit of good news to cheer you up. The Australian stock market is about to break through to record levels.

That's right. The All Ordinaries Index may be 22% below the 2007 record and valuations, according to most analysts, look stretched.

But like all good statisticians, it is all just a matter of how you measure these things. And if you add in the dividend payments to the stock price movements, the picture suddenly takes on a rosy view.

The All Ordinaries Accumulation Index is now just 3% off its November 2007 record thanks to the renewed focus from corporate Australia on delivering income to investors (see Three blue-chip dividends under threat).

Add in imputation credits, and suddenly investors have serious cause for celebration. That's right, you're rich.

Still, it is difficult to escape the obvious. It is now five years since the collapse of Lehman Brothers rocked global markets and threatened to destabilise the entire global financial system. And yet Wall Street recovered quickly and has been consistently punching through record levels while the Australian market, apart from the past 12 months, has languished.

Most of that has to do with the weakness in the greenback and the boost it provided for US corporate earnings as a soaring local currency punished Australian corporates.

With the American and European economies now slowly recovering, and as the Australian dollar weakens, many domestic analysts are shifting their views. The Australian market may be in for a long term growth spurt, no matter how you measure it.

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