Bulls, Bears & a Croupier: The insider's guide to profiting from the Australian stockmarket
by Matthew Kidman
Chapter 24: History has the answers
In October 2007 Geoff Wilson and I sat down to discuss the best way to handle a 30 per cent fall in the sharemarket. We were both anxious that something awful was about to unfold, but we just didn’t know when.
The Australian market had found a bottom of 2800 after the tech wreck in March 2003, and in the four and half years since then it had risen a whopping 150 per cent. The rally for the most part had been built on the solid foundations of tremendous earnings per share growth but in the last 12 months of the run the rise in share prices was simply the expansion of company PEs. In other words, stocks were rapidly getting expensive — a phenomenon associated with behaviour towards the end of major bull market ...
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