The NZX50 has had a stellar year. Financial assets around the world are outperforming because of quantitative easing and financial institutions preferring to hold assets for their own books versus taking risk and making loans.
For investors who didn’t try to time the market and held on over the past few years, they’ll have accumulated some tidy dividends and good quality shares on the cheap through buying weakness.
NZX price/earnings ratios are very low by global standards and dividend yields are very high by global standards. Because companies can increase prices in response to inflation, they’re a better inflation hedge than bonds.
The sheeple who keep piling money into housing will get their comeuppance as soon as building restrictions and land supply restrictions are relaxed. When Housing Bubble 2.0 bursts eventually, we’ll have the recession we should have had in 2008.
But Kiwis will still need to do their grocery shopping, pay for electricity and are more likely to visit The Warehouse. These are just some of the reasons why the sharemarket – by no means perfect and holy – is simply a better market to participate in than the housing market.