SMI Bullish

Hi all,

For some reason, we don’t get any media talking about the SMI. They seem to harp on the DAX, Nasdaq, DOW, S&P 500, etc. But the SMI shows a clear upward trend. Its finally broken through the long-time resistance barrier and will likely remain there at least until the end of the year.

I believe the SMI will bring us a lot of good times in the coming years because negative interest rates are pushing us to invest in stocks and funds.

Are there any pros on here that share my belief?

For the time being it will shoot straight up, and when it falls, there is always gold – which should be in everyone’s portfolio.

With the crossing of the longstanding resistance barrier, things are looking brighter – at least from a chartist point of view. However, I am not convinced that now is the best time to enter, because the index has already climbed by 25% in 2019.

The fact that the SMI isn’t widely publicizes by foreign media may have to do with the fact that it is made up primarily of conservative dividend stocks (Nestle, Novartis, Roche) which haven’t reacted to recent trade disputes as drastically as other indexes like the DAX and US tech indexes. In fact, recent events seem to have pushed the SMI upward.

But you should understand that, with an average KGV of 23, the SMI is anything but underpriced. Its historical average KGV is just over 15, depending on how far back you go.

That does not mean that it cannot climb much higher than it is now. But I would give preference to the SPI, because it is far more diversified (200 stocks tracked as opposed to 20 tracked by the SMI).

Cheers