Wide range of shares best bet - Mary Holm

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Friday 16 July 2004

Q. I found an article in the Herald this week by Ellen Read disturbing.

She says New Zealand stock is getting overvalued and "the capital NZSX-all index is at 908.5 - its highest since October 1997 and just below the all-time high of 921 just before the 1987 crash".

I only have New Zealand dividend-yield stock in case the market crashes, as I have been told I will

By The Landlord

still get my dividend whatever happens and, eventually, they will rise in value again.

I think I would still find it hard not to panic if my Contact Energy shares were suddenly worth 50 cents each.

What do you think of the high position of the market at the moment? Are we in danger of a crash?

A. I don't know. I could ring lots of market analysts and report back what they said. But history shows that nobody is all that good at predicting share market movements.

Having said that, crashes tend to follow periods of extraordinary growth. And we haven't had that.

The fact that the index is close to its 1987 peak is nothing to worry about. If anything, we should worry that it didn't get there years ago. Most of the world's big share markets topped their 1987 peaks within a year or two of the crash.

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