Our measurement of “Relative Market Value” (RMV) is an indication of the sustainability of Australian equity market prices based on historical evidence over three decades. RMV Measurement (RMVM) compares income each quarter year generated from listed companies that make up the Australian All Ordinaries Accumulation index to present short-term interest rates, based on the 90-day bank bill rate.

Historical evidence has shown that if income generated within that share market index is “relatively” higher than income that can be earned on short-term interest bearing securities then rising market prices most generally follow. Conversely, if income from the market is “relatively” lower then what investors can earn on interest bearing deposits, then falling market prices may eventually follow. The key is in establishing a “relative” axis point for the information to be credible.

By measuring an array of economic and investment market data and by utilising specialised artificial learning software we are able to see a high degree or correlation between movement on the Australian stock market in relation to a combination of income from the All Ordinaries Accumulation index and income from bank bills, if measured over a certain preceding period. This links in strongly with the wisdom of hindsight however the main difference is to determine sustainable value before a market falls, by strict and disciplined ongoing measurement and monitoring, not afterwards when anyone can become an overnight expert.

Like to know more? Talk to us today about how our state of the art RVMV is reducing our client’s investment volatility, while providing them with a tactical discipline that enhances their medium to long-term returns.