Methodology, data and analysis by Logan Wong.
Long-horizon, rules-based models for the Australian share market: market size versus the economy, earnings multiples, interest rates, trend deviation and the equity-bond trade-off. Each is scored in standard deviations from its own history, and the five scored models combine into a single aggregate reading. Built on 45+ years of monthly data.
The aggregate reading is +0.50σ from the average of the five scored models, up from +0.46σ at the previous update as the market continued to recover. The individual model readings are set out below and in the table.
On the data, the S&P/ASX 200 closed at 8,892 on Thursday 29 October, about 3% below the all-time high of 9,203 set in February 2026. The S&P/ASX 300 closed at 8,799, about 2% above where it sat in April. Because the P/E and dividend yield readings are scaled from the last published April figures by the index move, both have moved a little further from their long-run averages. The trailing P/E is 23.4x, which is 47% above its 15.9x long-run average and higher than 95% of monthly readings since 1980 (z +1.28). The dividend yield is 3.02%, about 26% below its 4.07% long-run average and lower than all but 6% of monthly readings (z +1.29).
Pulling the other way, the Southern Cross Indicator (market capitalisation to GDP) is about 123%, roughly 16 points below its long-run linear trend (z −0.68); the ratio has trended structurally higher across four decades of superannuation inflows, so the model measures deviation from trend rather than the raw level. Total ASX market capitalisation is about A$3.66 trillion against annualised nominal GDP of about A$2.97 trillion. Mean reversion places the S&P/ASX 300 about 7% above its long-run price trend (z +0.50), inside one standard deviation, and the earnings yield gap is a little above its long-run average (z +0.11).
Rates backdrop, as published by the data sources: the RBA cash rate is 4.60%, its highest setting since 2011 after the rise on 29 September 2026, and the next decision is due on 3 November 2026. The 10-year government bond yield closed at 5.18% on 29 October, down from 5.25% on 16 October. The easing in long-dated yields has moved the interest rate model a little closer to its own long-run average (z +0.29, from +0.32).
These are model outputs calculated from published data, not a prediction. This is factual information only, not financial product advice, a recommendation or a forecast.
Every model on one line: today's reading, the model's own fair value, how far the two differ, and where today sits in the model's own history. Select any row to jump to that model.
| Model | Current | Fair value | Deviation | History percentile | z-score |
|---|
How to read this. "Fair value" is each model's own long-run trend or average. "Deviation" is how far today's reading sits from it. "History percentile" shows where today's reading sits within the model's own history. "z-score" expresses that deviation in standard deviations. All figures are calculated, not estimated.
Total ASX market capitalisation as a percentage of nominal GDP, annually 1979-2020 (World Bank) with a live 2026 reading (ASX market cap A$3.58T ÷ annualised GDP A$2.97T ≈ 120%). Scored against a linear trend fitted to the full history; the ratio drifted structurally higher through the 1980s and 90s as superannuation deepened Australia's capital markets, so the model measures deviation from trend rather than the raw level.
Market-cap-weighted trailing P/E of the Australian market (All Ordinaries), monthly since 1980. Scored on LN(P/E) versus its long-run average, which damps the distortion of recession-era earnings collapses (1992, 2009, 2020-21 spikes are earnings artefacts, not euphoric pricing).
Australian 10-year government bond yield, monthly since 1980 (OECD via FRED). Scored against the modern inflation-targeting era (1995 to present): a positive z-score means the current yield is above its 1995-present average. This series is shown for context and is not included in the aggregate.
S&P/ASX 300 monthly closes since 2001 (the index launched April 2000), log scale, versus an exponential trend fitted on
continuously compounded returns, r = LN(Pₐ/Pₐ₋₁), with ±1σ/±2σ bands. Price index (excludes dividends);
an accumulation-index version is in development.
Equity earnings yield (100 ÷ P/E) minus the 10-year bond yield, monthly since 1980. A positive gap means the equity earnings yield exceeds the 10-year bond yield; a negative gap means the bond yield exceeds the equity earnings yield. The z-score is calculated inversely, so a lower gap gives a higher z-score.
Market-cap-weighted dividend yield of the Australian market, monthly since 1980 (excluding franking credits). Yield moves inversely to price. The z-score is calculated inversely, so a lower yield gives a higher z-score.
Calendar-year total returns (price + dividends reinvested) of the All Ordinaries Accumulation Index, 1980-2024. Most years are positive, the average is double-digit, and the worst years cluster around 1981-82, 1990, 2008 and 2022.
A backward-looking check on the mean-reversion model. For every month since 2001 it measures how far the index sat from its long-run trend, then the price change that actually followed over the next 12 months. The chart plots every month; the table groups the same history by starting valuation. It reports what has happened, not what will happen.
| Starting valuation band | Months | Avg next-12m price change | Share positive |
|---|
Read with care. This is the price index only and excludes dividends, so total returns were higher. The record covers 2001-2026, one market's history, and the bands furthest from trend hold few observations. It is an objective summary of the past, not a forecast, and past performance is not a reliable indicator of future performance. Factual information only, not advice.
Objective by design. Nothing here is a personal opinion. Each reading is produced by a fixed formula applied to published market data, so the same inputs always give the same output. This page is factual information only. It is not financial product advice, not a recommendation to buy, hold or sell anything, and it does not consider anyone's circumstances.
Scoring. Every model is reduced to a z-score: how many standard deviations today's reading sits from its own long-run trend or average. A larger positive z-score means the reading sits further above the model's own long-run average or trend; a larger negative z-score means further below. The aggregate is the simple average of the five scored models' z-scores (Southern Cross, P/E, Mean Reversion, Earnings Yield Gap, Dividend Yield). Interest rates and the subsequent-returns section are context and are not included in the aggregate.
Continuously compounded returns. Trend fitting uses natural-log returns LN(Pₐ/Pₐ₋₁), which are additive across time and
the correct basis for exponential trend regression.
Sources. Market Index (PE, dividend yield, market statistics) · FRED/OECD (10-year yields) · FRED/World Bank (market cap ÷ GDP) · FRED/IMF (nominal GDP) · TradingView (S&P/ASX 300 monthly closes) · All Ordinaries Accumulation data per Vanguard and ASX research. Data retrieved .
Freshness. Index prices and bond yields are current to the latest monthly update; P/E and dividend yield after April 2026 are price-scaled nowcasts pending publication. The aggregate is refreshed monthly.
This page presents factual, objectively calculated market information; every figure is produced by a fixed rule from published market data. It is not financial product advice (general or personal), not a recommendation, not an opinion on any security, and not a forecast of future returns, and it does not consider anyone's objectives, financial situation or needs. Past performance is not a reliable indicator of future performance. Boston Global Wealth Pty Ltd ABN 99 691 504 506 is a Corporate Authorised Representative (No. 1318023) of Advisory Circle Pty Ltd AFSL No. 513052. © 2026 Boston Global Wealth Pty Ltd.
