What's up with Australian shares? While most rich-country sharemarkets are trading higher than their pre-GFC highs, Australian share prices have not done that well over the past 10 years.
While property prices in Sydney and Melbourne have almost doubled over the decade, Australian share prices have been in a long torpor. Other than a renewed commodities boom, it's hard to see what will get prices moving again.
November 1 this year will mark the 10-year anniversary since Australian share prices hit their all-time high of just over 6800 points.
Today, the market is trading at just over 5700 points, which is still more than 15 per cent below its all-time high.
Yet, the share prices of most developed countries have hit new highs since the GFC - sometimes well above.
For example, the US S&P500 Index, which peaked at more than 1500 points in October 2007, is trading at more than 2500 points.
These comparisons are on a share price basis. Australian share prices, over the long term, sit on a dividend yield of about 4.5 per cent, compared with about half that for global shares.
After accounting for dividends, which are captured by the "accumulation" index, Australian share investors are ahead of where they were in early November 2007.
But even on an accumulation basis, returns from Australian shares have not been as good as for most overseas markets.
Shane Oliver, the chief economist at AMP Capital Investors, points to several reasons for our shares not doing that well.
Firstly, Australia has had relatively high interest rates over most of the 10 years. The cash rate is at a record low of 1.5 per cent, but that is still higher than the cash rates of other rich countries.
All other things being equal, higher interest rates are a negative for share prices.
There has also been an absence of quantitative easing (money printing) in Australia; unlike in the United States and the European Union where money printing has been used to stimulate economic growth.
And there has been a slump in commodity prices over most of the past decade, following the booming prices of the preceding period.
Oliver says the rise in the value of the Australian dollar to above parity with the US dollar in 2010 has reduced Australia's global competitiveness. The Australian dollar remains relatively high, which negatively impacts on the foreign earnings of Australian companies.
Underlying profit growth, after excluding the volatile earnings of resources companies, is about 5-6 per cent in Australia, Oliver says.
That's well below that in the United States, at about 11 per cent and between 20 and 30 per cent for Europe and Japan.
Oliver says while there are signs that economic growth is improving, the underperformance of Australian shares may have a while to go yet.
While Australian shares will remain good for income, global shares are likely to remain outperformers for capital growth.
He reckons that's a argument for having a "decent" exposure to global shares.