Search found 2152 matches

by Simplegift
Sat Jul 23, 2016 9:10 am
Forum: Investing - Theory, News & General
Topic: Reliving the Nightmare of the Crisis
Replies: 22
Views: 1386

Re: Reliving the Nightmare of the Crisis

In my experience, the 2008-2009 market crash was so unique because it had such a strong element of "existential" fear about the continued viability of the global financial system. In 1987, the market crash was brief and soon inconsequential. The 2000 tech crash certainly had a big emotiona...
by Simplegift
Sat Jul 23, 2016 12:10 am
Forum: Investing - Theory, News & General
Topic: U.S. Stock Market Increasingly Detached from U.S. Economy
Replies: 17
Views: 1708

Re: U.S. Stock Market Increasingly Detached from U.S. Economy

This topic has motivated a bit of research into the breakdown of private and publicly-traded companies in the United States. A few statistics (from a 2013 Forbes article ): • Of the 5.7 million firms in the U.S. that have employees, less than 1% are publicly traded on the major exchanges. • Private ...
by Simplegift
Fri Jul 22, 2016 9:09 pm
Forum: Investing - Theory, News & General
Topic: U.S. Stock Market Increasingly Detached from U.S. Economy
Replies: 17
Views: 1708

Re: U.S. Stock Market Increasingly Detached from U.S. Economy

I'm not sure what the rationale is for paralleling the economy rather than paralleling the market. The only investors who might be discomforted by the disconnect between the U.S. stock market and the domestic economy, I imagine, are those “portfolio patriots” who insist they will only invest in U.S...
by Simplegift
Fri Jul 22, 2016 7:16 pm
Forum: Investing - Theory, News & General
Topic: Trying the Impossible - Financing 30-Year Retirements with 40-Year Careers
Replies: 55
Views: 7220

Re: Trying the Impossible - Financing 30-Year Retirements with 40-Year Careers

In other words labor productivity growth as measure by the Bureau of Labor Statistics has been in decline for at least a decade. It is important to remember that we're not talking about the absolute level of productivity in these statistics but only its growth. Even with our weak gains in labor pro...
by Simplegift
Fri Jul 22, 2016 5:22 pm
Forum: Investing - Theory, News & General
Topic: Recession post-election?
Replies: 35
Views: 2086

Re: Recession post-election?

One “predictor” of U.S. recessions in recent decades has been an inverted yield curve. Looking at the spread between 10-year and 3-month Treasuries today (chart below), we don't yet appear to be anywhere near that territory. http://www.ultraimg.com/images/2016/07/22/Untitled06972.jpg Note: Recession...
by Simplegift
Fri Jul 22, 2016 4:08 pm
Forum: Investing - Theory, News & General
Topic: U.S. Stock Market Increasingly Detached from U.S. Economy
Replies: 17
Views: 1708

U.S. Stock Market Increasingly Detached from U.S. Economy

While the U.S. stock market is often considered a bellwether of the U.S. economy — and many investors concentrate their equity allocations on U.S. stocks specifically for exposure to the U.S. economy — it’s apparent there’s an increasing disconnect between U.S. companies and the domestic economy. A ...
by Simplegift
Wed Jul 20, 2016 4:43 pm
Forum: Investing - Theory, News & General
Topic: Trying the Impossible - Financing 30-Year Retirements with 40-Year Careers
Replies: 55
Views: 7220

Re: Trying the Impossible - Financing 30-Year Retirements with 40-Year Careers

How can this be? We have had the personal computer revolution, the internet, smart phones, software that has revolutionized white collar work, robots performing manufacturing functions, the rise of artificial intelligence, three dimensional printing, biotechnology, etc. etc. A whole lot has happene...
by Simplegift
Wed Jul 20, 2016 2:07 am
Forum: Investing - Theory, News & General
Topic: Stock Valuations — Is the U.S. Market Now the Global Growth Index?
Replies: 28
Views: 2293

Re: Stock Valuations — Is the U.S. Market Now the Global Growth Index?

NOTE: Because the median CAPE values in the OP were originally based on widely different time histories (as pointed out by lack_ey upthread), I edited the chart in the OP to restrict the median CAPE value calculations to just the 1969-2016 period. There’s still time variation in the market histories...
by Simplegift
Tue Jul 19, 2016 9:10 pm
Forum: Investing - Theory, News & General
Topic: Stock Valuations — Is the U.S. Market Now the Global Growth Index?
Replies: 28
Views: 2293

Re: Stock Valuations — Is the U.S. Market Now the Global Growth Index?

Just curious: Do you know if there is historical valuation data available for international vs. US, and if so, where it can be found and how far back does it go? Good question. We have annualized CAPE 10 data for the U.S. market going back to 1881, courtesy of Mr. Shiller, found in an Excel spreads...
by Simplegift
Tue Jul 19, 2016 5:15 pm
Forum: Investing - Theory, News & General
Topic: Stock Valuations — Is the U.S. Market Now the Global Growth Index?
Replies: 28
Views: 2293

Re: Stock Valuations — Is the U.S. Market Now the Global Growth Index?

On a slightly different note, if I recall correctly, European companies tend (and currently have) 1. Higher weights in sectors that we consider "value". Value companies tend to have lower P/E ratios. 2. A lower gearing than their american counterparts by sector. One way to boast P/E ratio...
by Simplegift
Mon Jul 18, 2016 9:19 pm
Forum: Investing - Theory, News & General
Topic: Stock Valuations — Is the U.S. Market Now the Global Growth Index?
Replies: 28
Views: 2293

Re: Stock Valuations — Is the U.S. Market Now the Global Growth Index?

Still would be interesting and possibly enlightening if they had the option of letting you see the results computed on a consistent time period. We can compare the U.S. and various developed market CAPEs since 1969, where we have median CAPE values calculated over a consistent time period: http://w...
by Simplegift
Mon Jul 18, 2016 7:52 pm
Forum: Investing - Theory, News & General
Topic: Stock Valuations — Is the U.S. Market Now the Global Growth Index?
Replies: 28
Views: 2293

Re: Stock Valuations — Is the U.S. Market Now the Global Growth Index?

For one, the historical median is calculated over a different set of history for each country, many only going back to the mid '90s. Right. Most emerging market countries have CAPE data starting only about 1992-1995, while developed European market countries have CAPE data starting in the 1969-1972...
by Simplegift
Mon Jul 18, 2016 7:23 pm
Forum: Investing - Theory, News & General
Topic: Stock Valuations — Is the U.S. Market Now the Global Growth Index?
Replies: 28
Views: 2293

Stock Valuations — Is the U.S. Market Now the Global Growth Index?

Looking at current stock market valuations worldwide (CAPE 10), including various developed and emerging countries, it’s apparent that every major country on the planet — except the U.S. — is now valued at or below its long-term median average: http://www.ultraimg.com/images/2016/07/20/CAPEValueChar...
by Simplegift
Sat Jul 02, 2016 8:31 am
Forum: Investing - Theory, News & General
Topic: Japan's stock market in 1989?
Replies: 6
Views: 905

Re: Japan's stock market in 1989?

We had a long-running series of posts last year by Forum member bpp , who examined this question in depth: Update through the end of 2014. We now have 25 years of data. Yearly portfolio values for 1 million yen invested at the end of 1989, in inflation-adjusted (using Japanese CPI) yen terms. No wit...
by Simplegift
Sat Jul 02, 2016 8:19 am
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 12 — The Societal Risk Premium
Replies: 21
Views: 1985

Re: Classic Bernstein 12 — The Societal Risk Premium

Just to add: If interested in more background on the societal risk premium and similar topics, Mr. Bernstein went on in 2004 to write a very readable book of economic history, The Birth of Plenty: How the Prosperity of the Modern World Was Created — now available in both Kindle and paperback edition...
by Simplegift
Fri Jul 01, 2016 3:51 pm
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 12 — The Societal Risk Premium
Replies: 21
Views: 1985

Re: Classic Bernstein 12 — The Societal Risk Premium

Further discussion from there indicates that from the experience of the Roman Empire, that the aggregate return on capital has a floor of about 4 percent. To me, this would imply that the rate of return on a balanced portfolio of stocks and bonds to be about 4 percent real. Thanks, nedsaid. If a 4%...
by Simplegift
Fri Jul 01, 2016 1:25 pm
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 12 — The Societal Risk Premium
Replies: 21
Views: 1985

Re: Classic Bernstein 12 — The Societal Risk Premium

I do remember that Bernstein said that over very, very long periods of time that the returns of stocks and bonds are identical. I think this is because of the Societal Risk Premium and the fact that stock markets have gone bust in the past. Any comments on that? Can’t say that I recall reading this...
by Simplegift
Fri Jul 01, 2016 11:27 am
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 12 — The Societal Risk Premium
Replies: 21
Views: 1985

Re: Classic Bernstein 12 — The Societal Risk Premium

Just to see if Mr. Siegel’s supposition has been true in the real world (i.e., greater societal stability leads to a lower equity risk premium), I’ve looked around for data on the realized equity premium for the U.S. market over the past century. The chart below is from the 2013 Barclays Equity Gilt...
by Simplegift
Fri Jul 01, 2016 9:52 am
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 12 — The Societal Risk Premium
Replies: 21
Views: 1985

Re: Classic Bernstein 12 — The Societal Risk Premium

Did "we" finally mature or stabilize with the onset of the 1990's? Good to hear you’ve enjoyed the series. I’ve learned a great deal from it myself! For another perspective on your question: Jeremy Seigel also discusses the increased stability of the U.S. economy over time in his book, St...
by Simplegift
Fri Jul 01, 2016 8:37 am
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 12 — The Societal Risk Premium
Replies: 21
Views: 1985

Classic Bernstein 12 — The Societal Risk Premium

PREFACE: This is the twelfth (and last!) in a series of posts highlighting the classic investing insights of William Bernstein from the 1990s and early 2000s. Many new Bogleheads have never been exposed to his early writings — and while the data sets used may seem antiquated, his portfolio concepts...
by Simplegift
Wed Jun 29, 2016 5:48 pm
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 11 — Stocks, Economies and Populations
Replies: 5
Views: 783

Re: Classic Bernstein 11 — Stocks, Economies and Populations

Has the amount of leakage been graphed against national corruption scales or free market scales over time? There are studies around this question, though I couldn't find any that looked at "leakage" vs. corruption specifically. However, Morningstar did an intriguing analysis a few years a...
by Simplegift
Wed Jun 29, 2016 3:26 pm
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 11 — Stocks, Economies and Populations
Replies: 5
Views: 783

Re: Classic Bernstein 11 — Stocks, Economies and Populations

Fifteen years on from Mr. Bernstein’s study, it’s interesting to look at the emerging economies of Africa in the context of his analysis. Over the past 10 years, the GDP of the 11 largest sub-Saharan countries has increased 51% — over twice the world’s expansion of 23%. However, their GDP growth per...
by Simplegift
Wed Jun 29, 2016 1:40 pm
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 11 — Stocks, Economies and Populations
Replies: 5
Views: 783

Classic Bernstein 11 — Stocks, Economies and Populations

PREFACE: This is the eleventh in a series of posts highlighting the classic investing insights of William Bernstein from the 1990s and early 2000s. Many new Bogleheads have never been exposed to his early writings — and while the data sets used may seem antiquated, his portfolio concepts and novel ...
by Simplegift
Tue Jun 28, 2016 12:37 pm
Forum: Investing - Theory, News & General
Topic: BREXIT - Whats the big deal?
Replies: 108
Views: 10426

Re: BREXIT - Whats the big deal?

It's fine to use "British" colloquially in circumstances where it isn't 100% precise, like referring to the people of the UK even though the UK contains northern Ireland. Thanks. This was the source of my initial confusion as, technically, the vote was not about a Brexit (the exit of Grea...
by Simplegift
Tue Jun 28, 2016 12:11 pm
Forum: Investing - Theory, News & General
Topic: BREXIT - Whats the big deal?
Replies: 108
Views: 10426

Re: BREXIT - Whats the big deal?

English v. British is a particularly complex question... Also a complex geographical question for many of us insular Americans. I’ve recently had to look up (twice!) the proper geographic distinctions between England vs. Britain vs. the United Kingdom: http://i.imgur.com/JEfEQZZ.jpg Source: Range
by Simplegift
Mon Jun 27, 2016 6:18 pm
Forum: Investing - Theory, News & General
Topic: Developed Mkts/Emerging Mkts Relative Drops
Replies: 6
Views: 731

Re: Developed Mkts/Emerging Mkts Relative Drops

I noticed that on Friday that Developed Markets indexes dropped by a greater percentage than Emerging Markets indexes. At least as of this hour, the same trend seems to be continuing today. I'm curious as to why this is the case. Looking at the performance of the MSCI Regional Indexes around the wo...
by Simplegift
Mon Jun 27, 2016 2:39 pm
Forum: Investing - Theory, News & General
Topic: Return expectations for the next 10 years
Replies: 91
Views: 6005

Re: Return expectations for the next 10 years

How much of an error bar would you put around the point estimates? What methodology of determining that error do you believe in? If interested in this subject, I’d suggest noodling around on the Research Affiliates website , where they show expected returns (plus their methodology) for quite a few ...
by Simplegift
Mon Jun 27, 2016 1:57 pm
Forum: Investing - Theory, News & General
Topic: Return expectations for the next 10 years
Replies: 91
Views: 6005

Re: Return expectations for the next 10 years

I don't get this idea that because there is uncertainty we must artificially tell ourselves that we know absolutely nothing about the sources of stock market returns. Of course, it's impossible to know. It's also impossible to know if I will be alive in 10 years or tomorrow, doesn't mean that I can...
by Simplegift
Sun Jun 26, 2016 6:05 pm
Forum: Investing - Theory, News & General
Topic: BREXIT - Whats the big deal?
Replies: 108
Views: 10426

Re: BREXIT - Whats the big deal?

When I look at the top 10 in FTSE 100 index, I see names like HSBC, GlaxoSmithKline, RoyalDutchShell, BP, Vodafone, so on ... most of these are global giants with operations all over the world. They do not derive their profits from UK alone. I do not see how it is possible for these corporations to...
by Simplegift
Sun Jun 26, 2016 12:13 pm
Forum: Investing - Theory, News & General
Topic: Return expectations for the next 10 years
Replies: 91
Views: 6005

Re: Return expectations for the next 10 years

What were the 10-year return expectations in 2006? Below are the expected and actual, real (inflation-adjusted) 10-year total returns for U.S. large-cap stocks and 10-year Treasury bonds, from May 2006 to May 2016 — based on the simple market valuation models upthread: http://i.imgur.com/Q9zlzP7.jp...
by Simplegift
Sun Jun 26, 2016 9:39 am
Forum: Investing - Theory, News & General
Topic: BREXIT - Whats the big deal?
Replies: 108
Views: 10426

Re: BREXIT - Whats the big deal?

So why should there be so much hoopla? My suspicion is that there are deeper fears and concerns about the rise of nationalism and protectionism around the world today, the slowing of world trade (chart below), and the diminishing perceived benefits of globalization — and the Brexit vote has just br...
by Simplegift
Sun Jun 26, 2016 8:12 am
Forum: Investing - Theory, News & General
Topic: Return expectations for the next 10 years
Replies: 91
Views: 6005

Re: Return expectations for the next 10 years

Just for perspective, below are the expert 10-year forecasts from the first three sources on lack_ey’s list upthread. These are expected, real 10-year returns for U.S. intermediate-term bonds and U.S. large cap stocks. Not too much different than the current market valuation forecasts. http://i.imgu...
by Simplegift
Sat Jun 25, 2016 4:24 pm
Forum: Investing - Theory, News & General
Topic: Return expectations for the next 10 years
Replies: 91
Views: 6005

Re: Return expectations for the next 10 years

Furthermore, the precise question is not whether CAPE has predicted past returns but if that return is 1/CAPE specifically. To avoid turning this thread into a discussion of various forecasting models (which is not what the OP is after), I believe we can agree that current valuations have generally...
by Simplegift
Sat Jun 25, 2016 2:58 pm
Forum: Investing - Theory, News & General
Topic: Return expectations for the next 10 years
Replies: 91
Views: 6005

Re: Return expectations for the next 10 years

Is there any historical data on your 2 metrics in terms of how well they've predicted things in past rolling 5-10 year periods? There’s actually been quite a few studies showing that current bond yields and stock CAPE 10 have been decent forecasters of future asset returns. Here’s one: http://i.img...
by Simplegift
Sat Jun 25, 2016 2:35 pm
Forum: Investing - Theory, News & General
Topic: Return expectations for the next 10 years
Replies: 91
Views: 6005

Re: Return expectations for the next 10 years

What is the market currently predicting that real (inflation-adjusted) U.S. stock and bond returns will be over the next 10 years? • For Stocks: The earnings yield of S&P 500 (reciprocal of CAPE 10, or 1/25) = 4.00% • For Bonds: The current yield of 10-year TIPS Bond = 0.15% The market itself (t...
by Simplegift
Sat Jun 25, 2016 10:43 am
Forum: Investing - Theory, News & General
Topic: Another Brexit question
Replies: 15
Views: 2855

Re: Another Brexit question

Clearly, Brexit is a huge repudiation of globalization. If that repudiation spreads further, and it may well extend to the US, there will definitely be a change in International markets. Globalization has been the trend for 20+ years now and is one big driver for emerging markets. If the brakes are...
by Simplegift
Sat Jun 25, 2016 8:20 am
Forum: Investing - Theory, News & General
Topic: Dividend and Buyback Yields, S&P 500, 1982-2015
Replies: 86
Views: 5055

Re: Dividend and Buyback Yields, S&P 500, 1982-2015

Out of curiosity, is the net buyback yield typically lower for value stocks? This has been my (anecdotal) experience. Not precisely what you’re asking about, but this may help: There’s published quarterly information on buyback yields by industry sector, found here (page 9). Note that these are gro...
by Simplegift
Fri Jun 24, 2016 4:07 pm
Forum: Investing - Theory, News & General
Topic: Dividend and Buyback Yields, S&P 500, 1982-2015
Replies: 86
Views: 5055

Re: Dividend and Buyback Yields, S&P 500, 1982-2015

The model is NOT broken, it's people using it with a the mix of timeframes (current yield, historical growth) that makes it inaccurate nowadays. In the past, dividends didn't change much, so the issue was there, but hidden in plain sight!... it just needs to be used properly... Just so I understand...
by Simplegift
Fri Jun 24, 2016 3:25 pm
Forum: Investing - Theory, News & General
Topic: International stocks in free fall
Replies: 118
Views: 10435

Re: International stocks in free fall

Interesting how poorly European bonds have done relative to T-bills for the "long-term" investor (a century) , not catching up until this century acc. to your chart. And stocks didn't do much either for the first half of the 20th century. You had volatility that was not compensated by per...
by Simplegift
Fri Jun 24, 2016 12:49 pm
Forum: Investing - Theory, News & General
Topic: International stocks in free fall
Replies: 118
Views: 10435

Re: International stocks in free fall

Long-term, buy-and-hold investors of European equity will do fine. The Brexit vote (and others to come possibly) can’t compare with a global depression and two land wars fought on their home soil — which companies of the European nations overcame, with a 4.2% real equity return since 1900. It gives ...
by Simplegift
Fri Jun 24, 2016 11:06 am
Forum: Investing - Theory, News & General
Topic: Dividend and Buyback Yields, S&P 500, 1982-2015
Replies: 86
Views: 5055

Re: Dividend and Buyback Yields, S&P 500, 1982-2015

And about your last post, yes, the Gordon formula doesn't change, no need for a 4th factor. It's just that one has to be really careful to not mix up timeframes between the dividends factor and the growth factor when trying to create a forecast based on past results (which is an easy mistake to do,...
by Simplegift
Thu Jun 23, 2016 6:52 am
Forum: Investing - Theory, News & General
Topic: Dividend and Buyback Yields, S&P 500, 1982-2015
Replies: 86
Views: 5055

Re: Dividend and Buyback Yields, S&P 500, 1982-2015

Seems to me that you guys are making it way too complicated. Somebody holding X shares will still hold X shares after the buyback. It's just that the total number of shares decreased. Consequently *future* earnings will be spread on a smaller number of shares, hence increasing the EPS (if nothing e...
by Simplegift
Thu Jun 23, 2016 6:15 am
Forum: Investing - Theory, News & General
Topic: New AQR/Asness Paper on Factor Timing
Replies: 9
Views: 877

Re: New AQR/Asness Paper on Factor Timing

While I find the dueling papers and ongoing dialogue between Mr. Arnott and Mr. Asness fascinating to read, I can’t help but be bothered by the fact that these are not unbiased, disinterested financial researchers. In other words, since both parties are managers of commercial investment funds that a...
by Simplegift
Wed Jun 22, 2016 5:32 pm
Forum: Investing - Theory, News & General
Topic: Dividend and Buyback Yields, S&P 500, 1982-2015
Replies: 86
Views: 5055

Re: Dividend and Buyback Yields, S&P 500, 1982-2015

But I do wonder if there's a legitimate reason for returning the capital if the company is going into debt to do so. If they're borrowing money to pay dividends and/or buybacks rather than to use the money for new capital investment, why are they doing that? In the case of net buybacks, they may be...
by Simplegift
Wed Jun 22, 2016 2:31 pm
Forum: Investing - Theory, News & General
Topic: Dividend and Buyback Yields, S&P 500, 1982-2015
Replies: 86
Views: 5055

Re: Dividend and Buyback Yields, S&P 500, 1982-2015

Total return is with dividends reinvested. So it makes perfect sense to add together dividends and buybacks as a combined yield; it's only when you think "per share" that the waters are muddied with these EPS questions, because the number of shares you hold is indeed different in these tw...
by Simplegift
Wed Jun 22, 2016 12:26 pm
Forum: Investing - Theory, News & General
Topic: Webcast:Analyzing the Global Economy-6/21/16
Replies: 5
Views: 374

Re: Webcast:Analyzing the Global Economy-6/21/16

People have consistently been forecasting higher interest rates for the past 15 years — even the professional forecasters (chart below). It’s been one of the more entertaining pastimes in the financial press over the last decade. I just hope folks haven't been making any portfolio changes based on t...
by Simplegift
Wed Jun 22, 2016 8:58 am
Forum: Investing - Theory, News & General
Topic: Dividend and Buyback Yields, S&P 500, 1982-2015
Replies: 86
Views: 5055

Re: Dividend and Buyback Yields, S&P 500, 1982-2015

So seeing the net as in the OP is good, but it would also be interesting to see the difference between the net and gross that, from a common shareholders perspective, sort of vanishes. If the net/gross ratio is high, then buybacks could be a good deal for taxable shareholders. Not exactly sure what...
by Simplegift
Wed Jun 22, 2016 8:04 am
Forum: Investing - Theory, News & General
Topic: Dividend and Buyback Yields, S&P 500, 1982-2015
Replies: 86
Views: 5055

Re: Dividend and Buyback Yields, S&P 500, 1982-2015

My question would be: how reliable are the figures for return due to buyback and what is the efficiency (i.e., what percent of the buybacks are offset by new issues or just handed to executives as compensation). Maybe all that is well accounted for. In the data on share buybacks, one has to disting...
by Simplegift
Tue Jun 21, 2016 7:18 pm
Forum: Investing - Theory, News & General
Topic: Dividend and Buyback Yields, S&P 500, 1982-2015
Replies: 86
Views: 5055

Re: Dividend and Buyback Yields, S&P 500, 1982-2015

In a simplistic model: shares fairly valued and company earning a uniform rate of return on its capital, buybacks appear to have no effect for buy and hold shareholders of a company. Gordoni2, I appreciate you pressing your case here, as it’s caused me to drill down deeper into the impacts of net s...

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