Where do you think the money will come from to move the overall market higher?

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Ron Scott
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Where do you think the money will come from to move the overall market higher?

Post by Ron Scott » Thu Oct 05, 2017 12:03 pm

Recent polls suggest the general public and professional money managers are both getting skittish about valuations. If these polls are correct, and if people slow their equity investments, where do you see the demand coming from?

Grt2bOutdoors
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Re: Where do you think the money will come from to move the overall market higher?

Post by Grt2bOutdoors » Thu Oct 05, 2017 12:04 pm

My bank account. :P
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Jack FFR1846
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Re: Where do you think the money will come from to move the overall market higher?

Post by Jack FFR1846 » Thu Oct 05, 2017 12:05 pm

Money managers and the general public have been skidish about valuations since 1963. Where's the money going to come from? (picture me raising my hand).
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JBTX
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Re: Where do you think the money will come from to move the overall market higher?

Post by JBTX » Thu Oct 05, 2017 12:10 pm

If people are getting skittish that is generally a bullish sign. Typically large market downturns happen when people start to think the rules have fundamentally changed and the markets can't possibly go down anytime soon. While it is hard to see valuations going much higher, as long as the economy chugs along and there are no good investment alternatives with near zero interest rates I suspect equities will continue to grow modestly.

bigred77
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Re: Where do you think the money will come from to move the overall market higher?

Post by bigred77 » Thu Oct 05, 2017 12:14 pm

Profits from publicly traded companies continuing to rise over time.

I read something a long time ago about some sort of "invisible hand" :mrgreen: Seems to have some merit.

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TheTimeLord
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Re: Where do you think the money will come from to move the overall market higher?

Post by TheTimeLord » Thu Oct 05, 2017 12:16 pm

Ron Scott wrote:
Thu Oct 05, 2017 12:03 pm
Recent polls suggest the general public and professional money managers are both getting skittish about valuations. If these polls are correct, and if people slow their equity investments, where do you see the demand coming from?
You have answered your own question. Skittish people are not all in, exuberant people are all in. Slowly and surely they will give in unable to continue to remain on the sidelines making near zero in other things and the market will rise and the momentum will build and then the bad things will happen once everyone is in love with the Bull. Also share buybacks shrink the amount of shares and raise share price.
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livesoft
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Re: Where do you think the money will come from to move the overall market higher?

Post by livesoft » Thu Oct 05, 2017 12:19 pm

Everybody who lost something in the bad weather (fires, hurricanes, earthquakes, floods, etc) will tap into their emergency funds to replace what they lost. So money in savings accounts gets put back into the economy and into companies which will affect stock prices. Also people tend to spend money they don't have, so that is helpful, too.
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Pajamas
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Re: Where do you think the money will come from to move the overall market higher?

Post by Pajamas » Thu Oct 05, 2017 12:24 pm

From the same place the money goes when the overall market moves lower. :beer

JBTX
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Re: Where do you think the money will come from to move the overall market higher?

Post by JBTX » Thu Oct 05, 2017 1:35 pm

bigred77 wrote:
Thu Oct 05, 2017 12:14 pm
Profits from publicly traded companies continuing to rise over time.

I read something a long time ago about some sort of "invisible hand" :mrgreen: Seems to have some merit.
Profits are at record high levels compared to the economy. The invisible hand argument would tend to argue for eventual mean reversion.

CoAndy
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Re: Where do you think the money will come from to move the overall market higher?

Post by CoAndy » Thu Oct 05, 2017 1:42 pm

I wonder about this too, although for a slightly different reason.
Total student loan debt in this country: $1,400,000,000,000.00
Total credit card debt in this country: $1,000,000,000,000.00
Total auto loan debt in this country: $1,000,000,000,000.00

And all are growing. This can't possibly end well....
Last edited by CoAndy on Thu Oct 05, 2017 1:45 pm, edited 1 time in total.

Broken Man 1999
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Re: Where do you think the money will come from to move the overall market higher?

Post by Broken Man 1999 » Thu Oct 05, 2017 1:42 pm

It won't be coming from our household, except thru the reinvestment of dividends and capital gains.

But, think of the millions of workers that have 401k plans that are left alone by the owners, leaving funds to invest each payday into some type investment.

Broken Man 1999
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nolesrule
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Re: Where do you think the money will come from to move the overall market higher?

Post by nolesrule » Thu Oct 05, 2017 1:53 pm

CoAndy wrote:
Thu Oct 05, 2017 1:42 pm
I wonder about this too, although for a slightly different reason.
Total student loan debt in this country: $1,400,000,000,000.00
Total credit card debt in this country: $1,000,000,000,000.00
Total auto loan debt in this country: $1,000,000,000,000.00

And all are growing. This can't possibly end well....

That's about $13,800 per person over the age of 18.

JBTX
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Re: Where do you think the money will come from to move the overall market higher?

Post by JBTX » Thu Oct 05, 2017 1:58 pm

CoAndy wrote:
Thu Oct 05, 2017 1:42 pm
I wonder about this too, although for a slightly different reason.
Total student loan debt in this country: $1,400,000,000,000.00
Total credit card debt in this country: $1,000,000,000,000.00
Total auto loan debt in this country: $1,000,000,000,000.00

And all are growing. This can't possibly end well....
Household debt, while growing in nominal dollars has actually decreased from 100% of GDP at the peak before 2008 bust down to about 80% of GDP, which is still higher than average but not quite as bad. However if you add in increase in government debt and corporate debt the total debt to GDP percent hasn't decreased or maybe even increased since the 2008 bust. Worldwide debt has increased substantially too, especially China.

Maverick3320
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Re: Where do you think the money will come from to move the overall market higher?

Post by Maverick3320 » Thu Oct 05, 2017 2:36 pm

Ron Scott wrote:
Thu Oct 05, 2017 12:03 pm
Recent polls suggest the general public and professional money managers are both getting skittish about valuations. If these polls are correct, and if people slow their equity investments, where do you see the demand coming from?
Does there need to be demand, or just perception of demand?

bberris
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Re: Where do you think the money will come from to move the overall market higher?

Post by bberris » Thu Oct 05, 2017 2:50 pm

CoAndy wrote:
Thu Oct 05, 2017 1:42 pm
I wonder about this too, although for a slightly different reason.
Total student loan debt in this country: $1,400,000,000,000.00
Total credit card debt in this country: $1,000,000,000,000.00
Total auto loan debt in this country: $1,000,000,000,000.00

And all are growing. This can't possibly end well....
If you think things are bad because debt is growing, I hope you never see what happens when debts contract.
The amount of debt is meaningless without comparing the ability to service the debt.

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Re: Where do you think the money will come from to move the overall market higher?

Post by oldcomputerguy » Thu Oct 05, 2017 2:54 pm

CoAndy wrote:
Thu Oct 05, 2017 1:42 pm
I wonder about this too, although for a slightly different reason.
Total student loan debt in this country: $1,400,000,000,000.00
Total credit card debt in this country: $1,000,000,000,000.00
Total auto loan debt in this country: $1,000,000,000,000.00
...
None of it's mine. :)
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CnC
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Re: Where do you think the money will come from to move the overall market higher?

Post by CnC » Thu Oct 05, 2017 3:00 pm

Ron Scott wrote:
Thu Oct 05, 2017 12:03 pm
Recent polls suggest the general public and professional money managers are both getting skittish about valuations. If these polls are correct, and if people slow their equity investments, where do you see the demand coming from?
3 numbers and a letter.


401k so many people are just dumping $$ in every 2 weeks into the index it is very difficult to move the market.


I for one believe passive index funds are the reason for all time lows in volitility.

Tigermoose
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Re: Where do you think the money will come from to move the overall market higher?

Post by Tigermoose » Thu Oct 05, 2017 4:26 pm

Debt and fractional reserve banking <-- the engine that drives the other side of the balance sheet.
Institutions matter

Bacchus01
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Re: Where do you think the money will come from to move the overall market higher?

Post by Bacchus01 » Thu Oct 05, 2017 4:53 pm

CoAndy wrote:
Thu Oct 05, 2017 1:42 pm
I wonder about this too, although for a slightly different reason.
Total student loan debt in this country: $1,400,000,000,000.00
Total credit card debt in this country: $1,000,000,000,000.00
Total auto loan debt in this country: $1,000,000,000,000.00

And all are growing. This can't possibly end well....
Per capita?
% of GDP?

Total numbers are almost irrelevant.

venkman
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Re: Where do you think the money will come from to move the overall market higher?

Post by venkman » Fri Oct 06, 2017 3:52 am

I see the continued demand for equities coming from the fact that most other investment options don't look very good right now either...

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nisiprius
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Re: Where do you think the money will come from to move the overall market higher?

Post by nisiprius » Fri Oct 06, 2017 6:41 am

bigred77 wrote:
Thu Oct 05, 2017 12:14 pm
...Profits from publicly traded companies continuing to rise over time...
I don't know what the stock market is going to do. But I am skeptical of this kind of argument. Back around 1998 or so I remember a discussion with a colleague.

My point of view was "Look, I understand that GE and all the others are terrific companies, but what I've been seeing in my 401(k)'s is just crazy. Would you please tell me just exactly what GE or anybody else has done that could possibly justify increases of 20% and 30% per year, several years in a row? They haven't developed cold fusion or teleportation! They aren't little startups expanding into an empty niche! Why are they growing that fast?"

He just shrugged and said "The numbers. The earnings numbers justify it."
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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DaftInvestor
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Re: Where do you think the money will come from to move the overall market higher?

Post by DaftInvestor » Fri Oct 06, 2017 7:02 am

CoAndy wrote:
Thu Oct 05, 2017 1:42 pm
I wonder about this too, although for a slightly different reason.
Total student loan debt in this country: $1,400,000,000,000.00
Total credit card debt in this country: $1,000,000,000,000.00
Total auto loan debt in this country: $1,000,000,000,000.00

And all are growing. This can't possibly end well....
I can show numbers with lots of zeros too:
US stock market has a value of about $30,000,000,000,000.00.
Total deposits in US Banks: 12,000,000,000,000.00
Not a bad balance sheet :)
Not sure why you say things can't end well just because there is debt in the US.

KlangFool
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Re: Where do you think the money will come from to move the overall market higher?

Post by KlangFool » Fri Oct 06, 2017 7:47 am

OP,

I do not know. And, I know that I do not know.

KlangFool

GoldenFinch
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Re: Where do you think the money will come from to move the overall market higher?

Post by GoldenFinch » Fri Oct 06, 2017 7:58 am

nolesrule wrote:
Thu Oct 05, 2017 1:53 pm
CoAndy wrote:
Thu Oct 05, 2017 1:42 pm
I wonder about this too, although for a slightly different reason.
Total student loan debt in this country: $1,400,000,000,000.00
Total credit card debt in this country: $1,000,000,000,000.00
Total auto loan debt in this country: $1,000,000,000,000.00

And all are growing. This can't possibly end well....

That's about $13,800 per person over the age of 18.
I think although it’s likely to end badly for some individuals it’s probably good for the overall economy.

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triceratop
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Re: Where do you think the money will come from to move the overall market higher?

Post by triceratop » Fri Oct 06, 2017 8:01 am

CnC wrote:
Thu Oct 05, 2017 3:00 pm
Ron Scott wrote:
Thu Oct 05, 2017 12:03 pm
Recent polls suggest the general public and professional money managers are both getting skittish about valuations. If these polls are correct, and if people slow their equity investments, where do you see the demand coming from?
3 numbers and a letter.


401k so many people are just dumping $$ in every 2 weeks into the index it is very difficult to move the market.


I for one believe passive index funds are the reason for all time lows in volitility.
How do you explain the market events of Winter 2016?
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Jags4186
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Re: Where do you think the money will come from to move the overall market higher?

Post by Jags4186 » Fri Oct 06, 2017 8:02 am

Every two weeks the market gets $1384 from my wife and me and another $285 from our employers. I suspect for many people on the board it is similar.

lostdog
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Re: Where do you think the money will come from to move the overall market higher?

Post by lostdog » Fri Oct 06, 2017 8:16 am

CnC wrote:
Thu Oct 05, 2017 3:00 pm
Ron Scott wrote:
Thu Oct 05, 2017 12:03 pm
Recent polls suggest the general public and professional money managers are both getting skittish about valuations. If these polls are correct, and if people slow their equity investments, where do you see the demand coming from?
3 numbers and a letter.


401k so many people are just dumping $$ in every 2 weeks into the index it is very difficult to move the market.


I for one believe passive index funds are the reason for all time lows in volitility.

I would think this to be true if everyone maxed their 401k. I am going to guess that most americans invest very little into their 401k if not at all.
"Our life is frittered away by detail. Simplify, simplify." -Thoreau | Vanguard Total World Index-buy the haystack.

lostdog
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Re: Where do you think the money will come from to move the overall market higher?

Post by lostdog » Fri Oct 06, 2017 8:18 am

lostdog wrote:
Fri Oct 06, 2017 8:16 am
CnC wrote:
Thu Oct 05, 2017 3:00 pm
Ron Scott wrote:
Thu Oct 05, 2017 12:03 pm
Recent polls suggest the general public and professional money managers are both getting skittish about valuations. If these polls are correct, and if people slow their equity investments, where do you see the demand coming from?
3 numbers and a letter.


401k so many people are just dumping $$ in every 2 weeks into the index it is very difficult to move the market.


I for one believe passive index funds are the reason for all time lows in volitility.

I would think this to be true if everyone maxed their 401k. I am going to guess that most americans invest very little into their 401k if not at all. International investing is probably less
"Our life is frittered away by detail. Simplify, simplify." -Thoreau | Vanguard Total World Index-buy the haystack.

Dottie57
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Re: Where do you think the money will come from to move the overall market higher?

Post by Dottie57 » Fri Oct 06, 2017 8:25 am

Grt2bOutdoors wrote:
Thu Oct 05, 2017 12:04 pm
My bank account. :P
My paycheck.

bigred77
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Re: Where do you think the money will come from to move the overall market higher?

Post by bigred77 » Fri Oct 06, 2017 8:46 am

nisiprius wrote:
Fri Oct 06, 2017 6:41 am
bigred77 wrote:
Thu Oct 05, 2017 12:14 pm
...Profits from publicly traded companies continuing to rise over time...
I don't know what the stock market is going to do. But I am skeptical of this kind of argument. Back around 1998 or so I remember a discussion with a colleague.

My point of view was "Look, I understand that GE and all the others are terrific companies, but what I've been seeing in my 401(k)'s is just crazy. Would you please tell me just exactly what GE or anybody else has done that could possibly justify increases of 20% and 30% per year, several years in a row? They haven't developed cold fusion or teleportation! They aren't little startups expanding into an empty niche! Why are they growing that fast?"

He just shrugged and said "The numbers. The earnings numbers justify it."
I agree, 20% and 30% annual increases over any short/medium term time period is usually not justified by earnings numbers. IMO it's typically driven by changing expectations and sentiment. Sometime's seemingly just wherever the winds decide to blow.

I guess I was referring to continued rising profits from publicly traded companies leading to reasonable, steady market gains over the long term (10+ years).

TheHouse7
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Re: Where do you think the money will come from to move the overall market higher?

Post by TheHouse7 » Fri Oct 06, 2017 8:49 am

lostdog wrote:
Fri Oct 06, 2017 8:16 am
CnC wrote:
Thu Oct 05, 2017 3:00 pm
Ron Scott wrote:
Thu Oct 05, 2017 12:03 pm
Recent polls suggest the general public and professional money managers are both getting skittish about valuations. If these polls are correct, and if people slow their equity investments, where do you see the demand coming from?
3 numbers and a letter.


401k so many people are just dumping $$ in every 2 weeks into the index it is very difficult to move the market.


I for one believe passive index funds are the reason for all time lows in volitility.

I would think this to be true if everyone maxed their 401k. I am going to guess that most americans invest very little into their 401k if not at all.
+1 lost dog the average American missed this bull, but won't miss the next recession.
"PSX will always go up 20%, why invest in anything else?!" -Father-in-law early retired.

CnC
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Re: Where do you think the money will come from to move the overall market higher?

Post by CnC » Fri Oct 06, 2017 8:53 am

lostdog wrote:
Fri Oct 06, 2017 8:16 am
CnC wrote:
Thu Oct 05, 2017 3:00 pm
Ron Scott wrote:
Thu Oct 05, 2017 12:03 pm
Recent polls suggest the general public and professional money managers are both getting skittish about valuations. If these polls are correct, and if people slow their equity investments, where do you see the demand coming from?
3 numbers and a letter.


401k so many people are just dumping $$ in every 2 weeks into the index it is very difficult to move the market.


I for one believe passive index funds are the reason for all time lows in volitility.

I would think this to be true if everyone maxed their 401k. I am going to guess that most americans invest very little into their 401k if not at all.

May not be everyone, but it is more now than ever before.

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