Moods of the U.S. Stock Market, 1990-2017

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SimpleGift
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Moods of the U.S. Stock Market, 1990-2017

Post by SimpleGift » Thu Dec 14, 2017 7:46 pm

How much of the U.S. market's price gains in recent decades have come from fundamental returns (earnings growth) and how much simply from investor enthusiasm (multiple expansion)?

This question came up in a recent Forum discussion and it just happens that S&P Dow Jones publishes a quarterly spreadsheet with this data, going back to 1990. Charted below are each year's percent change in earnings (in green) and percent change in P/E ratio (in blue) — with the market's annual price change (not shown) being the sum of the two.
  • Image
    Note: Both charts show the same data, one stacked bars and one stacked areas. 2017 data to 9/30/17.
    Source: S&P Dow Jones
On average over the full 28-year period, earnings growth has dominated P/E expansion, 7.4% to 3.0%. However, each decade seemed to have its own moods. In the 1990s, earnings growth started out strong, but was overwhelmed by investor enthusiasm. In the 2000s, earnings growth was generally robust, but investors were shy and multiples contracted overall. Since 2010, earnings growth has been fairly modest, but investor enthusiasm has returned, with multiples expanding.

Your thoughts?
Last edited by SimpleGift on Thu Dec 14, 2017 7:59 pm, edited 1 time in total.
Cordially, Todd

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Re: Moods of the U.S. Stock Market, 1990-2017

Post by Thesaints » Thu Dec 14, 2017 7:51 pm

Perhaps calling changes in P/E "moods" is a tad reductive. It also includes expectations on future earnings, which sometimes are estimated in a rather cold fashion.

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Re: Moods of the U.S. Stock Market, 1990-2017

Post by triceratop » Thu Dec 14, 2017 8:00 pm

While trying to steer clear of breaking forum rules on proposed legislation, it's been known for some time that there is a likelihood of changes in the proportion of corporate profits that are returned as earnings in future years. Stocks are priced on future earnings. But any efforts at pricing future earnings in 2017 would go to multiple expansion, not earnings growth. So, is that "mood", or market attempts at accurately pricing future earnings? It seems murky to me.

Thanks for the links, Todd.
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Re: Moods of the U.S. Stock Market, 1990-2017

Post by Boglegrappler » Thu Dec 14, 2017 8:01 pm

The problem with that narrative is that multiple expansion can indeed happen from "mood swing" enthusiasm that overestimates the future growth rate, only to be brought back to earth. But....the exact same multiple also expands if the overall rate of return declines (as evidenced by current interest rates). A great deal of the current multiple is due to exactly that. Its not a mood swing. Look at your rate on the 10 year. And tell me what the right multiple is for a zero growth equity with fairly steady earnings.

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Re: Moods of the U.S. Stock Market, 1990-2017

Post by lack_ey » Thu Dec 14, 2017 8:02 pm

I'm not as comfortable linking investor enthusiasm to P/E changes (multiple expansion). There are probably better and more direct measures of sentiment.

Pricing isn't based on current earnings but rather future prospective earnings, potential future pricing, liquidity, projected risk, investor appetite for risk, prospective return on other investments, etc. The current P/E multiple based on the latest earnings figures doesn't capture all that. You could reasonably have P/E ratios expand without investors being in a particularly good mood in a number of scenarios.

I don't reject the relationship being outlined (surely there's a relationship between multiple expansion and investor mood) but would use different language.

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Re: Moods of the U.S. Stock Market, 1990-2017

Post by SimpleGift » Thu Dec 14, 2017 8:23 pm

Thesaints wrote:
Thu Dec 14, 2017 7:51 pm
Perhaps calling changes in P/E "moods" is a tad reductive. It also includes expectations on future earnings, which sometimes are estimated in a rather cold fashion.
Fair point. But over long periods, the relationship between speculative market returns (multiple changes) and fundamental returns (dividends and earnings) seems to be characterized more by emotional overreaction, both positive and negative, rather than rational calculation (chart below).
Eventually, the market's speculative return (in pink above) always seems to return to the fundamental returns (green and yellow) — thought it usually takes a while. Perhaps these speculative excesses, positive and negative, would better be called "miscalculations" (of future fundamentals) rather than "moods"?
Cordially, Todd

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Re: Moods of the U.S. Stock Market, 1990-2017

Post by livesoft » Thu Dec 14, 2017 8:27 pm

"miscalculations" or simple behavioral errors?
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Re: Moods of the U.S. Stock Market, 1990-2017

Post by triceratop » Thu Dec 14, 2017 8:37 pm

SimpleGift wrote:
Thu Dec 14, 2017 8:23 pm
Thesaints wrote:
Thu Dec 14, 2017 7:51 pm
Perhaps calling changes in P/E "moods" is a tad reductive. It also includes expectations on future earnings, which sometimes are estimated in a rather cold fashion.
Fair point. But over long periods, the relationship between speculative market returns (multiple changes) and fundamental returns (dividends and earnings) seems to be characterized more by emotional overreaction, both positive and negative, rather than rational calculation (chart below).
Eventually, the market's speculative return (in pink above) always seems to return to the fundamental returns (green and yellow) — thought it usually takes a while. Perhaps these speculative excesses, positive and negative, would better be called "miscalculations" (of future fundamentals) rather than "moods"?
That chart makes the same error I pointed out above. If the market is about estimating future changes in EPS then why would we expect to see rolling total returns track EPS? If I (and the market) know EPS are going to jump 50% 10 years from now, that will be priced in as total return today. and will fall out of the rolling window by the time my prediction is realized.
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Re: Moods of the U.S. Stock Market, 1990-2017

Post by SimpleGift » Thu Dec 14, 2017 9:27 pm

triceratop wrote:
Thu Dec 14, 2017 8:37 pm
If I (and the market) know EPS are going to jump 50% 10 years from now, that will be priced in as total return today. and will fall out of the rolling window by the time my prediction is realized.
The problem is that even the experts whose job it is to predict the market's future earnings-per-share have a terrible track record of forecasting this metric just one year in advance, much less 10 years in the future. Though not totally discounting the rational calculations of future fundamentals, I'm sticking with overzealous optimism and pessimism as a significant driver of long-term multiple changes. :wink:
Cordially, Todd

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Re: Moods of the U.S. Stock Market, 1990-2017

Post by Thesaints » Thu Dec 14, 2017 10:02 pm

SimpleGift wrote:
Thu Dec 14, 2017 8:23 pm
Eventually, the market's speculative return (in pink above) always seems to return to the fundamental returns (green and yellow) — thought it usually takes a while. Perhaps these speculative excesses, positive and negative, would better be called "miscalculations" (of future fundamentals) rather than "moods"?
Yes, that's what I had in mind. I don't see Jamie Dimon panicking or crying happy tears in his office. Individual small investors may, but they don't move the market.
Furthermore, miscalculations at times come from very accurate calculations which fail because a higher authority decides to change the playing field.

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Re: Moods of the U.S. Stock Market, 1990-2017

Post by protagonist » Thu Dec 14, 2017 10:11 pm

SimpleGift wrote:
Thu Dec 14, 2017 7:46 pm

On average over the full 28-year period, earnings growth has dominated P/E expansion, 7.4% to 3.0%. However, each decade seemed to have its own moods. In the 1990s, earnings growth started out strong, but was overwhelmed by investor enthusiasm. In the 2000s, earnings growth was generally robust, but investors were shy and multiples contracted overall. Since 2010, earnings growth has been fairly modest, but investor enthusiasm has returned, with multiples expanding.

Your thoughts?
Yes...that a global economy is a complex system with so many confounding, malleable, evolving variables that its behavior is predominantly chaotic. To understand that, people should be reading a lot more about the behavior of nonlinear systems and complexity theory and a lot less traditional financial stuff.

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Re: Moods of the U.S. Stock Market, 1990-2017

Post by siamond » Fri Dec 15, 2017 8:19 am

The chart posted in the OP doesn't include dividends, correct? Then it is not representative of fundamental returns nor total-returns, I'm afraid.

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Re: Moods of the U.S. Stock Market, 1990-2017

Post by SimpleGift » Fri Dec 15, 2017 9:05 am

siamond wrote:
Fri Dec 15, 2017 8:19 am
The chart posted in the OP doesn't include dividends, correct? Then it is not representative of fundamental returns nor total-returns, I'm afraid.
Correct. In the interest of simplification, the OP exercise just focuses on price changes to the S&P 500, breaking out the annual changes to earnings and multiples. It does not aspire to represent total returns. If desired, one can envision a third category, with a more or less constant addition of 2% dividends-per-share across the top of all the chart columns.
Cordially, Todd

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Re: Moods of the U.S. Stock Market, 1990-2017

Post by whiteprius » Fri Dec 15, 2017 9:13 am

This chart is horrifyingly misleading and you should edit the OP. Why? Because it fails to reflect that P/E ratios in the early 90s were BELOW their historic average whereas P/E ratios now are wayyyyy above their historic average.

So your chart makes it seem like P/E ratios are not inflated. They are, by a lot.

Here's some useful data. http://www.multpl.com/table and http://www.multpl.com/

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Re: Moods of the U.S. Stock Market, 1990-2017

Post by SimpleGift » Fri Dec 15, 2017 9:22 am

whiteprius wrote:
Fri Dec 15, 2017 9:13 am
So your chart makes it seem like P/E ratios are not inflated. They are, by a lot.
Kindly re-read the OP. The point of the chart and OP exercise is to answer a simple question, raised in a previous Forum thread:
  • "How much of the U.S. market's price gains in recent decades have come from fundamental returns (earnings growth) and how much simply from investor enthusiasm (multiple expansion)?"
It has nothing to do with whether P/E ratios are currently inflated or not. If interested in that topic, I'd suggest you prepare a separate chart and Forum post yourself so that we can all discuss that issue. :wink:
Last edited by SimpleGift on Fri Dec 15, 2017 9:23 am, edited 1 time in total.
Cordially, Todd

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Re: Moods of the U.S. Stock Market, 1990-2017

Post by alfaspider » Fri Dec 15, 2017 9:22 am

whiteprius wrote:
Fri Dec 15, 2017 9:13 am
This chart is horrifyingly misleading and you should edit the OP. Why? Because it fails to reflect that P/E ratios in the early 90s were BELOW their historic average and at the end of the 90s they were around their historic average whereas P/E ratios now are wayyyyy above their historic average.

So your chart makes it seem like P/E ratios are not inflated. They are, by a lot.

Here's some useful data. http://www.multpl.com/table
Which PE ratio are you referring to?

Forward PE ratios are somewhat high right now, but nowhere close to where they were during the 90s .com boom. 1-year trailing is actually a bit below where it was 2 years ago.

PE10 is what people talking about high PE ratios usually talk about. But current PE 10 still includes the worst of the recession years in the average, and arguably is a bit distorted.

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Re: Moods of the U.S. Stock Market, 1990-2017

Post by siamond » Fri Dec 15, 2017 9:54 am

SimpleGift wrote:
Fri Dec 15, 2017 9:05 am
siamond wrote:
Fri Dec 15, 2017 8:19 am
The chart posted in the OP doesn't include dividends, correct? Then it is not representative of fundamental returns nor total-returns, I'm afraid.
Correct. In the interest of simplification, the OP exercise just focuses on price changes to the S&P 500, breaking out the annual changes to earnings and multiples. It does not aspire to represent total returns. If desired, one can envision a third category, with a more or less constant addition of 2% dividends-per-share across the top of all the chart columns.
Well, this is the thing. Check the chart you posted yourself here. It isn't that constant. Plus it is quite misleading to ignore a 2%-ish quantity as the first instinct when looking at the chart in the OP is to compare the relative size of the blue and green bars. It's like using a price chart in lieu of a growth chart, it is just not representing investors' reality.

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Re: Moods of the U.S. Stock Market, 1990-2017

Post by SimpleGift » Fri Dec 15, 2017 10:14 am

The story of this thread so far, in a nutshell:
  • OP: This is a picture of a chicken. Any thoughts?

    First Responder: But that bird doesn't have webbed feet. How can it be a duck?

    OP: If you look closer, you'll see that it's actually a chicken.

    Second Responder: But why didn't you offer a picture of a goose? I'm into waterfowl also.

    OP: Sigh...........
Cordially, Todd

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Re: Moods of the U.S. Stock Market, 1990-2017

Post by alpine_boglehead » Fri Dec 15, 2017 10:33 am

SimpleGift wrote:
Fri Dec 15, 2017 10:14 am
The story of this thread in a nutshell:
  • OP: This is a picture of a chicken. Any thoughts?

    First Responder: But that bird doesn't have webbed feet. How can it be a duck?

    OP: If you look closer, you'll see that it's actually a chicken.

    Second Responder: But why didn't you offer a picture of a goose? I'm into waterfowl also.

    OP: Sigh...........
Hoping to add to the original intention of the thread - I find the graphic is quite hard for me to wrap my head around. If I read this correctly, the market crash in 2008 was actually very "rational", because earnings went down by 40%. P/E stayed the same, the price only followed the earnings. The real "crash" from a P/E perspective took place in 2010 when the earnings strongly rebounded, but the price did not as much (reducing the P/E ratio by 20%). Same in 2000/2001.

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Re: Moods of the U.S. Stock Market, 1990-2017

Post by Thesaints » Fri Dec 15, 2017 10:43 am

I had not realized those P/E and EPS curves are trailing 10 years averages. Then all bets are off since those quantities nowadays don’t mean much. A way to make that chart more significative would be replacing total return with its 10 year rolling average.

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Re: Moods of the U.S. Stock Market, 1990-2017

Post by garlandwhizzer » Fri Dec 15, 2017 12:20 pm

SimpleGift wrote:
The problem is that even the experts whose job it is to predict the market's future earnings-per-share have a terrible track record of forecasting this metric just one year in advance, much less 10 years in the future. Though not totally discounting the rational calculations of future fundamentals, I'm sticking with overzealous optimism and pessimism as a significant driver of long-term multiple changes.
1+

Future earnings estimates are basically a joke. They are made by analysts in the business of marketing equity and historically on a consistent basis overestimate earnings on average by 10%. That's good for their business models, investors who actually believe in analysts estimates are more likely to justify the purchase of richly valued stock based on presumed future growth in earnings. But in truth the problem is much worse than the average 10% error, because there is a very wide dispersion of errors, some wildly optimistic, some much less so, according to the prevailing emotional investment climate. In the the tech boom, long term earnings estimates were wildly overstated relative to what turned out to be reality. They and employed successfully to justify outrageous PEs as the bubble expanded. There seemed to be no end in sight for the massively growing profits of Lucent or Nokia or Cisco.

There are macroeconomic conditions for sure when next years earnings are expected to improve, no doubt about that. There are also times when they are expected to suffer. But in both conditions there is considerable emotional overlay on top of a rational analysis, partly from the conflict of interest agenda of buy side financial firms who generate profits from equity sales and partly from the natural emotional swings of herd human behavior.

Currently in the market there is considerable optimism on future earnings growth. The following is a quote from an article on earnings estimates for next year 2018 from Seeking Alpha:
Earnings are expected to rise an estimated 22 percent to $131.36 by the end of 2018, from the trialing-twelve-months estimates of $107.61. At 23.5 times 2018 earnings, the S&P 500 would be valued at 3087, or roughly 3,100.
22% earnings growth is quite robust and they're predicting generous increases in the S&P. Macroeconomic conditions are good now, no doubt, but achieving that level of earnings growth is quite unlikely IMO. It is however used to justify stock current and future price appreciation. The general optimism and complacency among investors now is reflected in generous but not bubble-like equity valuations and also in the Volatility Index VIX which is at or very near its lowest point in history. Essentially no one expects significant inflation or a recession and most expect the continuation of slow growth, low inflation, and increasing corporate profits (the Goldilocks scenario). The optimists may be right, it may continue unabated. The happy news may continue. The driving factor for our generous valuations and low VIX, however, is not just fundamental economic reality which, granted, looks okay, but a large measure of positive emotion/sentiment based on 8+ years of bull market. Earlier along in that 8+ year run, many investors were skeptical of it, loaded up on bonds yielding almost nothing, and the bull kept running in spite of a lot of money watching from the sidelines. A lot of that sideline money has finally given up on pessimism and bought into risk assets, driving up their prices. That's where we are now IMO. Historically, pervasive optimism and investor complacency tends to happen in the late stages of a bull market. That doesn't mean it will collapse soon, but rather that at some point in the future, air will start leaking out the positive emotional balloon and PE expansion will likely moderate, cease, or even reverse.

Garland Whizzer

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Re: Moods of the U.S. Stock Market, 1990-2017

Post by SimpleGift » Fri Dec 15, 2017 1:02 pm

garlandwhizzer wrote:
Fri Dec 15, 2017 12:20 pm
Historically, pervasive optimism and investor complacency tends to happen in the late stages of a bull market. That doesn't mean it will collapse soon, but rather that at some point in the future, air will start leaking out the positive emotional balloon and PE expansion will likely moderate, cease, or even reverse.
This appears to already be happening, if one looks at the makeup of S&P 500 price changes over the past five years (table below). Since 2012, P/E expansion has steadily dropped from over 95% of price returns to 37% last year. Meanwhile, earnings growth has become a much more significant driver of price returns, explaining over 60% last year.
One gets the sense that the market's P/E can't really expand too much from here forward, leaving earnings growth to be the main driver of price returns in the years just ahead.
Cordially, Todd

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Re: Moods of the U.S. Stock Market, 1990-2017

Post by whiteprius » Fri Dec 15, 2017 1:10 pm

SimpleGift wrote:
Fri Dec 15, 2017 1:02 pm
One gets the sense that the market's P/E can't really expand too much from here forward, leaving earnings growth to be the main driver of price returns in the years just ahead.
P/E is not only unlikely to expand but it will shrink. To understand the OP's chart you have to read it in conjunction with the graph below, which shows that P/E was at its natural 15 in 2011 or so. Knowing that, you will conclude that all post-2011 blue bars in OP's chart are unnatural increases that will be taken away in the future, likely the near future. Same story if you look at Shiller CAPE. This isn't a goose vs. ducks issue the chart below and OP's chart must be read together. Some say the natural P/E level has risen above 15 and that today is different from the last 90 years, and that's fine if you believe that, but you need to pick your natural level which can't be the current level.

http://www.multpl.com/

http://www.multpl.com/shiller-pe/

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Re: Moods of the U.S. Stock Market, 1990-2017

Post by siamond » Fri Dec 15, 2017 4:14 pm

SimpleGift wrote:
Fri Dec 15, 2017 10:14 am
The story of this thread so far, in a nutshell:
  • OP: This is a picture of a chicken. Any thoughts?

    First Responder: But that bird doesn't have webbed feet. How can it be a duck?

    OP: If you look closer, you'll see that it's actually a chicken.

    Second Responder: But why didn't you offer a picture of a goose? I'm into waterfowl also.

    OP: Sigh...........
Ok, this is kind of funny, but I'm afraid you might have missed the point. Fact is dividends and earning growth are fungible quantities. Depending on the enterprises collective mood (!!), they may distribute more or less dividends while reinvesting (less or more) undistributed earnings. Or they may do some level of buybacks which end up acting on price. Your chickens are sometimes missing a leg or two, or a feather, or a wing, or even a head. Makes kind of hard to compare chicken to chicken... So really, the only meaningful chart is dividends+earnings growth (fundamental return) vs. P/E variation (speculative return). The golden goose in other words! :wink:

PS. I am assuming that the chart in the OP was using TTM P/E1 (i.e. no CAPE-like multi-year math, just the past years earnings).

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Re: Moods of the U.S. Stock Market, 1990-2017

Post by Thesaints » Fri Dec 15, 2017 4:40 pm

whiteprius wrote:
Fri Dec 15, 2017 1:10 pm
SimpleGift wrote:
Fri Dec 15, 2017 1:02 pm
One gets the sense that the market's P/E can't really expand too much from here forward, leaving earnings growth to be the main driver of price returns in the years just ahead.
P/E is not only unlikely to expand but it will shrink. To understand the OP's chart you have to read it in conjunction with the graph below, which shows that P/E was at its natural 15 in 2011 or so. Knowing that, you will conclude that all post-2011 blue bars in OP's chart are unnatural increases that will be taken away in the future, likely the near future. Same story if you look at Shiller CAPE. This isn't a goose vs. ducks issue the chart below and OP's chart must be read together. Some say the natural P/E level has risen above 15 and that today is different from the last 90 years, and that's fine if you believe that, but you need to pick your natural level which can't be the current level.
There is no such thing as a "natural" level. It depends on the rest of the economical environment.
Presently, bonds yield less than 3% (treasuries) which corresponds to a P/E > 33. Stocks P/E is lower do to the equity risk premium and one can discuss how much extra risk there is and therefore how much below 33 the stock market P/E has to be.
Of course, if treasuries yielded 5% the starting point would be P/E < 20, but no figure for the treasuries yield is more "natural" or "unnatural".

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Re: Moods of the U.S. Stock Market, 1990-2017

Post by SimpleGift » Fri Dec 15, 2017 4:50 pm

siamond wrote:
Fri Dec 15, 2017 4:14 pm
So really, the only meaningful chart is dividends+earnings growth (fundamental return) vs. P/E variation (speculative return). The golden goose in other words!
If interested in a golden goose chart such as you're describing, one can certainly draw one up from the S&P Dow Jones data in the OP, found in this spreadsheet. Please go for it, showing total returns, if that's your desire. There's no multi-year math, as the index prices, operating earnings and cash dividends are all reported quarterly, easily converted into annual data.

As much as I understand where you're coming from, siamond, the OP post is answering a different question, taken from a previous Forum thread: How much of the price gains of the S&P 500 in recent years are attributable to earnings growth and how much are attributable to P/E expansion?

That's it — a limited question, with a limited scope of analysis. Nothing more than an ordinary chicken, I'm afraid. :wink:
Cordially, Todd

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Re: Moods of the U.S. Stock Market, 1990-2017

Post by SimpleGift » Fri Dec 15, 2017 4:57 pm

Thesaints wrote:
Fri Dec 15, 2017 4:40 pm
There is no such thing as a "natural" level. It depends on the rest of the economical environment.
Hear, hear! There is no magical, mean value at which stocks are destined to trade — and no good reason why CAPE 10 values must revert back to historical averages anytime soon. Especially if interest rates stay in their current low range.
Cordially, Todd

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Re: Moods of the U.S. Stock Market, 1990-2017

Post by siamond » Fri Dec 15, 2017 6:36 pm

SimpleGift wrote:
Fri Dec 15, 2017 4:50 pm
As much as I understand where you're coming from, siamond, the OP post is answering a different question, taken from a previous Forum thread: How much of the price gains of the S&P 500 in recent years are attributable to earnings growth and how much are attributable to P/E expansion?

That's it — a limited question, with a limited scope of analysis. Nothing more than an ordinary chicken, I'm afraid. :wink:
Ok, fair enough, I didn't pay attention to the linkage with a previous thread. Then I'd argue that the original question is a little weird (chicken little?), because of the fungibility between dividends and earnings growth, but that's just because I can be a tad stubborn at times! As you undoubtedly noticed! :wink:

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Re: Moods of the U.S. Stock Market, 1990-2017

Post by whiteprius » Fri Dec 15, 2017 6:47 pm

Thesaints wrote:
Fri Dec 15, 2017 4:40 pm

There is no such thing as a "natural" level. It depends on the rest of the economical environment.
There is a natural level, the level the rubber band has snapped back to over the last 120 years and that's around 15. It might be a little higher or a little lower, but it's not the 20+ we're in now. It's always snapped back in the past, it will this time too.

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Re: Moods of the U.S. Stock Market, 1990-2017

Post by SimpleGift » Fri Dec 15, 2017 7:06 pm

whiteprius wrote:
Fri Dec 15, 2017 6:47 pm
There is a natural level, the level the rubber band has snapped back to over the last 120 years and that's around 15. It might be a little higher or a little lower, but it's not the 20+ we're in now. It's always snapped back in the past, it will this time too.
Regarding your idea of a "natural level" of stock valuations to which markets are destined to "snap back" over time. It's a common view, one I entertained myself a few years ago — but this blog post over at Philosophical Economics in 2013 thoroughly convinced me otherwise.

It's a very long, detailed blog post, but here's a brief executive summary: If one looks carefully at the history of CAPE 10 values, they have only fallen below "average" in the past due to 1) world war, 2) high inflation, or 3) a financial crisis (chart below).
Today, we have the opposite of these three fearsome factors, and instead we are experiencing relative peace, low inflation and interest rates, and financial stability worldwide. Certainly a global catastrophe could come along (a pandemic, a major war, or an environmental collapse) — but absent these, there's not a good reason why CAPE 10 must mean revert back to its historical average anytime soon.

Stock valuations are not a stationary series around a fixed mean — no matter how seductive that straight red line across the middle of the historical CAPE 10 chart looks above. Their level depends upon the economic environment around them.
Cordially, Todd

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Re: Moods of the U.S. Stock Market, 1990-2017

Post by whiteprius » Fri Dec 15, 2017 9:11 pm

lol at the attempted post-hoc rationalizations, e.g. of the 80s as "tight money high inflation" and ignoring the Vietnam war, among other things. And who knew WW1 lasted so long? If you look at the graph, you'll see that almost all of the snapbacks were sudden, very violent (those are very steep lines) and essentially random; they weren't connected to any particular event. I don't know when the next will occur, but those blue bars above are a debt that will be repaid.

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