Starting to feel like the late 1990s?

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SlowMovingInvestor
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Re: Starting to feel like the late 1990s?

Post by SlowMovingInvestor » Sat Jan 27, 2018 10:25 am

nativenewenglander wrote:
Sat Jan 27, 2018 9:44 am
I'm not changing any allocations either, but it feels much like 1999.
Other than utilities all other ETF sector choices say higher.
As I recollect, regulated utilities (power, gas etc.) typically don't benefit much from tax reform since they just have to pass benefits on to their customers in the form of lower rates. That may be why utilities haven't shared much in the upside.

visualguy
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Re: Starting to feel like the late 1990s?

Post by visualguy » Sat Jan 27, 2018 10:34 am

Even if it's like the late 90s, we all have asset allocations that enable us to tolerate with SWAN something similar to what came after that, right? :wink:

Greg in Idaho
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Re: Starting to feel like the late 1990s?

Post by Greg in Idaho » Sat Jan 27, 2018 10:41 am

TRC wrote:
Fri Jan 26, 2018 7:43 pm

Unicorns that are going public have increasing Annual Recurring Revenue, but most are losing money hand over fist. It seems like Wall Street just cares about increasing ARR and doesn't factor in whether or not companies are actually making money.
The Rainbow Sector profits seem pretty elusive too...


Sorry...there are so many of these threads that I have a hard time responding with anything but snark. I am impressed by those who patiently make the same basic BH points over and over and over again...Good on you!

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jadd806
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Re: Starting to feel like the late 1990s?

Post by jadd806 » Sat Jan 27, 2018 10:43 am

I was 6 in 1999, so I'm not sure that I'm qualified to comment on this one. :P

I have worried on occasion about how tech-heavy the US market is. I cringe at Apple, Amazon, Facebook, and Microsoft comprising over 10% of the S&P 500. But there's nothing actionable here. Many sectors have gone through similar booms (and later busts) in the past, and the market just keeps on chugging. Relevant paper by Shiller, looking back 150 years: Changing Times, Changing Values: A Historical Analysis of Sectors within the US Stock Market 1872-2013.

Thanks to my international allocation at market cap weight, the P/E of my portfolio is still just below 20.

Valuethinker
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Re: Starting to feel like the late 1990s?

Post by Valuethinker » Sat Jan 27, 2018 10:49 am

SlowMovingInvestor wrote:
Sat Jan 27, 2018 10:22 am
Index Fan wrote:
Sat Jan 27, 2018 9:38 am
Tycoon wrote:
Fri Jan 26, 2018 4:34 pm
Listening to Nobel winning economists can also derail one's path to wealth. One boastfully declared the market would NEVER recover after the last election.
In particular, a Nobel-prize-winning economist that is often lauded here.

An excellent example of letting politics interfere with investing.

Well, he recanted within 3-4 days, as I recall, so even if you had taken that as gospel, you wouldn't have missed more than 3-4% of gain.

That being said, even Nobel Prize winning financial economist don't have good handles on investing. See Long Term Capital, Collapse of.
Indeed so. He said there would be a severe recession.

3 or so days later he recanted.

Note he also said we should not overreact (in macroeconomic terms) re Brexit. So far, he has been proved correct (although Brexit has not happened yet).

Valuethinker
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Re: Starting to feel like the late 1990s?

Post by Valuethinker » Sat Jan 27, 2018 10:53 am

Index Fan wrote:
Sat Jan 27, 2018 9:38 am
Tycoon wrote:
Fri Jan 26, 2018 4:34 pm
Listening to Nobel winning economists can also derail one's path to wealth. One boastfully declared the market would NEVER recover after the last election.
In particular, a Nobel-prize-winning economist that is often lauded here.

An excellent example of letting politics interfere with investing.
If we are talking about the same economist, he said that there would be a severe recession?

3 (or 4) days later he said that had been an emotional reaction, and he recanted what he had said.

AFAIK he said nothing about a stock market crash?

Economists said the Brexit vote would be disastrous (although this same economist said we should not overestimate the impacts, even in a small open economy like the UK with a huge trade sector). The foreign exchange markets appeared to agree with them, dropping GBP relative to USD & EUR by about 10% in about 60 minutes (between 2 and 3 am). The FTSE100 then rallied, because the biggest stocks in the UK index (10 stocks are c. 44%, 100 stocks are c. 84%) are multinationals that earn most of their profits overseas. Overall the UK economy and stock market have lagged its main trading partners since 23rd June, 2016.

So we could say economists were again, wrong, however Brexit has not yet happened.

IlliniDave
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Re: Starting to feel like the late 1990s?

Post by IlliniDave » Sat Jan 27, 2018 10:54 am

Yeah, this tune seems familiar ...

... but it's like a good blues solo, it draws on elements of the prior melody, but where each new note goes is difficult to pin down in advance.

I admit to getting nervous as the gains mount, but I can't think of anything I believe is more prudent than sticking with my plan, which was drafted with the benefit of hindsight from 2000-2002, and 2007-2009, and even 1987 (though I had basically no real skin in the game at the time).
Don't do something. Just stand there!

quantAndHold
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Re: Starting to feel like the late 1990s?

Post by quantAndHold » Sat Jan 27, 2018 11:04 am

The whole crypto thing feels very much like the late 90’s.

The rest of the market, not so much. In the 90’s all a company had to do is put “.com” after their name to get a billion dollar valuation. The company I worked for during that time had a billion dollar valuation and a product with no customers.

Amazon is a cash generating machine, but Jeff Bezos uses the free cash flow to invest back into the business to fund massive growth. Netflix is doing similar. I don’t worry about either of them surviving and thriving. Tesla is Tesla. It will survive or not, but it’s a single company. Elon Musk marches to his own drummer.

It now a fully valued, late bull market? Yes. Absolutely. The market will drop at some point, because it always does. Is it a bubble waiting for its moment to burst like 1999? Nope.

Also, people displaying charts to make your point...use log scale. Anything will look like a bubble in linear scale.

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Top99%
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Re: Starting to feel like the late 1990s?

Post by Top99% » Sat Jan 27, 2018 11:10 am

quantAndHold wrote:
Sat Jan 27, 2018 11:04 am
The whole crypto thing feels very much like the late 90’s.

The rest of the market, not so much. In the 90’s all a company had to do is put “.com” after their name to get a billion dollar valuation. The company I worked for during that time had a billion dollar valuation and a product with no customers.

Amazon is a cash generating machine, but Jeff Bezos uses the free cash flow to invest back into the business to fund massive growth. Netflix is doing similar. I don’t worry about either of them surviving and thriving. Tesla is Tesla. It will survive or not, but it’s a single company. Elon Musk marches to his own drummer.

It now a fully valued, late bull market? Yes. Absolutely. The market will drop at some point, because it always does. Is it a bubble waiting for its moment to burst like 1999? Nope.

Also, people displaying charts to make your point...use log scale. Anything will look like a bubble in linear scale.
My take as well. One data point is my Megacorp employer still hasn't reached 50% of the market cap it had in 1999 even though revenue and profits are up over 500% since then.
Adapt or perish

ResearchMed
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Re: Starting to feel like the late 1990s?

Post by ResearchMed » Sat Jan 27, 2018 11:13 am

willthrill81 wrote:
Sat Jan 27, 2018 1:02 am
visualguy wrote:
Sat Jan 27, 2018 12:55 am
It is very frightening for people who put a very large lump sum in the market at these levels - I would hate to be in those shoes. For the rest of us who rode this up, we can probably ride it back down without too much anxiety unless it really overshoots on the way down, and there's no catalyst on the horizon for a real crash as opposed to a correction.
Whether you put a lump sum in the market or dollar cost averaged in is irrelevant at this point. Either way, you have the same stake in what happens going forward.
If we are comparing someone who has been contributing to investments (and seeing some nice gains) for several years or several decades and now has "almost" everything invested, to someone/a newbie who has just lump summed in with "almost everything"... here is a huge difference:

The experienced investor has, well, experienced investing, including lots of ups, and downs, and ... ups again, in the long term.

The newbie? Not so much. It's looking like a cliff and lots of people are talking like it is a cliff.
And whatever drop does occur (more than daily fluctuations, but even the larger of those, too), it's going to loom large.
IF this person is fortunate to have a bit of a run up first, that often does change the perspective.

Yes, whether it is "your money" (original investment) or "house money" (the gains), either way, the money is "now yours".
Or could be if you took it out of the market and stashed it under the mattress (or, okay, in a bank).
But it can still feel a bit different. Most of us still have some of those human frailties in terms of emotional responses :wink:

RM
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willthrill81
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Re: Starting to feel like the late 1990s?

Post by willthrill81 » Sat Jan 27, 2018 11:36 am

ResearchMed wrote:
Sat Jan 27, 2018 11:13 am
willthrill81 wrote:
Sat Jan 27, 2018 1:02 am
visualguy wrote:
Sat Jan 27, 2018 12:55 am
It is very frightening for people who put a very large lump sum in the market at these levels - I would hate to be in those shoes. For the rest of us who rode this up, we can probably ride it back down without too much anxiety unless it really overshoots on the way down, and there's no catalyst on the horizon for a real crash as opposed to a correction.
Whether you put a lump sum in the market or dollar cost averaged in is irrelevant at this point. Either way, you have the same stake in what happens going forward.
If we are comparing someone who has been contributing to investments (and seeing some nice gains) for several years or several decades and now has "almost" everything invested, to someone/a newbie who has just lump summed in with "almost everything"... here is a huge difference:

The experienced investor has, well, experienced investing, including lots of ups, and downs, and ... ups again, in the long term.

The newbie? Not so much. It's looking like a cliff and lots of people are talking like it is a cliff.
And whatever drop does occur (more than daily fluctuations, but even the larger of those, too), it's going to loom large.
IF this person is fortunate to have a bit of a run up first, that often does change the perspective.

Yes, whether it is "your money" (original investment) or "house money" (the gains), either way, the money is "now yours".
Or could be if you took it out of the market and stashed it under the mattress (or, okay, in a bank).
But it can still feel a bit different. Most of us still have some of those human frailties in terms of emotional responses :wink:

RM
That was my point. The only differences have to deal with you, the individual investor. Objectively, whether the money came from your contributions or gains is irrelevant. What happens going forward with your contribution, whether made all at once or bit by bit over time, is irrelevant, apart from your own experiences and feelings.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

ResearchMed
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Re: Starting to feel like the late 1990s?

Post by ResearchMed » Sat Jan 27, 2018 11:48 am

willthrill81 wrote:
Sat Jan 27, 2018 11:36 am
ResearchMed wrote:
Sat Jan 27, 2018 11:13 am
willthrill81 wrote:
Sat Jan 27, 2018 1:02 am
visualguy wrote:
Sat Jan 27, 2018 12:55 am
It is very frightening for people who put a very large lump sum in the market at these levels - I would hate to be in those shoes. For the rest of us who rode this up, we can probably ride it back down without too much anxiety unless it really overshoots on the way down, and there's no catalyst on the horizon for a real crash as opposed to a correction.
Whether you put a lump sum in the market or dollar cost averaged in is irrelevant at this point. Either way, you have the same stake in what happens going forward.
If we are comparing someone who has been contributing to investments (and seeing some nice gains) for several years or several decades and now has "almost" everything invested, to someone/a newbie who has just lump summed in with "almost everything"... here is a huge difference:

The experienced investor has, well, experienced investing, including lots of ups, and downs, and ... ups again, in the long term.

The newbie? Not so much. It's looking like a cliff and lots of people are talking like it is a cliff.
And whatever drop does occur (more than daily fluctuations, but even the larger of those, too), it's going to loom large.
IF this person is fortunate to have a bit of a run up first, that often does change the perspective.

Yes, whether it is "your money" (original investment) or "house money" (the gains), either way, the money is "now yours".
Or could be if you took it out of the market and stashed it under the mattress (or, okay, in a bank).
But it can still feel a bit different. Most of us still have some of those human frailties in terms of emotional responses :wink:

RM
That was my point. The only differences have to deal with you, the individual investor. Objectively, whether the money came from your contributions or gains is irrelevant. What happens going forward with your contribution, whether made all at once or bit by bit over time, is irrelevant, apart from your own experiences and feelings.
But the point I was trying to make, in addition, and importantly (I think, in many cases) is that it can feel very different. VERY.

And "knowing" that there is no difference? Doesn't help that feeling, especially when you just plopped "everything" in the market (whatever the reason you are just starting out with a lump sum: inheritance, bank money cautiously saved to date, etc.).

That's one reason it is sometimes recommended to put one chunk in the market "now", but DCA some of the rest over x months, etc.
(Another reason, in our minds, is that the benefit of lump summing is an *average* over many time periods/DCA strategies. Starting at what ends up being an unfortunate time? No lump sum advantage; quite the opposite. Again, it's the emotions. But if one gets unlucky with start times for lump summing, it's not just emotions. If one is aware of DCA'ing, there's no avoiding the "if only" feeling... and those emotions about what would have been an actual better choice... But the lump sum/DCA is a much different issue than the topic of this thread. The similarity is the emotional part.)

RM
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willthrill81
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Re: Starting to feel like the late 1990s?

Post by willthrill81 » Sat Jan 27, 2018 11:57 am

ResearchMed wrote:
Sat Jan 27, 2018 11:48 am
willthrill81 wrote:
Sat Jan 27, 2018 11:36 am
ResearchMed wrote:
Sat Jan 27, 2018 11:13 am
willthrill81 wrote:
Sat Jan 27, 2018 1:02 am
visualguy wrote:
Sat Jan 27, 2018 12:55 am
It is very frightening for people who put a very large lump sum in the market at these levels - I would hate to be in those shoes. For the rest of us who rode this up, we can probably ride it back down without too much anxiety unless it really overshoots on the way down, and there's no catalyst on the horizon for a real crash as opposed to a correction.
Whether you put a lump sum in the market or dollar cost averaged in is irrelevant at this point. Either way, you have the same stake in what happens going forward.
If we are comparing someone who has been contributing to investments (and seeing some nice gains) for several years or several decades and now has "almost" everything invested, to someone/a newbie who has just lump summed in with "almost everything"... here is a huge difference:

The experienced investor has, well, experienced investing, including lots of ups, and downs, and ... ups again, in the long term.

The newbie? Not so much. It's looking like a cliff and lots of people are talking like it is a cliff.
And whatever drop does occur (more than daily fluctuations, but even the larger of those, too), it's going to loom large.
IF this person is fortunate to have a bit of a run up first, that often does change the perspective.

Yes, whether it is "your money" (original investment) or "house money" (the gains), either way, the money is "now yours".
Or could be if you took it out of the market and stashed it under the mattress (or, okay, in a bank).
But it can still feel a bit different. Most of us still have some of those human frailties in terms of emotional responses :wink:

RM
That was my point. The only differences have to deal with you, the individual investor. Objectively, whether the money came from your contributions or gains is irrelevant. What happens going forward with your contribution, whether made all at once or bit by bit over time, is irrelevant, apart from your own experiences and feelings.
But the point I was trying to make, in addition, and importantly (I think, in many cases) is that it can feel very different. VERY.

And "knowing" that there is no difference? Doesn't help that feeling, especially when you just plopped "everything" in the market (whatever the reason you are just starting out with a lump sum: inheritance, bank money cautiously saved to date, etc.).

That's one reason it is sometimes recommended to put one chunk in the market "now", but DCA some of the rest over x months, etc.
(Another reason, in our minds, is that the benefit of lump summing is an *average* over many time periods/DCA strategies. Starting at what ends up being an unfortunate time? No lump sum advantage; quite the opposite. Again, it's the emotions. But if one gets unlucky with start times for lump summing, it's not just emotions. If one is aware of DCA'ing, there's no avoiding the "if only" feeling... and those emotions about what would have been an actual better choice... But the lump sum/DCA is a much different issue than the topic of this thread. The similarity is the emotional part.)

RM
I completely agree. Feelings shouldn't enter the equation, but of course they do. That's part of the reason why I'm a trend follower; I want some downside protection, even if my long-term returns aren't quite the same as they would be with buy-and-hold. It's easier for me (and many others) to emotionally deal with the situation. If one is fine with losing 50% or more of their equity position with buy-and-hold and won't panic sell, it's a great strategy too. Thankfully, many here realize that despite the nine year and counting bull market, a bear market is coming, sooner or later, and now is the time to determine how we'll deal with it.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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nedsaid
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Re: Starting to feel like the late 1990s?

Post by nedsaid » Sat Jan 27, 2018 12:18 pm

kosomoto wrote:
Fri Jan 26, 2018 4:00 pm
If this bothers you just buy the vanguard value fund which excludes all these companies. The return is basically the same as the total market return and you don’t need to worry about owning companies that may never be profitable.

There, problem solved.
I think this is a good idea. Large Value has been underperforming since the 2008-2009 financial crisis and thus we have been in a Large Growth market. Large Value won't protect you from a crash but you will be avoiding the more speculative stocks and this should help lessen the losses if this happens.

I recall that Larry Swedroe did something similar in 1998. My caution is to not be "all in" or "all out". That is I wouldn't sell 100% of my Total Stock Market Index Fund to switch into Value Index. What I would do instead is a Value tilt. I am just not an "all in" or "all out" guy, you never want to be 100% out of the large growth stocks.
Last edited by nedsaid on Sat Jan 27, 2018 12:20 pm, edited 1 time in total.
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lostdog
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Re: Starting to feel like the late 1990s?

Post by lostdog » Sat Jan 27, 2018 12:20 pm

I am seeing alot of these fear threads lately. I always go back to what Toons and Jack Bogle say.

Time in the market is better than timing the market. -Toons

Put The Compounding Machine To Work Now.. -Toons

Stay the course. -Bogle
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tibbitts
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Re: Starting to feel like the late 1990s?

Post by tibbitts » Sat Jan 27, 2018 12:26 pm

nedsaid wrote:
Sat Jan 27, 2018 12:18 pm
kosomoto wrote:
Fri Jan 26, 2018 4:00 pm
If this bothers you just buy the vanguard value fund which excludes all these companies. The return is basically the same as the total market return and you don’t need to worry about owning companies that may never be profitable.

There, problem solved.
I think this is a good idea. Large Value has been underperforming since the 2008-2009 financial crisis and thus we have been in a Large Growth market. Large Value won't protect you from a crash but you will be avoiding the more speculative stocks and this should help lessen the losses if this happens.

I recall that Larry Swedroe did something similar in 1998. My caution is to not be "all in" or "all out". That is I wouldn't sell 100% of my Total Stock Market Index Fund to switch into Value Index. What I would do instead is a Value tilt. I am just not an "all in" or "all out" guy, you never want to be 100% out of the large growth stocks.
Ah, but what about not being 100% out of the much-maligned small growth category? I've actually have added somewhat to that in the form of an R2000 fund, due entirely to fund availability in one of my retirement programs - if I recall the expenses are something like .02.

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Re: Starting to feel like the late 1990s?

Post by snowman » Sat Jan 27, 2018 12:33 pm

quantAndHold wrote:
Sat Jan 27, 2018 11:04 am
The whole crypto thing feels very much like the late 90’s.

The rest of the market, not so much. In the 90’s all a company had to do is put “.com” after their name to get a billion dollar valuation. The company I worked for during that time had a billion dollar valuation and a product with no customers.

Amazon is a cash generating machine, but Jeff Bezos uses the free cash flow to invest back into the business to fund massive growth. Netflix is doing similar. I don’t worry about either of them surviving and thriving. Tesla is Tesla. It will survive or not, but it’s a single company. Elon Musk marches to his own drummer.

It now a fully valued, late bull market? Yes. Absolutely. The market will drop at some point, because it always does. Is it a bubble waiting for its moment to burst like 1999? Nope.

Also, people displaying charts to make your point...use log scale. Anything will look like a bubble in linear scale.
Great summary! I worked for the megacorp (on the finance/deal side) that was selling all the "new" products/services at a massive loss, and the goal was to get as many customers as quickly as possible! Sales people were compensated accordingly. The strategy was to fund it with legacy profits, which at some point became dwarfed by losses from the new side. I left the company.

Went to startup offering massive stock options. Was lured by highly profitable business model, and ethical business dealings. Within a month of running deals/margins, I realized it's just a different variation of megacorp's business model - we still lost money, now on every single customer, but we ethically reported our negative numbers to our main financial backer - a mega mega investment bank everyone knows. Company's financial goals were booking as much revenue as possible; sales people were compensated accordingly. I left after several months, as soon as I found a new job. It took about 3 more months for the company to finally die.

Crazy times indeed.

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Tycoon
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Re: Starting to feel like the late 1990s?

Post by Tycoon » Sat Jan 27, 2018 12:42 pm

Valuethinker wrote:
Sat Jan 27, 2018 10:53 am
Index Fan wrote:
Sat Jan 27, 2018 9:38 am
Tycoon wrote:
Fri Jan 26, 2018 4:34 pm
Listening to Nobel winning economists can also derail one's path to wealth. One boastfully declared the market would NEVER recover after the last election.
In particular, a Nobel-prize-winning economist that is often lauded here.

An excellent example of letting politics interfere with investing.
If we are talking about the same economist, he said that there would be a severe recession?

3 (or 4) days later he said that had been an emotional reaction, and he recanted what he had said.

AFAIK he said nothing about a stock market crash?

Economists said the Brexit vote would be disastrous (although this same economist said we should not overestimate the impacts, even in a small open economy like the UK with a huge trade sector). The foreign exchange markets appeared to agree with them, dropping GBP relative to USD & EUR by about 10% in about 60 minutes (between 2 and 3 am). The FTSE100 then rallied, because the biggest stocks in the UK index (10 stocks are c. 44%, 100 stocks are c. 84%) are multinationals that earn most of their profits overseas. Overall the UK economy and stock market have lagged its main trading partners since 23rd June, 2016.

So we could say economists were again, wrong, however Brexit has not yet happened.
My overarching point is that acting on expert advice is often the wrong thing to do. How many predicted the run up we are currently seeing? How many predicted the opposite? For what it's worth I believe Taylor gives the best advice; although I don't believe a lot of people listen to him.
...I might be just beginning | I might be near the end. Enya | | C'est la vie

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Re: Starting to feel like the late 1990s?

Post by nedsaid » Sat Jan 27, 2018 12:45 pm

garlandwhizzer wrote:
Fri Jan 26, 2018 3:16 pm
Netflix continues to skyrocket as it burns through more and more cash. Netflix reported a quarterly loss last quarter but due to top line subscriber growth its price spiked in after hours trading. Netflix has a PE ratio of 220 and a market cap of 117 billion. Amazon has a stratospheric PE 0f 346. Tesla loses money, burns through cash rapidly, has a trailing 12 month EPS of negative $8.66/share, and yet its market cap is 57+ billion although it is yet to show any profit at all. All these companies enjoy competitive advantages, robust top line growth, strong future prospects, and compelling business models but the profits to justify such valuations lies not in the present but in the anticipated future. The problem is that the future rarely turns out to be exactly what is expected even by the brightest among us. If any of these firms disappoint, there's a long way to drop before hitting the ground floor. Then there's Bitcoin which IMHO demonstrates how easy it is currently to ride a wave of investor optimism in tech and inflate a massive bubble based on nothing more than a compelling and innovating narrative which may or may not turn out to be true in the future. Pure speculation took the price of Bitcoin from $961 to $16,262 in the 12 months of 2017. Tons of money jumped into this MOM trade.

Such lofty investor sentiment reminds me a bit of the late 1990s. I am not making any portfolio changes other than rebalancing from equity into bonds according to my asset allocation model. One thing I know of sure: this price escalation won't continue at this pace for the rest of the year. It's hard to get off the gravy train with PE10 at 34.6 and PE1 at 26.7, but a bump in the road ahead is likely, probably a correction not a bear market, in the not too distant future. If you haven't yet rebalanced in this bull run, now might be a good time to do so.

Garland Whizzer
I would agree that there is outright speculative fever in certain stocks like Netflix, Tesla, and Amazon. I would avoid Bitcoin like the plague, I don't even fully understand what it is and I suspect most of its investors don't either. Sort of reminds me of the excitement over Enron in the 1990's. Those touting Enron couldn't quite articulate what Enron really did but it was the future and it was exciting though my suspicion was that there was the equivalent of the roulette wheel on the 22nd floor.

Unlike the late 1990's, I don't think the euphoria has spread to entire sectors of the market. For example, Apple showed up on a lot of Value screens. Certainly I am seeing more optimism out there. The elites at the recent Davos conference were showing optimism as well. A lot of good feeling out there but euphoria is pretty limited.

I have often posted that interest rates tend towards higher P/E ratios and that interest rates have been historically low, though they have been gently rising. Last night, I was thinking about early 2000 and how forward P/E ratios got to about 32 and how trailing P/E ratios were at about 45. The thing is, interest rates were 6% to 7% now as opposed to 2% to 3% today. It shows the power of human optimism which drove valuations much higher than today even though interest rates were also much higher than today. Today, forward P/E ratios are about 22 and trailing P/E's about 27.

What I am trying to say is that good economic news, higher earnings, and investor optimism can overcome the effects of rising interest rates, at least for a while. A lot depends upon why interest rates are rising and how well behaved inflation expectations are. A spike of unexpected inflation could be devastating to both stocks and bonds but I don't see that happening in the near future. A lot also depends upon the speed of interest rate increases, the market can handle slow and gentle upward trends in rates.

From a business point of view, regulations are being cut and thus so are compliance costs. This alone acts like a big tax cut. There has been a dramatic cut in corporate tax rates and also a dramatic acceleration of depreciation. Bonus depreciation has been increased to 100% until 2022. Pretty much, in tax policy we are letting it rip. This doesn't even account for the tax cuts for individual tax payers which are much less than for business but still important. So business people are optimistic.

My take is that higher stock valuations might well be justified. The economy is accelerating and this will boost worker paychecks and corporate profits. Let's just see how it goes.

I am getting cautious about the market and I am still executing wave after wave of mild rebalancing from stocks to bonds as I have since July 2013. Valuations which were stretched are appearing to be even more stretched in the wake of market and economic optimism. I certainly am not bearish at all but I believe some caution is prudent here. If you haven't rebalanced your portfolio for a while, this is a good time to do it.
A fool and his money are good for business.

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Re: Starting to feel like the late 1990s?

Post by nedsaid » Sat Jan 27, 2018 12:50 pm

tibbitts wrote:
Sat Jan 27, 2018 12:26 pm
nedsaid wrote:
Sat Jan 27, 2018 12:18 pm
kosomoto wrote:
Fri Jan 26, 2018 4:00 pm
If this bothers you just buy the vanguard value fund which excludes all these companies. The return is basically the same as the total market return and you don’t need to worry about owning companies that may never be profitable.

There, problem solved.
I think this is a good idea. Large Value has been underperforming since the 2008-2009 financial crisis and thus we have been in a Large Growth market. Large Value won't protect you from a crash but you will be avoiding the more speculative stocks and this should help lessen the losses if this happens.

I recall that Larry Swedroe did something similar in 1998. My caution is to not be "all in" or "all out". That is I wouldn't sell 100% of my Total Stock Market Index Fund to switch into Value Index. What I would do instead is a Value tilt. I am just not an "all in" or "all out" guy, you never want to be 100% out of the large growth stocks.
Ah, but what about not being 100% out of the much-maligned small growth category? I've actually have added somewhat to that in the form of an R2000 fund, due entirely to fund availability in one of my retirement programs - if I recall the expenses are something like .02.
If you screen out the "lottery stocks", Small Growth doesn't look so bad. Vanguard Small-Cap Value Index and Vanguard Small-Cap Growth Indexes have similar performance records. One reason is that Vanguard does not screen particularly well for factors, another is that the good indexes screen out the junk.
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Re: Starting to feel like the late 1990s?

Post by rgs92 » Sat Jan 27, 2018 5:39 pm

As long as it's not 1966, all is fine as I see it.

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Re: Starting to feel like the late 1990s?

Post by stlutz » Sat Jan 27, 2018 5:58 pm

The main thing that was unique about the late 90s was how concentrated it was. Back then I was picking my own small-cap value stocks doing the Graham and Dodd thing and the result were, shall we say, disappointing. In '98 and '99, small value was flat while the overall market was up about 50%. The "overall market" increasingly came to mean a small list of big tech companies.

That's very different from today. Sure, nedsaid laments that value stocks haven't beaten the market over the past 10 years, but looked at in an absolute sense they have done just fine. If one had only invested in value stocks over that time they should still be happy. I wasn't happy in '99.

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Re: Starting to feel like the late 1990s?

Post by siamond » Sat Jan 27, 2018 6:17 pm

garlandwhizzer wrote:
Fri Jan 26, 2018 3:16 pm
Such lofty investor sentiment reminds me a bit of the late 1990s. I am not making any portfolio changes other than rebalancing from equity into bonds according to my asset allocation model. One thing I know of sure: this price escalation won't continue at this pace for the rest of the year. It's hard to get off the gravy train with PE10 at 34.6 and PE1 at 26.7, but a bump in the road ahead is likely, probably a correction not a bear market, in the not too distant future. If you haven't yet rebalanced in this bull run, now might be a good time to do so.
I share the feeling. Of course, every crisis is different, and there is little point double-clicking on why the late 90s were indeed quite different, as the upper-level point remains, we do see increasing signs of exuberance. I would actually be relieved to see a correction to reset some expectations. I mean, I certainly don't mind having to sell less shares to create the same level of retirement income, but I fear the behavioral consequences (notably the sneaky anchoring bias) of such prolonged bull market. All we can do is rebalance though, agreed.

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Re: Starting to feel like the late 1990s?

Post by Doom&Gloom » Sat Jan 27, 2018 6:20 pm

rgs92 wrote:
Sat Jan 27, 2018 5:39 pm
As long as it's not 1966, all is fine as I see it.
What???
1966 was probably my favorite year of all time. Of course, I wasn't investing at the time, but I was having a lot of fun.

:sharebeer

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Re: Starting to feel like the late 1990s?

Post by willthrill81 » Sat Jan 27, 2018 6:32 pm

Doom&Gloom wrote:
Sat Jan 27, 2018 6:20 pm
rgs92 wrote:
Sat Jan 27, 2018 5:39 pm
As long as it's not 1966, all is fine as I see it.
What???
1966 was probably my favorite year of all time. Of course, I wasn't investing at the time, but I was having a lot of fun.

:sharebeer
I thought it was the summer of '69! :D
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Starting to feel like the late 1990s?

Post by RAchip » Sat Jan 27, 2018 6:41 pm

The charts are very misleading. Going from 5 to 10 is exactly the same as going from 20 to 40.

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Re: Starting to feel like the late 1990s?

Post by Always passive » Sat Jan 27, 2018 11:45 pm

willthrill81 wrote:
Sat Jan 27, 2018 11:57 am
ResearchMed wrote:
Sat Jan 27, 2018 11:48 am
willthrill81 wrote:
Sat Jan 27, 2018 11:36 am
ResearchMed wrote:
Sat Jan 27, 2018 11:13 am
willthrill81 wrote:
Sat Jan 27, 2018 1:02 am


Whether you put a lump sum in the market or dollar cost averaged in is irrelevant at this point. Either way, you have the same stake in what happens going forward.
If we are comparing someone who has been contributing to investments (and seeing some nice gains) for several years or several decades and now has "almost" everything invested, to someone/a newbie who has just lump summed in with "almost everything"... here is a huge difference:

The experienced investor has, well, experienced investing, including lots of ups, and downs, and ... ups again, in the long term.

The newbie? Not so much. It's looking like a cliff and lots of people are talking like it is a cliff.
And whatever drop does occur (more than daily fluctuations, but even the larger of those, too), it's going to loom large.
IF this person is fortunate to have a bit of a run up first, that often does change the perspective.

Yes, whether it is "your money" (original investment) or "house money" (the gains), either way, the money is "now yours".
Or could be if you took it out of the market and stashed it under the mattress (or, okay, in a bank).
But it can still feel a bit different. Most of us still have some of those human frailties in terms of emotional responses :wink:

RM
That was my point. The only differences have to deal with you, the individual investor. Objectively, whether the money came from your contributions or gains is irrelevant. What happens going forward with your contribution, whether made all at once or bit by bit over time, is irrelevant, apart from your own experiences and feelings.
But the point I was trying to make, in addition, and importantly (I think, in many cases) is that it can feel very different. VERY.

And "knowing" that there is no difference? Doesn't help that feeling, especially when you just plopped "everything" in the market (whatever the reason you are just starting out with a lump sum: inheritance, bank money cautiously saved to date, etc.).

That's one reason it is sometimes recommended to put one chunk in the market "now", but DCA some of the rest over x months, etc.
(Another reason, in our minds, is that the benefit of lump summing is an *average* over many time periods/DCA strategies. Starting at what ends up being an unfortunate time? No lump sum advantage; quite the opposite. Again, it's the emotions. But if one gets unlucky with start times for lump summing, it's not just emotions. If one is aware of DCA'ing, there's no avoiding the "if only" feeling... and those emotions about what would have been an actual better choice... But the lump sum/DCA is a much different issue than the topic of this thread. The similarity is the emotional part.)

RM
I completely agree. Feelings shouldn't enter the equation, but of course they do. That's part of the reason why I'm a trend follower; I want some downside protection, even if my long-term returns aren't quite the same as they would be with buy-and-hold. It's easier for me (and many others) to emotionally deal with the situation. If one is fine with losing 50% or more of their equity position with buy-and-hold and won't panic sell, it's a great strategy too. Thankfully, many here realize that despite the nine year and counting bull market, a bear market is coming, sooner or later, and now is the time to determine how we'll deal with it.
What does it mean to be a trend follower in actions ? Do you use the 200 day moving average, or something like that to decide whether to stay in the market or not?

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Re: Starting to feel like the late 1990s?

Post by Noobvestor » Sat Jan 27, 2018 11:55 pm

IngognitoUSA wrote:
Fri Jan 26, 2018 4:13 pm
Shiller called Housing in Bubble in 2003.

Shiller called Stock market bubble July 2015.

Shiller is supposed to be source of 'Irrational exuberance' by Greenspan in 1996.

Listening to armchair economists can be injurous to your wealth.

Is it different this time, who knows, but we have not had such low Corporate tax rates since the 40s.
So he's consistently 3 to 5 years ahead of the game - guess we're close to due for the crash, then!
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe

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Re: Starting to feel like the late 1990s?

Post by randomizer » Sat Jan 27, 2018 11:59 pm

Valuations look too high to me, and there are some stand-out examples. Nevertheless, I don't see any reason not to stay the course. The whole point of this is to pick an AA you can stick with, rebalance, and let the market do what it will. (Note: I'm accumulating, so not as concerned about "the market doing what it will" as I would be if I were on the brink of retirement.)
75:25 AA / Expected retirement: 2097

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Re: Starting to feel like the late 1990s?

Post by bottlecap » Sun Jan 28, 2018 12:04 am

Man, how many posts like this are we going to have a day? If they end up all being right, I guess it's proof you can time the market...

JT

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Re: Starting to feel like the late 1990s?

Post by Always passive » Sun Jan 28, 2018 12:10 am

Since the majority in this discussion use the term “rebalance” and it is an action that encompasses many different strategies, maybe it would be interesting to define what each one means.
For example, I rebalance when my total equity exceeds my allowable band. My target equity allocation is 30% (I am retired) and rebalance back to 30% when it either exceeds 35% or goes below to 25%. What do you do?

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Re: Starting to feel like the late 1990s?

Post by siamond » Sun Jan 28, 2018 12:26 am

Always passive wrote:
Sun Jan 28, 2018 12:10 am
Since the majority in this discussion use the term “rebalance” and it is an action that encompasses many different strategies, maybe it would be interesting to define what each one means.
For example, I rebalance when my total equity exceeds my allowable band. My target equity allocation is 30% (I am retired) and rebalance back to 30% when it either exceeds 35% or goes below to 25%. What do you do?
It doesn't really matter as long as one stays sensible. Please check the articles and threads about rebalancing listed in this wiki page. A while ago, I (among other people) ran the numbers between multiple rebalancing methods, and really, the difference is pretty much negligible. Main point is to have a proper discipline that you like, details do not matter.

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Re: Starting to feel like the late 1990s?

Post by willthrill81 » Sun Jan 28, 2018 1:20 am

Always passive wrote:
Sat Jan 27, 2018 11:45 pm
willthrill81 wrote:
Sat Jan 27, 2018 11:57 am
ResearchMed wrote:
Sat Jan 27, 2018 11:48 am
willthrill81 wrote:
Sat Jan 27, 2018 11:36 am
ResearchMed wrote:
Sat Jan 27, 2018 11:13 am


If we are comparing someone who has been contributing to investments (and seeing some nice gains) for several years or several decades and now has "almost" everything invested, to someone/a newbie who has just lump summed in with "almost everything"... here is a huge difference:

The experienced investor has, well, experienced investing, including lots of ups, and downs, and ... ups again, in the long term.

The newbie? Not so much. It's looking like a cliff and lots of people are talking like it is a cliff.
And whatever drop does occur (more than daily fluctuations, but even the larger of those, too), it's going to loom large.
IF this person is fortunate to have a bit of a run up first, that often does change the perspective.

Yes, whether it is "your money" (original investment) or "house money" (the gains), either way, the money is "now yours".
Or could be if you took it out of the market and stashed it under the mattress (or, okay, in a bank).
But it can still feel a bit different. Most of us still have some of those human frailties in terms of emotional responses :wink:

RM
That was my point. The only differences have to deal with you, the individual investor. Objectively, whether the money came from your contributions or gains is irrelevant. What happens going forward with your contribution, whether made all at once or bit by bit over time, is irrelevant, apart from your own experiences and feelings.
But the point I was trying to make, in addition, and importantly (I think, in many cases) is that it can feel very different. VERY.

And "knowing" that there is no difference? Doesn't help that feeling, especially when you just plopped "everything" in the market (whatever the reason you are just starting out with a lump sum: inheritance, bank money cautiously saved to date, etc.).

That's one reason it is sometimes recommended to put one chunk in the market "now", but DCA some of the rest over x months, etc.
(Another reason, in our minds, is that the benefit of lump summing is an *average* over many time periods/DCA strategies. Starting at what ends up being an unfortunate time? No lump sum advantage; quite the opposite. Again, it's the emotions. But if one gets unlucky with start times for lump summing, it's not just emotions. If one is aware of DCA'ing, there's no avoiding the "if only" feeling... and those emotions about what would have been an actual better choice... But the lump sum/DCA is a much different issue than the topic of this thread. The similarity is the emotional part.)

RM
I completely agree. Feelings shouldn't enter the equation, but of course they do. That's part of the reason why I'm a trend follower; I want some downside protection, even if my long-term returns aren't quite the same as they would be with buy-and-hold. It's easier for me (and many others) to emotionally deal with the situation. If one is fine with losing 50% or more of their equity position with buy-and-hold and won't panic sell, it's a great strategy too. Thankfully, many here realize that despite the nine year and counting bull market, a bear market is coming, sooner or later, and now is the time to determine how we'll deal with it.
What does it mean to be a trend follower in actions ? Do you use the 200 day moving average, or something like that to decide whether to stay in the market or not?
I personally like the 7 month moving average (~140 DMA) because it reacts more quickly to trends, but it really doesn't matter over the long-term. Every timing period I've examined from 2 month to 15 month 'works' similarly well over the long-term.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Starting to feel like the late 1990s?

Post by investingdad » Sun Jan 28, 2018 9:08 am

I was fresh out of college in the late 90s.

People everywhere where talking tech stocks, B2B, paradigm shift, startup incubators, cash burn rates, get really big really fast, 80% compensation in the form of restricted private stock that would make them rich when they went public, bandwidth, internet index funds, buy NOW or miss the boat, and turn on CNBC first thing in the morning to know which stock was going up 50% that day, and 12% yearly returns are the new norm.

It took a while but it made me the skeptic I am today about this market.

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Re: Starting to feel like the late 1990s?

Post by bikechuck » Sun Jan 28, 2018 10:03 am

Index Fan wrote:
Sat Jan 27, 2018 9:38 am
Tycoon wrote:
Fri Jan 26, 2018 4:34 pm
Listening to Nobel winning economists can also derail one's path to wealth. One boastfully declared the market would NEVER recover after the last election.
In particular, a Nobel-prize-winning economist that is often lauded here.

An excellent example of letting politics interfere with investing.
Why so cryptic? Does this economist have a name? If so, this discussion would be more informative.

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Re: Starting to feel like the late 1990s?

Post by Index Fan » Sun Jan 28, 2018 10:12 am

bikechuck wrote:
Sun Jan 28, 2018 10:03 am
Index Fan wrote:
Sat Jan 27, 2018 9:38 am
Tycoon wrote:
Fri Jan 26, 2018 4:34 pm
Listening to Nobel winning economists can also derail one's path to wealth. One boastfully declared the market would NEVER recover after the last election.
In particular, a Nobel-prize-winning economist that is often lauded here.

An excellent example of letting politics interfere with investing.
Why so cryptic? Does this economist have a name? If so, this discussion would be more informative.
https://www.nytimes.com/interactive/pro ... ic-fallout
"Optimum est pati quod emendare non possis." | -Seneca

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Re: Starting to feel like the late 1990s?

Post by Valuethinker » Sun Jan 28, 2018 12:10 pm

SlowMovingInvestor wrote:
Sat Jan 27, 2018 10:25 am
nativenewenglander wrote:
Sat Jan 27, 2018 9:44 am
I'm not changing any allocations either, but it feels much like 1999.
Other than utilities all other ETF sector choices say higher.
As I recollect, regulated utilities (power, gas etc.) typically don't benefit much from tax reform since they just have to pass benefits on to their customers in the form of lower rates. That may be why utilities haven't shared much in the upside.
Not all utilities in the USA are so regulated (rate of return regulation). I'd have to check, but I would say it's something like 40% are not.

Perhaps as big a factor is if you have a big debt load, drops in corporate tax rates lower the benefit of that.

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Re: Starting to feel like the late 1990s?

Post by Valuethinker » Sun Jan 28, 2018 12:13 pm

Index Fan wrote:
Sun Jan 28, 2018 10:12 am
bikechuck wrote:
Sun Jan 28, 2018 10:03 am
Index Fan wrote:
Sat Jan 27, 2018 9:38 am
Tycoon wrote:
Fri Jan 26, 2018 4:34 pm
Listening to Nobel winning economists can also derail one's path to wealth. One boastfully declared the market would NEVER recover after the last election.
In particular, a Nobel-prize-winning economist that is often lauded here.

An excellent example of letting politics interfere with investing.
Why so cryptic? Does this economist have a name? If so, this discussion would be more informative.
https://www.nytimes.com/interactive/pro ... ic-fallout
He then retracted that 4 days later.

https://krugman.blogs.nytimes.com/2016/ ... long-haul/
But it’s important not to expect this to happen right away. There’s a temptation to predict immediate economic or foreign-policy collapse; I gave in to that temptation Tuesday night, but quickly realized that I was making the same mistake as the opponents of Brexit (which I got right). So I am retracting that call, right now. It’s at least possible that bigger budget deficits will, if anything, strengthen the economy briefly. More detail in Monday’s column, I suspect.
Compared to the economists who predicted hyperinflation and economic catastrophe from the president's economic policies, in 2009, 2010, 2011, 2012, 2013 ... and the hedge fund managers (Paulson & Partners) who lost billions betting on that, I think Krugman's retraction looks pretty classy.
Last edited by Valuethinker on Sun Jan 28, 2018 12:27 pm, edited 1 time in total.

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Re: Starting to feel like the late 1990s?

Post by MindBogler » Sun Jan 28, 2018 12:19 pm

snodog wrote:
Fri Jan 26, 2018 5:06 pm
Despite the run up I am feeling somewhat bullish. US stocks are indeed frothy but overseas they are rather cheap. The PE ratio of my portfolio is only 14.7 according to Morningstar and Paul Krugman should have known better. At least he didn't say "We will be able to say merry christmas again". :twisted:
Paul Krugman is a charlatan that talks out both sides of his mouth. How anyone considers him reputable at this point is beyond my limited comprehension.

:sharebeer

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Re: Starting to feel like the late 1990s?

Post by Valuethinker » Sun Jan 28, 2018 12:26 pm

MindBogler wrote:
Sun Jan 28, 2018 12:19 pm
snodog wrote:
Fri Jan 26, 2018 5:06 pm
Despite the run up I am feeling somewhat bullish. US stocks are indeed frothy but overseas they are rather cheap. The PE ratio of my portfolio is only 14.7 according to Morningstar and Paul Krugman should have known better. At least he didn't say "We will be able to say merry christmas again". :twisted:
Paul Krugman is a charlatan that talks out both sides of his mouth. How anyone considers him reputable at this point is beyond my limited comprehension.

:sharebeer
Especially the Nobel Prize Committee (the Bank of Sweden Economics Prize in Honour of Alfred Nobel to be precise)? They are not reputable?

He's one of the world's leading economists. In particular seminal contributions on Trade Theory, on Regional Economics, and on the Theory of Financial Crises. He was also a tenured professor at 3 of America's top graduate schools in economics for over 30 years (MIT, Stanford and Princeton, from memory) and had his Phd from what was undoubtedly America's top graduate school in economics (Chicago would have been the other)-- MIT. BTW that would mean his Phd was from the top graduate school of economics in the *world* at that time, and a professor at one of the top graduate schools in economics in the world. You do find Cambridge/ LSE/ Oxford in the top 25, but I am not sure if there are any non Anglo-Saxon schools in the list.

Your view of him is shaped by your disagreement with his politics and the fact that he has a rather large platform on which to share his views-- and I think you should admit that to yourself.

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Re: Starting to feel like the late 1990s?

Post by SlowMovingInvestor » Sun Jan 28, 2018 12:30 pm

FWIW, I remember reading several of Krugman's articles on the liquidity trap in Japan many. many years back, and my recollection is that his analysis stood up pretty well.

But yes, Nobel Prize winning economist, even financial economists, aren't necessarily better at predicting markets than ordinary mortals. Again, Long Term Capital is a good example.

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Re: Starting to feel like the late 1990s?

Post by nedsaid » Sun Jan 28, 2018 12:41 pm

Valuethinker wrote:
Sun Jan 28, 2018 12:26 pm
MindBogler wrote:
Sun Jan 28, 2018 12:19 pm
snodog wrote:
Fri Jan 26, 2018 5:06 pm
Despite the run up I am feeling somewhat bullish. US stocks are indeed frothy but overseas they are rather cheap. The PE ratio of my portfolio is only 14.7 according to Morningstar and Paul Krugman should have known better. At least he didn't say "We will be able to say merry christmas again". :twisted:
Paul Krugman is a charlatan that talks out both sides of his mouth. How anyone considers him reputable at this point is beyond my limited comprehension.

:sharebeer
Especially the Nobel Prize Committee (the Bank of Sweden Economics Prize in Honour of Alfred Nobel to be precise)? They are not reputable?

He's one of the world's leading economists. In particular seminal contributions on Trade Theory, on Regional Economics, and on the Theory of Financial Crises. He was also a tenured professor at 3 of America's top graduate schools in economics for over 30 years (MIT, Stanford and Princeton, from memory) and had his Phd from what was undoubtedly America's top graduate school in economics (Chicago would have been the other)-- MIT. BTW that would mean his Phd was from the top graduate school of economics in the *world* at that time, and a professor at one of the top graduate schools in economics in the world. You do find Cambridge/ LSE/ Oxford in the top 25, but I am not sure if there are any non Anglo-Saxon schools in the list.

Your view of him is shaped by your disagreement with his politics and the fact that he has a rather large platform on which to share his views-- and I think you should admit that to yourself.
The problem with Paul Krugman is that his columns got to be very partisan and political and he made factual errors in his arguments. No doubt, he is a fine economist. If he had stuck to being an economist, things would have gone well for him. But somehow, he decided he was an expert in all things political and lost all objectivity. What should have been reasoned economic arguments just turned into petty political rants. A good economist who got carried away with reading his own opinions thinking himself the smartest man in the world. I find him repetitive, tiresome, and boring and no longer read his columns. Pretty much the same stuff repeated in various ways. Too bad. It was also rumored that Princeton got tired of this as well and quietly fired him.

Again, no doubt he is a fine and talented economist but he wore out his welcome with me a long time ago. Pretty much, I know what he is going to say, what I don't know is how he is going to say it. He has written the same column over and over for 10-15 years and I have concluded he has nothing new to say. Too bad.
A fool and his money are good for business.

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Re: Starting to feel like the late 1990s?

Post by MindBogler » Sun Jan 28, 2018 12:43 pm

Valuethinker wrote:
Sun Jan 28, 2018 12:26 pm
Your view of him is shaped by your disagreement with his politics and the fact that he has a rather large platform on which to share his views-- and I think you should admit that to yourself.
I believe that not every opinion in the world has to be shaped through the interminable lens of politics. What you've done here is create a straw man that supports your personal biases. How could Mindbogler not view Krugman in great esteem? They must be a luddite conservative! You should be ashamed for assuming to know my thoughts. I'd say your commentary says little about me while speaking volumes on you.

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Re: Starting to feel like the late 1990s?

Post by SlowMovingInvestor » Sun Jan 28, 2018 12:49 pm

nedsaid wrote:
Sat Jan 27, 2018 12:45 pm

Unlike the late 1990's, I don't think the euphoria has spread to entire sectors of the market. For example, Apple showed up on a lot of Value screens. Certainly I am seeing more optimism out there. The elites at the recent Davos conference were showing optimism as well. A lot of good feeling out there but euphoria is pretty limited.
Here is an article on different US sectors:

https://www.schwab.com/resource-center/ ... ctor-views

Real Estate, Telco and Utilties are the only ones that seem to be generally down. For RE and Utilities, it could be the impact of tax reform on interest expenses, and anticipated increase in interest rates (also, as I said earlier, possibly a significant chunk of the utility space is rate regulated).

Telcos -- possibly their dividends are less valuable in an increasing interest rate environment. Also, maybe the market is anticipating a lot of capital spending for 5G.

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Re: Starting to feel like the late 1990s?

Post by Rowan Oak » Sun Jan 28, 2018 12:51 pm

bottlecap wrote:
Sun Jan 28, 2018 12:04 am
Man, how many posts like this are we going to have a day? If they end up all being right, I guess it's proof you can time the market...

JT
Yes, lots of noise these days. Stay-the-course.
“If you can get good at destroying your own wrong ideas, that is a great gift.” – Charlie Munger

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Re: Starting to feel like the late 1990s?

Post by nedsaid » Sun Jan 28, 2018 12:53 pm

MindBogler wrote:
Sun Jan 28, 2018 12:43 pm
Valuethinker wrote:
Sun Jan 28, 2018 12:26 pm
Your view of him is shaped by your disagreement with his politics and the fact that he has a rather large platform on which to share his views-- and I think you should admit that to yourself.
I believe that not every opinion in the world has to be shaped through the interminable lens of politics. What you've done here is create a straw man that supports your personal biases. How could Mindbogler not view Krugman in great esteem? They must be a luddite conservative! You should be ashamed for assuming to know my thoughts. I'd say your commentary says little about me while speaking volumes on you.
I think it is important to read pieces written by people that you disagree with. I would read Paul Krugman if his articles were more objective and frankly more humble. I am sure he is a thoughtful and intelligent guy but he has gotten to the point where he just dismisses those who disagree with him.

I read some articles about Jacob Hacker. He is a spokesman for the "New New Deal" and though I disagree with him, I find his points to be well reasoned.

What I have found is that if one will listen to the other side, that there are areas of agreement. A person with another point of view can often see things that you can't. So although I have my political views, I do try my best to be objective when examining others ideas. My beef with Krugman is that he has lost all objectivity and it has hurt his career rather badly. He just doesn't realize it.
A fool and his money are good for business.

SlowMovingInvestor
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Re: Starting to feel like the late 1990s?

Post by SlowMovingInvestor » Sun Jan 28, 2018 12:54 pm

nedsaid wrote:
Sun Jan 28, 2018 12:41 pm

Again, no doubt he is a fine and talented economist but he wore out his welcome with me a long time ago. Pretty much, I know what he is going to say, what I don't know is how he is going to say it. He has written the same column over and over for 10-15 years and I have concluded he has nothing new to say. Too bad.
A fair enough criticism (which I largely agree with). But as I recollect his name was first brought up in this thread (not by you) for a comment which he retracted in 3 days.

Anyway, I reiterate my skepticism of financial economists making market judgements irrespective of political viewpoint (Dow 36000 !)
Last edited by SlowMovingInvestor on Sun Jan 28, 2018 12:57 pm, edited 1 time in total.

jebmke
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Re: Starting to feel like the late 1990s?

Post by jebmke » Sun Jan 28, 2018 12:56 pm

I look at indicators like this as more significant than academic predictions
Earlier this month, financial adviser ­Joseph Kelly visited a client who had seen the value of his retirement savings soar, thanks to a surging stock market.

“He said his account was up 18 percent, and he asked me, ‘What should I do with it?’ ” recalled Kelly, who works in Berkeley Heights, N.J. His client was modestly wealthy, but Kelly still suggested holding tight.

The client had another idea: He wanted to take out $75,000 to help his son buy a house.

Later the same day, Kelly visited another client — comfortable in the upper middle class — who wanted to take out $20,000 from her 401(k) to splurge on a vacation. She was even willing to pay a 10 percent penalty, which is required under the law if an individual is not yet 59½ years old.
https://www.washingtonpost.com/business ... d600471670

But I don't need to take any action since I am still within my tolerance bands of my target allocation.
When you discover that you are riding a dead horse, the best strategy is to dismount.

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nedsaid
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Re: Starting to feel like the late 1990s?

Post by nedsaid » Sun Jan 28, 2018 12:58 pm

SlowMovingInvestor wrote:
Sun Jan 28, 2018 12:54 pm
nedsaid wrote:
Sun Jan 28, 2018 12:41 pm

Again, no doubt he is a fine and talented economist but he wore out his welcome with me a long time ago. Pretty much, I know what he is going to say, what I don't know is how he is going to say it. He has written the same column over and over for 10-15 years and I have concluded he has nothing new to say. Too bad.
A fair enough criticism (which I largely agree with). But as I recollect his name was first brought up in this thread (not by you) for a comment which he retracted in 3 days.
Well, you have to give him credit for retracting a statement and admitting that he was at least premature. This is rare for Krugman but what I will say is that a little bit of humility goes a long way.
A fool and his money are good for business.

investorpeter
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Re: Starting to feel like the late 1990s?

Post by investorpeter » Sun Jan 28, 2018 12:59 pm

Theoretical wrote:
Sat Jan 27, 2018 12:47 am
wootwoot wrote:
Sat Jan 27, 2018 12:33 am
These market timing threads are becoming very prolific. Is bogleheads being hijacked by non-bogleheads?
Nope, they've been on the forum as long as I can see. Boglehead investing is fundamentally honest investing, because of a focus on transparency, costs, and shared investor interests, and part of that honesty is acknowledging one's own emotions.
I am only a half boglehead (50% of my portfolio is in individual stocks and 50% in SP500 index funds), but I find the commentary on individual stocks and the overall stock market to be very informative on this forum, much moreso than forums specifically dedicated to stock picking where much of the commentary is clouded by persona bias. Here the commentary is much more balanced and clearheaded.

As to feeling like the late 90’s, the bitcoin saga has felt almost exactly like the late 90’s + 2001 compressed into a short time frame. The Kodakcoin episode was taken directly from the same .com era playbook. I would say, right now with the FANG stock valuations, it feels more like mid 90’s or mid 00’s, so there is room to run. Keep in mind though that the FANGs are still all essentially tech stocks, so we on a larger scale we are have been in an overall tech bullrun since the 90s.

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