U.S. stocks continue to soar!

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fennewaldaj
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Re: U.S. stocks continue to soar!

Post by fennewaldaj »

k1982 wrote: Wed Nov 25, 2020 1:24 am
fennewaldaj wrote: Wed Nov 25, 2020 1:02 am
finite_difference wrote: Tue Nov 24, 2020 4:23 pm Unless stimulus is passed, I think the recent rise will be short lived. If stimulus is passed then that bodes well, but I don’t see it happening too soon from what I’ve read. It’s a good time for folks to evaluate their jitters, follow their IPS and rebalance if called for, etc.
I am not sure if the current rise is premised on a stimulus happening. The vaccine news means that we are ~ 6months from this being over. So small value companies are going way up for example because it is easier to judge that they will make it to a known point.
ha
Are you reacting to my 6 months from it being over? This is I think a true statement in the devolved world (60% acceptance of a 95% effective vaccine ~= herd immunity). It will be a while before every developing country is able to distribute the vaccine oth.
fennewaldaj
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Re: U.S. stocks continue to soar!

Post by fennewaldaj »

Pawpatrol wrote: Tue Nov 24, 2020 11:39 pm

My guess - for the foreseeable future just like europe and Japan. There is no way out of this and the fed has us boxed in and they will do yield curve management if the long bond yield drifts too high or our economy/debts/housing cant support higher rates. We are now dependent on low rates.
Yeah I can see say the 30 year getting up to 3% and the 10 year to say 2.5% but I think the fed pretty much has to aggressively suppress anything much higher. And Europe and Japan seem to indicate that that is a very doable thing.
k1982
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Re: U.S. stocks continue to soar!

Post by k1982 »

fennewaldaj wrote: Wed Nov 25, 2020 1:42 am
k1982 wrote: Wed Nov 25, 2020 1:24 am
fennewaldaj wrote: Wed Nov 25, 2020 1:02 am
finite_difference wrote: Tue Nov 24, 2020 4:23 pm Unless stimulus is passed, I think the recent rise will be short lived. If stimulus is passed then that bodes well, but I don’t see it happening too soon from what I’ve read. It’s a good time for folks to evaluate their jitters, follow their IPS and rebalance if called for, etc.
I am not sure if the current rise is premised on a stimulus happening. The vaccine news means that we are ~ 6months from this being over. So small value companies are going way up for example because it is easier to judge that they will make it to a known point.
ha
Are you reacting to my 6 months from it being over? This is I think a true statement in the devolved world (60% acceptance of a 95% effective vaccine ~= herd immunity). It will be a while before every developing country is able to distribute the vaccine oth.
I just don't see it happening (my reasons which I won't and can't voice on this forum)

However, I really hope you are right for everyone's sake - and I truly do mean that
What you stated is correct in theory, but there are other forces in play too
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calvin+hobbes
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Re: U.S. stocks continue to soar!

Post by calvin+hobbes »

HomerJ wrote: Wed Nov 25, 2020 12:42 am
Forester wrote: Tue Nov 24, 2020 10:47 pm Largest monthly spread between large cap and small cap since December 2000. Shiller CAPE highest since 2001. Investors in the big stock indexes are standing on a trapdoor - they just don't know it yet.
Most of us here at Bogleheads know we're standing on a trapdoor...

Because we're ALWAYS standing on a trapdoor. Haven't you learned anything reading threads here?

A crash is always possible.

But here's the thing, Forester... And this is really important, so read this, if you haven't read anything else.

The long-term 9%-10% nominal return of the stock market INCLUDES the crashes. Read that again. No, seriously, read that again. Think about what that says.

In the past, you didn't have to avoid the trap door to get very good long-term returns and become rich. That's the secret. Market-timing is NOT necessary.

Sure, if you can guess right and market-time correctly, you can become even richer, but if you're BAD at market-timing like you are (and like I am), you will become less rich, or maybe not even rich at all.

Recognize that there is ALWAYS a trapdoor under you, pick an Asset Allocation that you can hold long-term WHEN (not if) the trapdoor opens, and you can stop worrying about the trapdoor.
Well said, other readers should take note.

Forester though, is probably not listening as his MO is to drop permabear predictions with rationales that seem vaguely plausible then leave while others try to debate the merits of what he said.

I still have a post saved from last month where he said the nasdaq wouldn’t reach 12086 for another decade because of a tech bubble. Guess which door the nasdaq is currently knocking on..
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Re: U.S. stocks continue to soar!

Post by lostdog »

Might be muted or red today.
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Kookaburra
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Re: U.S. stocks continue to soar!

Post by Kookaburra »

calvin+hobbes wrote: Wed Nov 25, 2020 8:01 am The long-term 9%-10% nominal return of the stock market INCLUDES the crashes. Read that again. No, seriously, read that again. Think about what that says.
Follow-up question: is this 9-10% figure based on simple buy-and-hold, or does it presume some sort of re-balancing and “re-balancing bonus” as a result of crashes?
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Re: U.S. stocks continue to soar!

Post by Dottie57 »

Just logged into Fidelity. Astounded at the account totals. Financially Thanksgiving will be a good day.
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Re: U.S. stocks continue to soar!

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Last edited by Dottie57 on Wed Nov 25, 2020 9:12 am, edited 1 time in total.
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Re: U.S. stocks continue to soar!

Post by H-Town »

HomerJ wrote: Wed Nov 25, 2020 12:42 am
Forester wrote: Tue Nov 24, 2020 10:47 pm Largest monthly spread between large cap and small cap since December 2000. Shiller CAPE highest since 2001. Investors in the big stock indexes are standing on a trapdoor - they just don't know it yet.
Most of us here at Bogleheads know we're standing on a trapdoor...

Because we're ALWAYS standing on a trapdoor. Haven't you learned anything reading threads here?

A crash is always possible.

But here's the thing, Forester... And this is really important, so read this, if you haven't read anything else.

The long-term 9%-10% nominal return of the stock market INCLUDES the crashes. Read that again. No, seriously, read that again. Think about what that says.

In the past, you didn't have to avoid the trap door to get very good long-term returns and become rich. That's the secret. Market-timing is NOT necessary.

Sure, if you can guess right and market-time correctly, you can become even richer, but if you're BAD at market-timing like you are (and like I am), you will become less rich, or maybe not even rich at all.

Recognize that there is ALWAYS a trapdoor under you, pick an Asset Allocation that you can hold long-term WHEN (not if) the trapdoor opens, and you can stop worrying about the trapdoor.
This needs to be a sticky post.
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Re: U.S. stocks continue to soar!

Post by Stinky »

HomerJ wrote: Wed Nov 25, 2020 12:42 am
Forester wrote: Tue Nov 24, 2020 10:47 pm Largest monthly spread between large cap and small cap since December 2000. Shiller CAPE highest since 2001. Investors in the big stock indexes are standing on a trapdoor - they just don't know it yet.
Most of us here at Bogleheads know we're standing on a trapdoor...

Because we're ALWAYS standing on a trapdoor. Haven't you learned anything reading threads here?

A crash is always possible.

But here's the thing, Forester... And this is really important, so read this, if you haven't read anything else.

The long-term 9%-10% nominal return of the stock market INCLUDES the crashes. Read that again. No, seriously, read that again. Think about what that says.

In the past, you didn't have to avoid the trap door to get very good long-term returns and become rich. That's the secret. Market-timing is NOT necessary.

Sure, if you can guess right and market-time correctly, you can become even richer, but if you're BAD at market-timing like you are (and like I am), you will become less rich, or maybe not even rich at all.

Recognize that there is ALWAYS a trapdoor under you, pick an Asset Allocation that you can hold long-term WHEN (not if) the trapdoor opens, and you can stop worrying about the trapdoor.
Excellent post!!
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Re: U.S. stocks continue to soar!

Post by RyeBourbon »

lostdog wrote: Wed Nov 25, 2020 8:35 am Might be muted or red today.
Or it might not.
mr_brightside
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Re: U.S. stocks continue to soar!

Post by mr_brightside »

loving my JWN position today

-----------------------------------
remember Enron?? I do
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HomerJ
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Re: U.S. stocks continue to soar!

Post by HomerJ »

Kookaburra wrote: Wed Nov 25, 2020 8:41 am
calvin+hobbes wrote: Wed Nov 25, 2020 8:01 am The long-term 9%-10% nominal return of the stock market INCLUDES the crashes. Read that again. No, seriously, read that again. Think about what that says.
Follow-up question: is this 9-10% figure based on simple buy-and-hold, or does it presume some sort of re-balancing and “re-balancing bonus” as a result of crashes?
Simple buy and hold.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
CurlyDave
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Re: U.S. stocks continue to soar!

Post by CurlyDave »

Kookaburra wrote: Wed Nov 25, 2020 8:41 am
calvin+hobbes wrote: Wed Nov 25, 2020 8:01 am The long-term 9%-10% nominal return of the stock market INCLUDES the crashes. Read that again. No, seriously, read that again. Think about what that says.
Follow-up question: is this 9-10% figure based on simple buy-and-hold, or does it presume some sort of re-balancing and “re-balancing bonus” as a result of crashes?
Since its inception in January 1993, to Sept 30, 2020, the CAGR for SPY has been 9.7%. This is without rebalancing. I have the 2012 Ibbotson SBBI Classic Yearbook, and from 1925 through 2011 the CAGR for the S&P 500 was 9.8%, again without rebalancing. Clearly there is some overlap between the time periods.

The 10 year growth for SPY for the period ending 9/30/2020 was 13.6%, which reduces the overlap substantially, but does not completely eliminate it. So, the big answer to your question is NO REBALANCING NECESSARY.
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HomerJ
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Re: U.S. stocks continue to soar!

Post by HomerJ »

CurlyDave wrote: Wed Nov 25, 2020 10:43 am
Kookaburra wrote: Wed Nov 25, 2020 8:41 am
calvin+hobbes wrote: Wed Nov 25, 2020 8:01 am The long-term 9%-10% nominal return of the stock market INCLUDES the crashes. Read that again. No, seriously, read that again. Think about what that says.
Follow-up question: is this 9-10% figure based on simple buy-and-hold, or does it presume some sort of re-balancing and “re-balancing bonus” as a result of crashes?
Since its inception in January 1993, to Sept 30, 2020, the CAGR for SPY has been 9.7%. This is without rebalancing. I have the 2012 Ibbotson SBBI Classic Yearbook, and from 1925 through 2011 the CAGR for the S&P 500 was 9.8%, again without rebalancing. Clearly there is some overlap between the time periods.

The 10 year growth for SPY for the period ending 9/30/2020 was 13.6%, which reduces the overlap substantially, but does not completely eliminate it. So, the big answer to your question is NO REBALANCING NECESSARY.
Note that 10-year (or longer!) periods of bad returns for stocks do exist. Look at 2000-2009 in the recent past. But then, so far, they are followed by 10-year (or longer!) periods where stocks gain far more than 9%-10%, and the long-term 20-year and 30-year averages smooth out.

Here's a 30 year chart.

https://awealthofcommonsense.com/2016/0 ... t-returns/
The worst 30 year return — using rolling monthly performance — occurred at the height of the market just before the Great Depression and stocks still returned almost 8% per year over the ensuing three decades.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
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HomerJ
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Re: U.S. stocks continue to soar!

Post by HomerJ »

We haven't gotten to 30 years starting from 2000 yet, but investing in Total Stock Market Index Fund at the very top in 2000, the highest U.S. valuations ever, the worst time in recent history to invest...

You still made over 7% nominal so far over the past 20 years.

When the WORST time to invest still makes you 7% a year over the long-run with a buy and hold portfolio, holding through the crashes, that's pretty good.
Last edited by HomerJ on Wed Nov 25, 2020 11:46 am, edited 1 time in total.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
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willthrill81
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Re: U.S. stocks continue to soar!

Post by willthrill81 »

I think that this chart of JoMoney's is one of the all-time best on this forum and worth periodically reposting.
JoMoney wrote: Thu Jan 02, 2020 9:00 pm
willthrill81 wrote: Thu Jan 02, 2020 8:26 pm... one could argue on the basis of returns alone that at the end of this period, we've basically just 'caught up' to 'average'.
I've posted this before, but since you brought it up:
The blue line is $1 starting in 1925 grown at the annualized inflation adjusted return of the S&P 500 Index up through the end of 2019.
The top red line is a static 7% annualized grwoth starting from the peak after year-end 1928
The bottom red line is a static 7% annualized growth starting from the trough after year-end 1931
The dashed gray line is a static 7% annualized growth from the mid-point between the top and bottom red line after year-end 1931

Looks to me like you could describe it as 'caught up to average', but it also looks like the market could drop in half, or double, and still be within the range of the "long-term average"
Image
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Re: U.S. stocks continue to soar!

Post by dwickenh »

Dottie57 wrote: Wed Nov 25, 2020 9:11 am Just logged into Fidelity. Astounded at the account totals. Financially Thanksgiving will be a good day.
Congrats!!!! Enjoy the holiday.
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Re: U.S. stocks continue to soar!

Post by CurlyDave »

willthrill81 wrote: Wed Nov 25, 2020 11:09 am I think that this chart of JoMoney's is one of the all-time best on this forum and worth periodically reposting.
JoMoney wrote: Thu Jan 02, 2020 9:00 pm
willthrill81 wrote: Thu Jan 02, 2020 8:26 pm... one could argue on the basis of returns alone that at the end of this period, we've basically just 'caught up' to 'average'.
I've posted this before, but since you brought it up:
The blue line is $1 starting in 1925 grown at the annualized inflation adjusted return of the S&P 500 Index up through the end of 2019.
The top red line is a static 7% annualized grwoth starting from the peak after year-end 1928
The bottom red line is a static 7% annualized growth starting from the trough after year-end 1931
The dashed gray line is a static 7% annualized growth from the mid-point between the top and bottom red line after year-end 1931

Looks to me like you could describe it as 'caught up to average', but it also looks like the market could drop in half, or double, and still be within the range of the "long-term average"
Image
The big problem with that chart, and it is more an issue with plotting channel lines on semi-log paper than with JoMoney or you, is that the difference between the lower red line and the upper red line is about 3x. For a retired geezer like me, this is the difference between retirement being "the champaign years" and "the Alpo years".
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Re: U.S. stocks continue to soar!

Post by willthrill81 »

CurlyDave wrote: Wed Nov 25, 2020 11:34 am
willthrill81 wrote: Wed Nov 25, 2020 11:09 am I think that this chart of JoMoney's is one of the all-time best on this forum and worth periodically reposting.
JoMoney wrote: Thu Jan 02, 2020 9:00 pm
willthrill81 wrote: Thu Jan 02, 2020 8:26 pm... one could argue on the basis of returns alone that at the end of this period, we've basically just 'caught up' to 'average'.
I've posted this before, but since you brought it up:
The blue line is $1 starting in 1925 grown at the annualized inflation adjusted return of the S&P 500 Index up through the end of 2019.
The top red line is a static 7% annualized grwoth starting from the peak after year-end 1928
The bottom red line is a static 7% annualized growth starting from the trough after year-end 1931
The dashed gray line is a static 7% annualized growth from the mid-point between the top and bottom red line after year-end 1931

Looks to me like you could describe it as 'caught up to average', but it also looks like the market could drop in half, or double, and still be within the range of the "long-term average"
Image
The big problem with that chart, and it is more an issue with plotting channel lines on semi-log paper than with JoMoney or you, is that the difference between the lower red line and the upper red line is about 3x. For a retired geezer like me, this is the difference between retirement being "the champaign years" and "the Alpo years".
Indeed, and in subsequent discussions involving that chart, we pointed that out. Stocks could fall by around 50% or go up by about 100% and still fit within those red lines. It goes to show that while long-term returns have been remarkably consistent, it doesn't mean that stocks can't be highly volatile nor that you will get the returns you need over your investment horizon.
“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: U.S. stocks continue to soar!

Post by dogagility »

calvin+hobbes wrote: Tue Nov 24, 2020 11:47 pm
Forester wrote: Tue Nov 24, 2020 10:47 pm Largest monthly spread between large cap and small cap since December 2000. Shiller CAPE highest since 2001. Investors in the big stock indexes are standing on a trapdoor - they just don't know it yet.
Yawn
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Re: U.S. stocks continue to soar!

Post by CurlyDave »

Rooting for a melt-up at the close. NASDAQ looking good for that.
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Re: U.S. stocks continue to soar!

Post by lostdog »

Forester wrote: Tue Nov 24, 2020 10:47 pm Largest monthly spread between large cap and small cap since December 2000. Shiller CAPE highest since 2001. Investors in the big stock indexes are standing on a trapdoor - they just don't know it yet.
:twisted: :D
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Re: U.S. stocks continue to soar!

Post by firebirdparts »

CurlyDave wrote: Wed Nov 25, 2020 11:34 am
The big problem with that chart, and it is more an issue with plotting channel lines on semi-log paper than with JoMoney or you, is that the difference between the lower red line and the upper red line is about 3x. For a retired geezer like me, this is the difference between retirement being "the champaign years" and "the Alpo years".
Really, I think the problem with that chart is the existence of that channel is obvious fantasy. But that's okay, if some people like it.
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Re: U.S. stocks continue to soar!

Post by Marseille07 »

firebirdparts wrote: Wed Nov 25, 2020 4:37 pm
CurlyDave wrote: Wed Nov 25, 2020 11:34 am
The big problem with that chart, and it is more an issue with plotting channel lines on semi-log paper than with JoMoney or you, is that the difference between the lower red line and the upper red line is about 3x. For a retired geezer like me, this is the difference between retirement being "the champaign years" and "the Alpo years".
Really, I think the problem with that chart is the existence of that channel is obvious fantasy. But that's okay, if some people like it.
The channel exists until it doesn't. Of course, if it goes away (which, at some point, it can) then this whole notion of Boglehead can get in trouble.
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Re: U.S. stocks continue to soar!

Post by z3r0c00l »

CurlyDave wrote: Wed Nov 25, 2020 11:34 am
The big problem with that chart, and it is more an issue with plotting channel lines on semi-log paper than with JoMoney or you, is that the difference between the lower red line and the upper red line is about 3x. For a retired geezer like me, this is the difference between retirement being "the champaign years" and "the Alpo years".
Anyone investing in stocks needs to be honest about the volatility. Less than 100 years ago we had the worst few years in stocks, a 90% decline from the peak. It is safe to assume that could happen again, no matter how unlikely, and plan for that possibility. Hold enough bonds that you could survive a 90% drop in your stocks. This is why I want to be 50/50 in retirement.
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Re: U.S. stocks continue to soar!

Post by Robot Monster »

z3r0c00l wrote: Wed Nov 25, 2020 5:42 pm
CurlyDave wrote: Wed Nov 25, 2020 11:34 am
The big problem with that chart, and it is more an issue with plotting channel lines on semi-log paper than with JoMoney or you, is that the difference between the lower red line and the upper red line is about 3x. For a retired geezer like me, this is the difference between retirement being "the champaign years" and "the Alpo years".
Anyone investing in stocks needs to be honest about the volatility. Less than 100 years ago we had the worst few years in stocks, a 90% decline from the peak. It is safe to assume that could happen again, no matter how unlikely, and plan for that possibility. Hold enough bonds that you could survive a 90% drop in your stocks. This is why I want to be 50/50 in retirement.
I had not realized the Dow dropped that much, but seems you are right. "By July 8, 1932, the Dow [had] an 89.2% loss from its record-high close...on September 3, 1929. It was the worst bear market in terms of percentage loss in modern U.S. history." link
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Re: U.S. stocks continue to soar!

Post by mrspock »

willthrill81 wrote: Tue Nov 24, 2020 11:40 pm
PowderDay9 wrote: Tue Nov 24, 2020 11:25 pm
willthrill81 wrote: Tue Nov 24, 2020 11:04 pm
PowderDay9 wrote: Tue Nov 24, 2020 10:52 pm US valuations are getting ridiculous! I'm expecting a little more run up for another week or two then a 10-15% drop in late December (2018 anyone?). Should end the year at 3409.21, to be exact. :D
You know what is even more ridiculous? How low interest rates are. Lowering interest rates mean that valuations on real assets go up.
Agreed. Makes you wonder how long interest rates can stay this low.
Interest rates have been generally falling for the last 700 years, so they may stay this low for quite a long time.

Falling interest rates are, IMHO, the big factor that Shiller and others have ignored when complaining about rising stock valuations over the last ~30 years.
+1 . Don’t worry they will write some brilliant paper about this in 5 or 10 years explaining this effect after their CAPE ratio is thrown into the dumpster of financial history. This of course won’t put the money back in the pockets of those who followed their advice or their context “light” metric.
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Re: U.S. stocks continue to soar!

Post by Robot Monster »

mrspock wrote: Wed Nov 25, 2020 6:13 pm
willthrill81 wrote: Tue Nov 24, 2020 11:40 pm
PowderDay9 wrote: Tue Nov 24, 2020 11:25 pm
willthrill81 wrote: Tue Nov 24, 2020 11:04 pm
PowderDay9 wrote: Tue Nov 24, 2020 10:52 pm US valuations are getting ridiculous! I'm expecting a little more run up for another week or two then a 10-15% drop in late December (2018 anyone?). Should end the year at 3409.21, to be exact. :D
You know what is even more ridiculous? How low interest rates are. Lowering interest rates mean that valuations on real assets go up.
Agreed. Makes you wonder how long interest rates can stay this low.
Interest rates have been generally falling for the last 700 years, so they may stay this low for quite a long time.

Falling interest rates are, IMHO, the big factor that Shiller and others have ignored when complaining about rising stock valuations over the last ~30 years.
+1 . Don’t worry they will write some brilliant paper about this in 5 or 10 years explaining this effect after their CAPE ratio is thrown into the dumpster of financial history. This of course won’t put the money back in the pockets of those who followed their advice or their context “light” metric.
If falling interest rates are what is throwing CAPE of its game, what will be the effect if rates stop falling and stabilize, I wonder.
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Re: U.S. stocks continue to soar!

Post by Alchemist »

willthrill81 wrote: Tue Nov 24, 2020 11:40 pm Interest rates have been generally falling for the last 700 years, so they may stay this low for quite a long time.

Falling interest rates are, IMHO, the big factor that Shiller and others have ignored when complaining about rising stock valuations over the last ~30 years.
I fail to understand everyone's obsession with Shiller given his uncanny ability to build models with zero predictive ability.

The Economist also had an article a few weeks back that traditional valuation metrics writ large are also thrown off by the increasing importance of intangible assets. For instance, a logging company buying new trucks would get 'credit' for having those trucks as assets on hand when valued. Yet a company like Apple or Google that spends billions on R&D would see that investment counted as a cost, even if the output is something like the new M1 chipset from Apple that is clearly more beneficial to it (from a profit perspective) than a logging company buying more trucks.

I am not arguing that this time is different. Instead I think it is more accurate to say that every time is different and building models that predict the past will continue to disappoint forecasters and any investors that rely on them.
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Re: U.S. stocks continue to soar!

Post by 000 »

Alchemist wrote: Wed Nov 25, 2020 8:39 pm traditional valuation metrics writ large are also thrown off by the increasing importance of intangible assets
Yep. I almost feel pity for the SCV faithful.
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Re: U.S. stocks continue to soar!

Post by willthrill81 »

Robot Monster wrote: Wed Nov 25, 2020 7:01 pm
mrspock wrote: Wed Nov 25, 2020 6:13 pm
willthrill81 wrote: Tue Nov 24, 2020 11:40 pm
PowderDay9 wrote: Tue Nov 24, 2020 11:25 pm
willthrill81 wrote: Tue Nov 24, 2020 11:04 pm

You know what is even more ridiculous? How low interest rates are. Lowering interest rates mean that valuations on real assets go up.
Agreed. Makes you wonder how long interest rates can stay this low.
Interest rates have been generally falling for the last 700 years, so they may stay this low for quite a long time.

Falling interest rates are, IMHO, the big factor that Shiller and others have ignored when complaining about rising stock valuations over the last ~30 years.
+1 . Don’t worry they will write some brilliant paper about this in 5 or 10 years explaining this effect after their CAPE ratio is thrown into the dumpster of financial history. This of course won’t put the money back in the pockets of those who followed their advice or their context “light” metric.
If falling interest rates are what is throwing CAPE of its game, what will be the effect if rates stop falling and stabilize, I wonder.
We won't know until/if that happens.
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Re: U.S. stocks continue to soar!

Post by abuss368 »

I will be adding fuel injector to my truck when I back up next!!!
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Re: U.S. stocks continue to soar!

Post by Kookaburra »

z3r0c00l wrote: Wed Nov 25, 2020 5:42 pm
CurlyDave wrote: Wed Nov 25, 2020 11:34 am
The big problem with that chart, and it is more an issue with plotting channel lines on semi-log paper than with JoMoney or you, is that the difference between the lower red line and the upper red line is about 3x. For a retired geezer like me, this is the difference between retirement being "the champaign years" and "the Alpo years".
Anyone investing in stocks needs to be honest about the volatility. Less than 100 years ago we had the worst few years in stocks, a 90% decline from the peak. It is safe to assume that could happen again, no matter how unlikely, and plan for that possibility. Hold enough bonds that you could survive a 90% drop in your stocks. This is why I want to be 50/50 in retirement.
While I suppose anything is possible, a few prominent structural changes have been made to the financial landscape since the 1930s. Many of these would help insulate against such a drop. It’s improbable enough to recur that 90% probably shouldn’t be the basis of planning. Even this year, with stock indices only dropping ~35%, the Fed was on the precipice of purchasing stocks to keep them propped up.
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Re: U.S. stocks continue to soar!

Post by Forester »

Major red flag for the high-flying tech stocks as Bitcoin crashes inside the last 12 hours. It might be a delayed reaction to the markets as in February 2018, but Bitcoin is essentially the ultimate tech story stock, if Bitcoin goes south this is a leading indicator that the animal spirits are exhausted.
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Re: U.S. stocks continue to soar!

Post by fennewaldaj »

I know this thread is about US stocks but the nikkei 225 is also soaring. It has hit levels not seen since the early 90s. Maybe it will finally break past the old peak (in price return its positive in total return) in the coming few years.
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Re: U.S. stocks continue to soar!

Post by z3r0c00l »

Kookaburra wrote: Wed Nov 25, 2020 10:00 pm
z3r0c00l wrote: Wed Nov 25, 2020 5:42 pm
CurlyDave wrote: Wed Nov 25, 2020 11:34 am
The big problem with that chart, and it is more an issue with plotting channel lines on semi-log paper than with JoMoney or you, is that the difference between the lower red line and the upper red line is about 3x. For a retired geezer like me, this is the difference between retirement being "the champaign years" and "the Alpo years".
Anyone investing in stocks needs to be honest about the volatility. Less than 100 years ago we had the worst few years in stocks, a 90% decline from the peak. It is safe to assume that could happen again, no matter how unlikely, and plan for that possibility. Hold enough bonds that you could survive a 90% drop in your stocks. This is why I want to be 50/50 in retirement.
While I suppose anything is possible, a few prominent structural changes have been made to the financial landscape since the 1930s. Many of these would help insulate against such a drop. It’s improbable enough to recur that 90% probably shouldn’t be the basis of planning. Even this year, with stock indices only dropping ~35%, the Fed was on the precipice of purchasing stocks to keep them propped up.
I won't bet my future on the idea that this time is different. All it takes is a political shift away from government support of corporations, which has occurred in many other countries, and suddenly stocks are allowed to collapse. The first year of the current administration saw a rapid and dramatic shift towards protectionism. Political changes can happen that quickly and all the corporations hurt by the tariffs accomplished little in their lobbying efforts. (A few cronies did get tariff exemptions IIRC.) A political shift in a different direction, such as towards the business environment of a country like France, could permanently take a chunk out of corporate profits.

There is also the possibility of temporary nationalization as happened during the great recession with AIG. The companies were saved but stockholders lost their equity. (As expected for stocks, by the way, when a company folds.) So there are ways of saving the economy without saving shareholders.
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Re: U.S. stocks continue to soar!

Post by lostdog »

We have a good month and it's amazing to see the bears come out with doom and gloom in full force.
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Re: U.S. stocks continue to soar!

Post by rascott »

z3r0c00l wrote: Thu Nov 26, 2020 9:48 am
Kookaburra wrote: Wed Nov 25, 2020 10:00 pm
z3r0c00l wrote: Wed Nov 25, 2020 5:42 pm
CurlyDave wrote: Wed Nov 25, 2020 11:34 am
The big problem with that chart, and it is more an issue with plotting channel lines on semi-log paper than with JoMoney or you, is that the difference between the lower red line and the upper red line is about 3x. For a retired geezer like me, this is the difference between retirement being "the champaign years" and "the Alpo years".
Anyone investing in stocks needs to be honest about the volatility. Less than 100 years ago we had the worst few years in stocks, a 90% decline from the peak. It is safe to assume that could happen again, no matter how unlikely, and plan for that possibility. Hold enough bonds that you could survive a 90% drop in your stocks. This is why I want to be 50/50 in retirement.
While I suppose anything is possible, a few prominent structural changes have been made to the financial landscape since the 1930s. Many of these would help insulate against such a drop. It’s improbable enough to recur that 90% probably shouldn’t be the basis of planning. Even this year, with stock indices only dropping ~35%, the Fed was on the precipice of purchasing stocks to keep them propped up.
I won't bet my future on the idea that this time is different. All it takes is a political shift away from government support of corporations, which has occurred in many other countries, and suddenly stocks are allowed to collapse. The first year of the current administration saw a rapid and dramatic shift towards protectionism. Political changes can happen that quickly and all the corporations hurt by the tariffs accomplished little in their lobbying efforts. (A few cronies did get tariff exemptions IIRC.) A political shift in a different direction, such as towards the business environment of a country like France, could permanently take a chunk out of corporate profits.

There is also the possibility of temporary nationalization as happened during the great recession with AIG. The companies were saved but stockholders lost their equity. (As expected for stocks, by the way, when a company folds.) So there are ways of saving the economy without saving shareholders.

Unlike the 1930s... stock ownership is much more widely spread today, and for better or worse most people's retirements are dependent upon the equity markets today. It would be politically suicidal in today's system to allow for a total market collapse. We also operate under a much different monetary system today, which allows central bankers infinitely more leeway in supporting the financial system.

Stagnation is a much larger realistic concern than a total equity market wipe out.
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Re: U.S. stocks continue to soar!

Post by rascott »

Forester wrote: Thu Nov 26, 2020 4:35 am Major red flag for the high-flying tech stocks as Bitcoin crashes inside the last 12 hours. It might be a delayed reaction to the markets as in February 2018, but Bitcoin is essentially the ultimate tech story stock, if Bitcoin goes south this is a leading indicator that the animal spirits are exhausted.
LOL
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Re: U.S. stocks continue to soar!

Post by lostdog »

rascott wrote: Thu Nov 26, 2020 10:39 am
Forester wrote: Thu Nov 26, 2020 4:35 am Major red flag for the high-flying tech stocks as Bitcoin crashes inside the last 12 hours. It might be a delayed reaction to the markets as in February 2018, but Bitcoin is essentially the ultimate tech story stock, if Bitcoin goes south this is a leading indicator that the animal spirits are exhausted.
LOL
:twisted: :D
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Re: U.S. stocks continue to soar!

Post by z3r0c00l »

lostdog wrote: Thu Nov 26, 2020 10:45 am
rascott wrote: Thu Nov 26, 2020 10:39 am
Forester wrote: Thu Nov 26, 2020 4:35 am Major red flag for the high-flying tech stocks as Bitcoin crashes inside the last 12 hours. It might be a delayed reaction to the markets as in February 2018, but Bitcoin is essentially the ultimate tech story stock, if Bitcoin goes south this is a leading indicator that the animal spirits are exhausted.
LOL
:twisted: :D
Few hundred thousand bitcoin transactions per day right now. What happens to the price if a few million are sold in one day during a run for the exit?
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Re: U.S. stocks continue to soar!

Post by dogagility »

rascott wrote: Thu Nov 26, 2020 10:39 am
Forester wrote: Thu Nov 26, 2020 4:35 am Major red flag for the high-flying tech stocks as Bitcoin crashes inside the last 12 hours. It might be a delayed reaction to the markets as in February 2018, but Bitcoin is essentially the ultimate tech story stock, if Bitcoin goes south this is a leading indicator that the animal spirits are exhausted.
LOL
I think Forester has spelled his/her moniker incorrectly. Unless I'm mistaken, I believe the correct spelling is Cramer. Or is it Kramer? I don't know. :P
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Re: U.S. stocks continue to soar!

Post by canadianbacon »

Forester wrote: Thu Nov 26, 2020 4:35 am Major red flag for the high-flying tech stocks as Bitcoin crashes inside the last 12 hours. It might be a delayed reaction to the markets as in February 2018, but Bitcoin is essentially the ultimate tech story stock, if Bitcoin goes south this is a leading indicator that the animal spirits are exhausted.
There seemed to be a pretty obvious pump and dump happening in crypto the last couple of weeks. I think this is just that playing out.
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Re: U.S. stocks continue to soar!

Post by mrspock »

Forester wrote: Thu Nov 26, 2020 4:35 am Major red flag for the high-flying tech stocks as Bitcoin crashes inside the last 12 hours. It might be a delayed reaction to the markets as in February 2018, but Bitcoin is essentially the ultimate tech story stock, if Bitcoin goes south this is a leading indicator that the animal spirits are exhausted.
Huh? It’s not even remotely close to a tech stock — it doesn’t make or produce anything of value. I work in FAANG and it’s heavily mocked and considered a sucker bet (or necessary overhead for drug dealers), worse — many who mine bitcoin, consider holders suckers. You just won’t see many miners which actually hold coins, they convert to actual currency as soon as they are mined.

That should tell you something.
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Re: U.S. stocks continue to soar!

Post by lostdog »

Forester wrote: Thu Nov 26, 2020 4:35 am Major red flag for the high-flying tech stocks as Bitcoin crashes inside the last 12 hours. It might be a delayed reaction to the markets as in February 2018, but Bitcoin is essentially the ultimate tech story stock, if Bitcoin goes south this is a leading indicator that the animal spirits are exhausted.
https://www.coindesk.com/3-reasons-bitc ... ll-bullish
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Re: U.S. stocks continue to soar!

Post by abuss368 »

mrspock wrote: Thu Nov 26, 2020 12:00 pm
Forester wrote: Thu Nov 26, 2020 4:35 am Major red flag for the high-flying tech stocks as Bitcoin crashes inside the last 12 hours. It might be a delayed reaction to the markets as in February 2018, but Bitcoin is essentially the ultimate tech story stock, if Bitcoin goes south this is a leading indicator that the animal spirits are exhausted.
Huh? It’s not even remotely close to a tech stock — it doesn’t make or produce anything of value. I work in FAANG and it’s heavily mocked and considered a sucker bet (or necessary overhead for drug dealers), worse — many who mine bitcoin, consider holders suckers. You just won’t see many miners which actually hold coins, they convert to actual currency as soon as they are mined.

That should tell you something.
I looked at iShares IGM for extended technology. What an incredible fund.
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Re: U.S. stocks continue to soar!

Post by Silverado »

abuss368 wrote: Wed Nov 25, 2020 9:44 pm I will be adding fuel injector to my truck when I back up next!!!
Would you please upgrade to a flux capacitor and be al set for good?!?!

1.21 gigawatts!
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Re: U.S. stocks continue to soar!

Post by k1982 »

Silverado wrote: Thu Nov 26, 2020 1:23 pm
abuss368 wrote: Wed Nov 25, 2020 9:44 pm I will be adding fuel injector to my truck when I back up next!!!
Would you please upgrade to a flux capacitor and be al set for good?!?!

1.21 gigawatts!
Hey abuss368
I think you would be better off buying a cheap reliable Honda Civic and making multiple drops; instead of adding those costly expenses every week to your truck. That is very un-Boglehead like. I'm very disappointed since you been around for a while.

Maybe it's time to look over your IPS again. Just trying to help.
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Re: U.S. stocks continue to soar!

Post by fanmail »

Easy to mock forester, but there has been a high positive correlation between btc and us equities going for at least this year.
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