Will stocks be cheap again in your lifetime?

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Forester
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Will stocks be cheap again in your lifetime?

Post by Forester » Sun Aug 04, 2019 3:05 am

Do you believe stocks will be cheap again as in 1982 / 2009; or will the experience of the 2010s put a "floor" under how low (U.S.) stocks go?

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Re: Will stocks be cheap again in your lifetime?

Post by AlohaJoe » Sun Aug 04, 2019 3:19 am

Stocks are already cheap.

Go buy some stocks in Russia (CAPE 7.5) or Czech Republic (10.1) or South Korea (12.4) or Singapore (14.2) or China (15.0) or United Kingdom (16.3) or Germany (18.3).

Contrary to popular opinion, there are actually stocks that you can purchase outside on the United States (29.66).

If you're not actually doing that, then you're saying you don't actually believe valuations tell you much that is useful.

lazyday
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Re: Will stocks be cheap again in your lifetime?

Post by lazyday » Sun Aug 04, 2019 3:36 am

AlohaJoe wrote:
Sun Aug 04, 2019 3:19 am
Stocks are already cheap.
CAPE according to https://interactive.researchaffiliates. ... e=Equities

Code: Select all

March-end 2009 	June-end 2019

EAFE 11.2	16.6
EM 12.7		12.9
US 13.3		29.7
EM index price is down about 5% since the end of June, so it might be cheaper today than in 2009.

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Stinky
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Re: Will stocks be cheap again in your lifetime?

Post by Stinky » Sun Aug 04, 2019 4:54 am

I expect that stocks will be “cheap” again in my lifetime. Probably multiple times.

But I don’t know when. And I don’t know how “cheap” they will be. And when they get “cheap”, if they will get even “cheaper”.

That’s why I establish a personal investment policy, and stick with it over time. Because I don’t own a crystal ball that can predict the future.
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AtlasShrugged?
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Re: Will stocks be cheap again in your lifetime?

Post by AtlasShrugged? » Sun Aug 04, 2019 5:33 am

Do you believe stocks will be cheap again as in 1982 / 2009; or will the experience of the 2010s put a "floor" under how low (U.S.) stocks go?
Post title seems a little 'click baity'. The answer is: Yes, after the next crash. When that crash happens is anyone's guess.
“If you don't know, the thing to do is not to get scared, but to learn.”

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Re: Will stocks be cheap again in your lifetime?

Post by Grt2bOutdoors » Sun Aug 04, 2019 7:09 am

You don’t necessarily need a crash to have stocks become cheap. Imagine a situation where stock prices go sideways for the next 15 years, earnings rise slowly and prices stay the same, more or less. Those banking on continued high returns will need to save more, a lot more.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Re: Will stocks be cheap again in your lifetime?

Post by Monster99 » Sun Aug 04, 2019 7:19 am

Grt2bOutdoors wrote:
Sun Aug 04, 2019 7:09 am
You don’t necessarily need a crash to have stocks become cheap. Imagine a situation where stock prices go sideways for the next 15 years, earnings rise slowly and prices stay the same, more or less. Those banking on continued high returns will need to save more, a lot more.
+1
Ahh, the 1970's - ....😐

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305pelusa
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Re: Will stocks be cheap again in your lifetime?

Post by 305pelusa » Sun Aug 04, 2019 7:31 am

Well IF S&P 500 ends up at 6000, 25 years from today (that would be the case if it achieved a 3% annual compound growth) then they're looking awfully cheap today. That doesn't even include the dividends, which would make the prices seem even cheaper.
If anything, it's time to buy! :sharebeer

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Re: Will stocks be cheap again in your lifetime?

Post by aristotelian » Sun Aug 04, 2019 7:31 am

Will interest rates ever normalize?

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Re: Will stocks be cheap again in your lifetime?

Post by Ferdinand2014 » Sun Aug 04, 2019 7:35 am

Yes. Is this in any way actionable? No. Compared to interest rates stocks are cheap now.
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Re: Will stocks be cheap again in your lifetime?

Post by RadAudit » Sun Aug 04, 2019 8:26 am

Forester wrote:
Sun Aug 04, 2019 3:05 am
Do you believe stocks will be cheap again as in 1982 / 2009
To mis-quote a famous economist - "Stocks have reached a permanently high plateau." - late Summer, early Fall 1929.

Unfortunately, for some, US stocks may be cheap again.
FI is the best revenge. LBYM. Invest the rest. Stay the course. - PS: The cavalry isn't coming, kids. You are on your own.

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Re: Will stocks be cheap again in your lifetime?

Post by nisiprius » Sun Aug 04, 2019 8:32 am

Phrases like "cheap" have no meaning. How high is the sky? How long is a piece of string? You need to ask the question more precisely, in some way--preferably involving numbers--that allows it to be answered.

The DJIA was around 1,000 in 1982. I don't know whether or not it was "cheap" then. However, if you are asking whether I expect the DJIA to fall below 1,000 in my lifetime, no, I do not.

The DJIA hit 14,164 in October, 2007. However, it has almost doubled since then.

More precisely, an investment of $10,000 into an S&P 500 index fund on 10/9/2007, including reinvested dividends, would now be worth $24,527. It has more than doubled, in about twelve years, which works out to about 7.7% annualized.

Allowing for inflation, $24,527 is the equivalent of about $20,000 in year-2007 dollars, so that is only 1.7% annualized. Nevertheless, since an investment in "the stock market" at the top in 2007 would have made money--both in dollars and in real terms--it could be argued that stocks were "cheap" even at the top in 2007. That is to say--in hindsight, of course--it was perfectly OK for a buy-and-hold investor with a time frame of more than ten years to just keep on buying and holding stocks all through 2007. A market timer with a working crystal ball could have done better, but that is always true.

So my second answer is that yes, I believe that within my lifetime, stocks will be as cheap as they were in October, 2007, and indeed for all I know, they might be that cheap right now.
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Re: Will stocks be cheap again in your lifetime?

Post by dumbmoney » Mon Aug 05, 2019 3:52 am

Presumably you're defining "cheap" in the way that value mavens often do, as some kind of smoothed P/E, compared to the historical average. Note that by such reasoning stocks were not cheap at the market bottom in 2009, just about average. I suggest that markets don't care about historical averages, and therefore there's no way to know whether markets are "cheap" or not.
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Re: Will stocks be cheap again in your lifetime?

Post by Forester » Mon Aug 05, 2019 4:33 am

dumbmoney wrote:
Mon Aug 05, 2019 3:52 am
Presumably you're defining "cheap" in the way that value mavens often do, as some kind of smoothed P/E, compared to the historical average. Note that by such reasoning stocks were not cheap at the market bottom in 2009, just about average.
Shiller CAPE bottomed in March '09. The last time it was under 14 was 1988.

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Re: Will stocks be cheap again in your lifetime?

Post by whodidntante » Mon Aug 05, 2019 6:00 am

Bear markets often start when things look great. Low unemployment, economic expansion, high stock ownership rate, more confidence fed by recency bias leads to less capital on the sidelines and weak hands. Central bank policies have inflated the capital markets but did not produce desired levels of inflation. And we didn't reload the stimulus gun this time. As much as I would like to see a steady March to 9000 I would not be surprised if we go through 2000 to get there.

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Re: Will stocks be cheap again in your lifetime?

Post by donaldfair71 » Mon Aug 05, 2019 6:15 am

What if current p/e levels are "cheap"? What if 2% interest rates on the ten year are normal?

Meb Faber talks about this sometimes on his show, this thing is constantly fluid and changing. With barriers to investing, such as fees, lower than ever, you can't necessarily expect rules to be rigid on these things until you look back on them decades later.

Nobody knows nothing. Diversify and save.

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Re: Will stocks be cheap again in your lifetime?

Post by tealeaves » Mon Aug 05, 2019 7:27 am

I think somebody would need to first tell me how long I will live. Depending on that answer I would then reply "unlikely" or "probably."

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Re: Will stocks be cheap again in your lifetime?

Post by ReformedSpender » Mon Aug 05, 2019 7:33 am

Stocks should be cheaper today then they were on Friday :D

S&P down 1.5%
DOW down 1.4%
NAS down 2.1%
Market history shows that when there's economic blue sky, future returns are low, and when the economy is on the skids, future returns are high. The best fishing is done in the most stormy waters.

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Forester
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Re: Will stocks be cheap again in your lifetime?

Post by Forester » Mon Aug 05, 2019 7:45 am

August 2019 = March 2009 for non-US stocks :D Chinese index now lower than this day in 2007 - presumably a similar story elsewhere.

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Re: Will stocks be cheap again in your lifetime?

Post by Bacchus01 » Mon Aug 05, 2019 7:46 am

Remember the Great Depression? Well, it’s coming again after the roaring 20s. Be ready to buy in ‘29

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Re: Will stocks be cheap again in your lifetime?

Post by RadAudit » Mon Aug 05, 2019 7:51 am

Bacchus01 wrote:
Mon Aug 05, 2019 7:46 am
Be ready to buy in ‘29
Wasn't the market low in the early '30's?

I guess that's why we talk so much about rebalancing, SWRs and withdrawal strategies.
FI is the best revenge. LBYM. Invest the rest. Stay the course. - PS: The cavalry isn't coming, kids. You are on your own.

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Re: Will stocks be cheap again in your lifetime?

Post by asif408 » Mon Aug 05, 2019 8:15 am

AlohaJoe wrote:
Sun Aug 04, 2019 3:19 am
Stocks are already cheap.

Go buy some stocks in Russia (CAPE 7.5) or Czech Republic (10.1) or South Korea (12.4) or Singapore (14.2) or China (15.0) or United Kingdom (16.3) or Germany (18.3).

Contrary to popular opinion, there are actually stocks that you can purchase outside on the United States (29.66).

If you're not actually doing that, then you're saying you don't actually believe valuations tell you much that is useful.
+1. As far as the OP goes, US stocks will be cheap again at some point. But who cares about US stocks when there are so many other great choices out there like Russia, Greece, Turkey, Brazil, China, South Korea, Europe, etc. Sure, the news out of those countries and regions is currently bad and has been bad for years, but no pain=no gain.

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Re: Will stocks be cheap again in your lifetime?

Post by Bacchus01 » Mon Aug 05, 2019 8:18 am

RadAudit wrote:
Mon Aug 05, 2019 7:51 am
Bacchus01 wrote:
Mon Aug 05, 2019 7:46 am
Be ready to buy in ‘29
Wasn't the market low in the early '30's?

I guess that's why we talk so much about rebalancing, SWRs and withdrawal strategies.
Yeah, the market bottomed in 32, but the biggest part of the drop was 29.

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Re: Will stocks be cheap again in your lifetime?

Post by bondsr4me » Mon Aug 05, 2019 8:26 am

[OT comment removed by moderator oldcomputerguy]

There may be some buying opportunities for long-term investors.
I am watching Apple in particular.

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Re: Will stocks be cheap again in your lifetime?

Post by azanon » Mon Aug 05, 2019 8:30 am

Bacchus01 wrote:
Mon Aug 05, 2019 8:18 am
RadAudit wrote:
Mon Aug 05, 2019 7:51 am
Bacchus01 wrote:
Mon Aug 05, 2019 7:46 am
Be ready to buy in ‘29
Wasn't the market low in the early '30's?

I guess that's why we talk so much about rebalancing, SWRs and withdrawal strategies.
Yeah, the market bottomed in 32, but the biggest part of the drop was 29.
At the end of 29 (dec) CAPE was 22.01. CAPE bottomed out Jun 32’ at 5.57, so about 75% lower than end of 29. CAPE peak at that time was 31 so greater part of the drop was after 29.

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Re: Will stocks be cheap again in your lifetime?

Post by Smoke » Mon Aug 05, 2019 8:36 am

Monster99 wrote:
Sun Aug 04, 2019 7:19 am
Grt2bOutdoors wrote:
Sun Aug 04, 2019 7:09 am
You don’t necessarily need a crash to have stocks become cheap. Imagine a situation where stock prices go sideways for the next 15 years, earnings rise slowly and prices stay the same, more or less. Those banking on continued high returns will need to save more, a lot more.
+1
Ahh, the 1970's - ....😐
+1

Unless stock prices stagnate (1970's)
1. Prices will go up, which makes them cheap now.
2. Prices will go down which makes them cheap later.
My crystal Ball in in the shop right now, they tell me it needs a new muffler bearing.
Arguing for the sake of arguing is something I am not going to engage in.

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Re: Will stocks be cheap again in your lifetime?

Post by azanon » Mon Aug 05, 2019 8:49 am

Forget the crystal ball, the S&P 500 is on sale to you for 30 times 10yr earnings, ... about the same price as before Black Tuesday. You either buy proclaiming that’s a great deal or you don’t. Worst option of all is buying a business without even asking to see the books or not caring what the books say. Yeah maybe you don’t know how things will be going forward, but there definitely is data to value a business today.

Assuming it’s always a fair price is ignoring the well documented, euphoric history of irrational exuberance.

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Re: Will stocks be cheap again in your lifetime?

Post by mptfan » Mon Aug 05, 2019 8:51 am

Forester wrote:
Sun Aug 04, 2019 3:05 am
Do you believe stocks will be cheap again as in 1982 / 2009; or will the experience of the 2010s put a "floor" under how low (U.S.) stocks go?
How do you define cheap?

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Re: Will stocks be cheap again in your lifetime?

Post by StandingRock » Mon Aug 05, 2019 8:52 am

Buy some penny stocks.

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Re: Will stocks be cheap again in your lifetime?

Post by LiveSimple » Mon Aug 05, 2019 8:53 am

305pelusa wrote:
Sun Aug 04, 2019 7:31 am
Well IF S&P 500 ends up at 6000, 25 years from today (that would be the case if it achieved a 3% annual compound growth) then they're looking awfully cheap today. That doesn't even include the dividends, which would make the prices seem even cheaper.
If anything, it's time to buy! :sharebeer
This !!! So yes the stocks are cheap always !!! if you buy and hold.

Rus In Urbe
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Re: Will stocks be cheap again in your lifetime?

Post by Rus In Urbe » Mon Aug 05, 2019 8:55 am

Today, they are on sale.

Tomorrow....who knows?
I'd like to live as a poor man with lots of money. ~Pablo Picasso

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Re: Will stocks be cheap again in your lifetime?

Post by Broken Man 1999 » Mon Aug 05, 2019 8:58 am

Might be on sale today. My buy of AAPL for $200/share executed for $197 this morning. That was a bit of a surprise.

Ugly opening, though perhaps recovering.

Broken Man 1999
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Re: Will stocks be cheap again in your lifetime?

Post by Bacchus01 » Mon Aug 05, 2019 12:15 pm

azanon wrote:
Mon Aug 05, 2019 8:30 am
Bacchus01 wrote:
Mon Aug 05, 2019 8:18 am
RadAudit wrote:
Mon Aug 05, 2019 7:51 am
Bacchus01 wrote:
Mon Aug 05, 2019 7:46 am
Be ready to buy in ‘29
Wasn't the market low in the early '30's?

I guess that's why we talk so much about rebalancing, SWRs and withdrawal strategies.
Yeah, the market bottomed in 32, but the biggest part of the drop was 29.
At the end of 29 (dec) CAPE was 22.01. CAPE bottomed out Jun 32’ at 5.57, so about 75% lower than end of 29. CAPE peak at that time was 31 so greater part of the drop was after 29.
Don't care about CAPE...so....

azanon
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Re: Will stocks be cheap again in your lifetime?

Post by azanon » Mon Aug 05, 2019 1:32 pm

Bacchus01 wrote:
Mon Aug 05, 2019 12:15 pm
azanon wrote:
Mon Aug 05, 2019 8:30 am
Bacchus01 wrote:
Mon Aug 05, 2019 8:18 am
RadAudit wrote:
Mon Aug 05, 2019 7:51 am
Bacchus01 wrote:
Mon Aug 05, 2019 7:46 am
Be ready to buy in ‘29
Wasn't the market low in the early '30's?

I guess that's why we talk so much about rebalancing, SWRs and withdrawal strategies.
Yeah, the market bottomed in 32, but the biggest part of the drop was 29.
At the end of 29 (dec) CAPE was 22.01. CAPE bottomed out Jun 32’ at 5.57, so about 75% lower than end of 29. CAPE peak at that time was 31 so greater part of the drop was after 29.
Don't care about CAPE...so....
What you said was incorrect regardless. Same was true for stock price, or any other metric.

At the end of 29', Dow was around 230 (looking at a graph, don't have the exact number). The exact number for the DOW for the bottom in 32' was 41.22. So close to 80% drop there, give or take a few percent. The peak in 29' was 381. But I'm trusting you know that it's percent drop that's relevant, if you wanted to compare the two periods.

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