Bear Cub Smells Bubble

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000
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Bear Cub Smells Bubble

Post by 000 »

1. Tech stocks are priced to perfection. TSLA, AAPL come to mind.
2. 100% stock portfolios are all the rage. Bonds are bad. Cash is trash. Gold is gross.
3. The mainstream is pushing TINA (There Is No Alternative to stocks) as well.
4. Almost everyone is either euphoric about stocks or has succumbed to TINA.
5. Berkshire Hathaway has succumbed to holding huge portions of AAPL.
6. People who would never have owned (as much in) stocks in the past are piling in.
7. Some are day trading their stimulus checks or student loans.
8. Some are leaving good jobs in their 30s to live off stocks passively for 50+ years.
9. I have seen discussions about the stock market in non-investment contexts.

Are stocks in a bubble? Or have they reached a permanently high plateau? Or do I need a dose of optimism? :mrgreen:
assyadh
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Re: Bear Cub Smells Bubble

Post by assyadh »

Sure, you make some valid observations :mrgreen:

But I'm still hoarding stocks because I don't know anything else. As long as I have a job :sharebeer
phantom0308
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Re: Bear Cub Smells Bubble

Post by phantom0308 »

I feel a similar way about TINA. OTOH, does it really make sense to fight the fed or expect them to allow the market to drop in the event of a shock? What has happened previously when this argument has been made? How many people lost their shirts shorting the bubble in the run up?
cogito
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Re: Bear Cub Smells Bubble

Post by cogito »

In other news, the sun rose and the legacy news publishers wrote stories with headlines similar to what you've got going on here. Just another day with Mr. Market :sharebeer
rascott
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Re: Bear Cub Smells Bubble

Post by rascott »

TSLA isn't a tech stock.

I quit reading after that
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mrspock
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Re: Bear Cub Smells Bubble

Post by mrspock »

000 wrote: Wed Aug 26, 2020 12:00 am 1. Tech stocks are priced to perfection. TSLA, AAPL come to mind.
2. 100% stock portfolios are all the rage. Bonds are bad. Cash is trash. Gold is gross.
3. The mainstream is pushing TINA (There Is No Alternative to stocks) as well.
4. Almost everyone is either euphoric about stocks or has succumbed to TINA.
5. Berkshire Hathaway has succumbed to holding huge portions of AAPL.
6. People who would never have owned (as much in) stocks in the past are piling in.
7. Some are day trading their stimulus checks or student loans.
8. Some are leaving good jobs in their 30s to live off stocks passively for 50+ years.
9. I have seen discussions about the stock market in non-investment contexts.

Are stocks in a bubble? Or have they reached a permanently high plateau? Or do I need a dose of optimism? :mrgreen:
You could have said this exact list in 2017, 2018, and 2019. Last I checked the market is up quite a bit from 2017.

The fundamental problem is the market is forward looking, if you capitulate and the market is right, you lose huge. If the market is wrong it will correct and you'll just the portfolio you should have deserved in the first place. I don't see a problem here.

Stick to your AA, or risk joining the ranks of folks who market timed in March and are still sitting on the sidelines.
DonIce
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Re: Bear Cub Smells Bubble

Post by DonIce »

rascott wrote: Wed Aug 26, 2020 12:15 am TSLA isn't a tech stock.

I quit reading after that
Of course it is. "Tech" is more than just the companies that serve you ads.
rascott
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Re: Bear Cub Smells Bubble

Post by rascott »

DonIce wrote: Wed Aug 26, 2020 12:31 am
rascott wrote: Wed Aug 26, 2020 12:15 am TSLA isn't a tech stock.

I quit reading after that
Of course it is. "Tech" is more than just the companies that serve you ads.
It makes cars. I'm not interested in debating it further.
DonIce
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Re: Bear Cub Smells Bubble

Post by DonIce »

Seems like a good time to spend money rather than saving it and investing in negative real yielding bonds or bubbly stocks. The fed has been rapidly inflating financial assets for over a decade while inflation outside of financial assets has been low. Real goods and services are cheaper than they've ever been relative to stocks and bonds. Buy goods and services that will save you time or money in the long run.
langlands
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Re: Bear Cub Smells Bubble

Post by langlands »

Certainly stocks (and in particular tech stocks) have had a good run, but I have to disagree with 2 which is really the most important point in that list. Bond ETFs have had net positive inflows throughout the last few months (and in fact during most of the bull run of the past decade). Gold has been shooting up, and even Berkshire is buying gold. So I certainly don't see "gold is gross" being a popular take (except on Bogleheads, whose opinion really doesn't matter :twisted: since passive money doesn't move markets). The fact of the matter is that everything is expensive because of the perpetual monetary and fiscal stimulus. If stocks are in a bubble, I don't even know what to call the current bond market. TINA is real because really what is the alternative? If the stock market starts selling off, what are people going to buy? Paradoxically, despite all the stimulus, one of the most feared scenarios is in fact deflation, not inflation. So even TIPS aren't safe.

You could say that the stock market is in a bubble, but I think it's more accurate to say that the entire state of the market is extremely unusual (or at least unprecedented). What I mean is that this isn't at all like the 2000 Nasdaq bubble in which stocks were clearly extremely richly priced compared to bonds. In today's market, a case can be made for any asset class (including cash) to be overpriced. That means nothing is clear, and in particular it's not obvious at all that you should sell stocks unless you know what underpriced asset you're going to hold in its stead.
Last edited by langlands on Wed Aug 26, 2020 12:52 am, edited 1 time in total.
flaccidsteele
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Re: Bear Cub Smells Bubble

Post by flaccidsteele »

Cool story bro
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat
phantom0308
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Re: Bear Cub Smells Bubble

Post by phantom0308 »

rascott wrote: Wed Aug 26, 2020 12:41 am
DonIce wrote: Wed Aug 26, 2020 12:31 am
rascott wrote: Wed Aug 26, 2020 12:15 am TSLA isn't a tech stock.

I quit reading after that
Of course it is. "Tech" is more than just the companies that serve you ads.
It makes cars. I'm not interested in debating it further.
It’s the only category that can justify close to $1M in market value per car sold (trailing 12 months). That’s some high margin auto manufacturing.
Sourc3
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Re: Bear Cub Smells Bubble

Post by Sourc3 »

rascott wrote: Wed Aug 26, 2020 12:41 am
DonIce wrote: Wed Aug 26, 2020 12:31 am
rascott wrote: Wed Aug 26, 2020 12:15 am TSLA isn't a tech stock.

I quit reading after that
Of course it is. "Tech" is more than just the companies that serve you ads.
It makes cars. I'm not interested in debating it further.
Solar roofs and home power walls are not cars.
phantom0308
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Re: Bear Cub Smells Bubble

Post by phantom0308 »

Sourc3 wrote: Wed Aug 26, 2020 1:21 am
rascott wrote: Wed Aug 26, 2020 12:41 am
DonIce wrote: Wed Aug 26, 2020 12:31 am
rascott wrote: Wed Aug 26, 2020 12:15 am TSLA isn't a tech stock.

I quit reading after that
Of course it is. "Tech" is more than just the companies that serve you ads.
It makes cars. I'm not interested in debating it further.
Solar roofs and home power walls are not cars.
Ah yes the solar roofs Tesla bailed out because they weren’t profitable. Competing with Chinese manufacturers on commodity goods is notoriously good business.

Power walls are more interesting and some good oil fashioned snake oil could really boost their margin on their admittedly impressive battery expertise.

Autonomous cars have been less than a year away for a decade.
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warner25
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Re: Bear Cub Smells Bubble

Post by warner25 »

langlands wrote: Wed Aug 26, 2020 12:50 am In today's market, a case can be made for any asset class (including cash) to be overpriced.
And that's been the talk on this forum for about a decade now. The situation just keeps getting more extreme. I've held a 50/50 asset allocation the whole time, for lack of any idea how this might end.
minimalistmarc
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Re: Bear Cub Smells Bubble

Post by minimalistmarc »

000 wrote: Wed Aug 26, 2020 12:00 am 1. Tech stocks are priced to perfection. TSLA, AAPL come to mind.
2. 100% stock portfolios are all the rage. Bonds are bad. Cash is trash. Gold is gross.
3. The mainstream is pushing TINA (There Is No Alternative to stocks) as well.
4. Almost everyone is either euphoric about stocks or has succumbed to TINA.
5. Berkshire Hathaway has succumbed to holding huge portions of AAPL.
6. People who would never have owned (as much in) stocks in the past are piling in.
7. Some are day trading their stimulus checks or student loans.
8. Some are leaving good jobs in their 30s to live off stocks passively for 50+ years.
9. I have seen discussions about the stock market in non-investment contexts.

Are stocks in a bubble? Or have they reached a permanently high plateau? Or do I need a dose of optimism? :mrgreen:
The usual translation of all the above is “I’m trying to time the market/I’m smarter than the market. The market isn’t doing what I think it should do, why is it becoming even more wrong than me?”
minimalistmarc
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Re: Bear Cub Smells Bubble

Post by minimalistmarc »

mrspock wrote: Wed Aug 26, 2020 12:26 am You could have said this exact list in 2017, 2018, and 2019. Last I checked the market is up quite a bit from 2017.
There have been similar lists constantly since 2009. Some poor souls who capitulated and sold at the bottom of that correction have never gotten back in.
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Forester
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Re: Bear Cub Smells Bubble

Post by Forester »

000 wrote: Wed Aug 26, 2020 12:00 am 1. Tech stocks are priced to perfection. TSLA, AAPL come to mind.
2. 100% stock portfolios are all the rage. Bonds are bad. Cash is trash. Gold is gross.
3. The mainstream is pushing TINA (There Is No Alternative to stocks) as well.
4. Almost everyone is either euphoric about stocks or has succumbed to TINA.
5. Berkshire Hathaway has succumbed to holding huge portions of AAPL.
6. People who would never have owned (as much in) stocks in the past are piling in.
7. Some are day trading their stimulus checks or student loans.
8. Some are leaving good jobs in their 30s to live off stocks passively for 50+ years.
9. I have seen discussions about the stock market in non-investment contexts.

Are stocks in a bubble? Or have they reached a permanently high plateau? Or do I need a dose of optimism? :mrgreen:
I think some could make the case that bonds are more expensive. A US 30/70 might be more precarious than a more global portfolio with a value tilt. The consensus among the bears I listen to, is that US stocks will be flat or a lose a little and bonds will lose 1/3 to 2/5 in real terms, over the next decade or decade and a half.
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fredflinstone
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Re: Bear Cub Smells Bubble

Post by fredflinstone »

000 wrote: Wed Aug 26, 2020 12:00 am 1. Tech stocks are priced to perfection. TSLA, AAPL come to mind.
2. 100% stock portfolios are all the rage. Bonds are bad. Cash is trash. Gold is gross.
3. The mainstream is pushing TINA (There Is No Alternative to stocks) as well.
4. Almost everyone is either euphoric about stocks or has succumbed to TINA.
5. Berkshire Hathaway has succumbed to holding huge portions of AAPL.
6. People who would never have owned (as much in) stocks in the past are piling in.
7. Some are day trading their stimulus checks or student loans.
8. Some are leaving good jobs in their 30s to live off stocks passively for 50+ years.
9. I have seen discussions about the stock market in non-investment contexts.

Are stocks in a bubble? Or have they reached a permanently high plateau? Or do I need a dose of optimism? :mrgreen:
The market has had a tremendous run since April; valuations are high; and sentiment is optimistic (a contrary indicator). It would not surprise me to see a correction here. That said, it would also not surprise me to see the market continue to power higher. Fact is, it's very hard to successfully time markets. Experienced Bogleheads generally don't attempt to do so.
Stocks 28 / Gold 23 / Long-term US treasuries 19 / Cash (mainly CDs) 22 / TIPS 8
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Schlabba
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Re: Bear Cub Smells Bubble

Post by Schlabba »

Sourc3 wrote: Wed Aug 26, 2020 1:21 am
rascott wrote: Wed Aug 26, 2020 12:41 am
DonIce wrote: Wed Aug 26, 2020 12:31 am
rascott wrote: Wed Aug 26, 2020 12:15 am TSLA isn't a tech stock.

I quit reading after that
Of course it is. "Tech" is more than just the companies that serve you ads.
It makes cars. I'm not interested in debating it further.
Solar roofs and home power walls are not cars.
You could also call Shell a tech company. They also invest in sustainable energy and don’t you know howmuch technology is used in modern day oil business?
Tesla’s revenue is 75% cars.

To the OP, are you maybe interested in buying a value or dividend index if you are worried about such high valuations?
Secretly a dividend investor. Feel free to ask why.
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Stinky
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Re: Bear Cub Smells Bubble

Post by Stinky »

fredflinstone wrote: Wed Aug 26, 2020 3:52 am The market has had a tremendous run since April; valuations are high; and sentiment is optimistic (a contrary indicator). It would not surprise me to see a correction here. That said, it would also not surprise me to see the market continue to power higher. Fact is, it's very hard to successfully time markets. Experienced Bogleheads generally don't attempt to do so.
Excellent points. Nobody knows nothing.

I’m staying the course. I expect a bumpy ride - but that’s no different than I have expected numerous times in my investing career.
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4nursebee
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Re: Bear Cub Smells Bubble

Post by 4nursebee »

Please post your portfolio questions in a more acceptable format

https://www.bogleheads.org/wiki/Asking_ ... _questions

viewtopic.php?t=6212
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whereskyle
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Re: Bear Cub Smells Bubble

Post by whereskyle »

000 wrote: Wed Aug 26, 2020 12:00 am 1. Tech stocks are priced to perfection. TSLA, AAPL come to mind.
2. 100% stock portfolios are all the rage. Bonds are bad. Cash is trash. Gold is gross.
3. The mainstream is pushing TINA (There Is No Alternative to stocks) as well.
4. Almost everyone is either euphoric about stocks or has succumbed to TINA.
5. Berkshire Hathaway has succumbed to holding huge portions of AAPL.
6. People who would never have owned (as much in) stocks in the past are piling in.
7. Some are day trading their stimulus checks or student loans.
8. Some are leaving good jobs in their 30s to live off stocks passively for 50+ years.
9. I have seen discussions about the stock market in non-investment contexts.

Are stocks in a bubble? Or have they reached a permanently high plateau? Or do I need a dose of optimism? :mrgreen:
Silly.

Gold prices are at ridiculous levels, FAANGM really are that valuable (sometimes even a p/e of 150 is "too low") and pretty much all of the SP 500 that is not tech is priced reasonably (if not unreasonably low).

The average, non-investor person continues to be completely dumbfounded and scared of the stock market, raising eyebrows whenever anyone mentions it might be a good investment. This is not Jerry picking a video-opera stock. Heck, I'm using at least two products from FAANG stocks just to write this reply.
"I am better off than he is – for he knows nothing and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle
columbia
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Re: Bear Cub Smells Bubble

Post by columbia »

Right now, I think cash is king.
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DartThrower
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Re: Bear Cub Smells Bubble

Post by DartThrower »

mrspock wrote: Wed Aug 26, 2020 12:26 am

Stick to your AA, or risk joining the ranks of folks who market timed in March and are still sitting on the sidelines.
March of 2009 or 2020? :mrgreen:
Our patience will achieve more than our force. -Edmund Burke
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nisiprius
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Re: Bear Cub Smells Bubble

Post by nisiprius »

The question isn't "do I smell a bubble." (I do, and to me Robinhood is the current equivalent of 1990s "day-traders" in T1-line brokerage parlors).

The question is "what should I do if I smell a bubble?"

Of course you can get the long-term average return of the stock market simply by buying and holding a total market index fund.

Here is what many people believe. "You would be a fool to blindly keep buying and holding during a bubble. You can reliably improve your returns, by a large amount, if you can spot a bubble. You will get a large improvement even if you are not perfectly correct, you can at least avoid the worst of it. You can avoid buying overpriced stocks during a bubble. You can realize some gains during a bubble--'nobody ever went broke taking a profit.' If you are really sure it is a bad bubble, you can go to cash, lock in your gains, and wait out the collapse."

I no longer believe this. There are three catches.

1) The old devil efficient market hypothesis applies during a bubble, too. If everyone believed it was a bubble, there would not be a bubble.

2) The stock market is fractal. There are sharp upward movements within every downward movement and sharp downward movements within every upward movement. All the upward movements induce euphoria, you just forget it if they are followed by downward movements. Just because you sense a degree of irrational mania in the market just means things are normal. Sometimes a crash follows, sometimes it doesn't.

There were unmistakable feelings of euphoria in 1996, so much so that Alan Greenspan was led to warn about "irrational exuberance" on December, 5th, 1996. The Dow Jones Industrial Average (DJIA) closed at 6,437 on that day. It reached 11,337 on May 21, 2001, but by October 9th, 2002 it was down to 7,286.

Was Greenspan "right?"

3) We overestimate the ease of being "right" in a vague way ("Sooner or later a crash is coming and it may be terrific," "We can see that in the inverse relationship exhibited by price/earnings ratios and the rate of inflation in the past. But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade? And how do we factor that assessment into monetary policy?") Particularly in hindsight, we selectively remember our uneasy feelings that preceded crashes and forget uneasy feelings that didn't.

We underestimate the precision in timing needed to realize improvements from timing maneuvers. One of the most interesting bits of research in this regard is Jeremy Siegel's work, which he described in a chapter on "Stocks and the Business Cycle" in Stocks for the Long Run. He found that an investor with access to a crystal ball giving the starting and end dates of every recession, who went to cash on the day a recession began and back to stocks on the day it ended, realized only a very modest improvement in return. In order to get a large benefit, it was necessary to make the sale and repurchase almost precisely six months before those dates.

In other words, smelling a bubble isn't enough. You have to see the bubble, measure the thin-film interference pattern in the places where it is thinning (the dark center of the rainbow rings), and take action fairly precisely just before the peak.

1) I honestly think that "sooner or later a crash is coming and it may be terrific" (the only reason we remember Roger Babson's words is because he said them in September, 1929). 2) And I am doing nothing about it.
Last edited by nisiprius on Wed Aug 26, 2020 8:52 am, edited 3 times in total.
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Tom_T
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Re: Bear Cub Smells Bubble

Post by Tom_T »

So, we might get two 30% corrections in one year? That would be a first, I think.
rkhusky
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Re: Bear Cub Smells Bubble

Post by rkhusky »

I've done quite a bit of rebalancing this year. It doesn't matter if stocks go up or down.
Valuethinker
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Re: Bear Cub Smells Bubble

Post by Valuethinker »

Tom_T wrote: Wed Aug 26, 2020 6:28 am So, we might get two 30% corrections in one year? That would be a first, I think.
I am thinking in the early 1930s that it happened? Market rallied after 1929 then crashed when scale of crisis became clear? Then crashed again then rallied after March 1932 Inaugural?

In a 12 month period 2008/9 I am pretty sure market fell 30% in 2008, then rallied then fell again in early 2009. So again might have been 30% then 30%.

This past bear market has been unusual in that it bottomed so quickly and rallied so fast. However the breadth of recovery is very narrow, a handful of internet stocks have accounted for most of the market gain.
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TomatoTomahto
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Re: Bear Cub Smells Bubble

Post by TomatoTomahto »

columbia wrote: Wed Aug 26, 2020 6:17 am Right now, I think cash is king.
I’m not sure I agree, but my actions agree. I have not sold equities (or bonds), but the cash is beginning to pile up. I just don’t have the desire to purchase financial assets.

Thankfully, we have already won the game. Otherwise, I’d be distressed.
Okay, I get it; I won't be political or controversial. The Earth is flat.
columbia
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Re: Bear Cub Smells Bubble

Post by columbia »

TomatoTomahto wrote: Wed Aug 26, 2020 6:42 am
columbia wrote: Wed Aug 26, 2020 6:17 am Right now, I think cash is king.
I’m not sure I agree, but my actions agree. I have not sold equities (or bonds), but the cash is beginning to pile up. I just don’t have the desire to purchase financial assets.

Thankfully, we have already won the game. Otherwise, I’d be distressed.

It's certainly not trash. I don't have much (in a relative sense), but I did cash in all of my VGIT holdings.

ITT might go below zero, but I'll let someone else play that game.
kabob
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Re: Bear Cub Smells Bubble

Post by kabob »

ChartSchool agrees...
Developed by J. Welles Wilder, the Relative Strength Index (RSI) is a momentum oscillator that measures the speed and change of price movements. RSI oscillates between zero and 100. According to Wilder, RSI is considered overbought when above 70 and oversold when below 30.
*** S&P500>70 - TechSector>70 - Both Overbought! ***
https://stockcharts.com/h-sc/ui?s=XLK&p ... 4778414990
https://stockcharts.com/h-sc/ui?s=XLK&p ... 4778414990

And we all know it's true,
What's a BogleHead supposed todo?
Last edited by kabob on Wed Aug 26, 2020 7:10 am, edited 1 time in total.
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midareff
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Re: Bear Cub Smells Bubble

Post by midareff »

000 wrote: Wed Aug 26, 2020 12:00 am 1. Tech stocks are priced to perfection. TSLA, AAPL come to mind.
2. 100% stock portfolios are all the rage. Bonds are bad. Cash is trash. Gold is gross.
3. The mainstream is pushing TINA (There Is No Alternative to stocks) as well.
4. Almost everyone is either euphoric about stocks or has succumbed to TINA.
5. Berkshire Hathaway has succumbed to holding huge portions of AAPL.
6. People who would never have owned (as much in) stocks in the past are piling in.
7. Some are day trading their stimulus checks or student loans.
8. Some are leaving good jobs in their 30s to live off stocks passively for 50+ years.
9. I have seen discussions about the stock market in non-investment contexts.

Are stocks in a bubble? Or have they reached a permanently high plateau? Or do I need a dose of optimism? :mrgreen:
You could have written this in 1997, 2007 or most years in the last 5. You should have an AA based on your tolerance for risk rather than big eyes for greed. It's a market and it will do what the market does.. namely; go up and go go down.
Valuethinker
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Re: Bear Cub Smells Bubble

Post by Valuethinker »

langlands wrote: Wed Aug 26, 2020 12:50 am Certainly stocks (and in particular tech stocks) have had a good run, but I have to disagree with 2 which is really the most important point in that list. Bond ETFs have had net positive inflows throughout the last few months (and in fact during most of the bull run of the past decade). Gold has been shooting up, and even Berkshire is buying gold. So I certainly don't see "gold is gross" being a popular take (except on Bogleheads, whose opinion really doesn't matter :twisted: since passive money doesn't move markets). The fact of the matter is that everything is expensive because of the perpetual monetary and fiscal stimulus. If stocks are in a bubble, I don't even know what to call the current bond market. TINA is real because really what is the alternative? If the stock market starts selling off, what are people going to buy? Paradoxically, despite all the stimulus, one of the most feared scenarios is in fact deflation, not inflation. So even TIPS aren't safe.

You could say that the stock market is in a bubble, but I think it's more accurate to say that the entire state of the market is extremely unusual (or at least unprecedented). What I mean is that this isn't at all like the 2000 Nasdaq bubble in which stocks were clearly extremely richly priced compared to bonds. In today's market, a case can be made for any asset class (including cash) to be overpriced. That means nothing is clear, and in particular it's not obvious at all that you should sell stocks unless you know what underpriced asset you're going to hold in its stead.
Hard to make a case for cash to be "overpriced"?

0 nominal return looks pretty good against negative nominal and real returns in prospect on other asset classes.

In the 1970s 90 day T Bills outperformed stocks or bonds I believe.
alluringreality
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Re: Bear Cub Smells Bubble

Post by alluringreality »

Valuethinker wrote: Wed Aug 26, 2020 7:29 am In the 1970s 90 day T Bills outperformed stocks or bonds I believe.
While I do keep near term money that is not subject to market declines, the current Fed funds rate is quite significantly different than the 1970s and unemployment is also above target. Essentially I question if T bills are likely to be a great investment any time soon.
https://fred.stlouisfed.org/series/FEDFUNDS
https://fred.stlouisfed.org/series/TB3MS
Last edited by alluringreality on Wed Aug 26, 2020 8:07 am, edited 1 time in total.
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rascott
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Re: Bear Cub Smells Bubble

Post by rascott »

Sourc3 wrote: Wed Aug 26, 2020 1:21 am
rascott wrote: Wed Aug 26, 2020 12:41 am
DonIce wrote: Wed Aug 26, 2020 12:31 am
rascott wrote: Wed Aug 26, 2020 12:15 am TSLA isn't a tech stock.

I quit reading after that
Of course it is. "Tech" is more than just the companies that serve you ads.
It makes cars. I'm not interested in debating it further.
Solar roofs and home power walls are not cars.
Thanks for making my point... (and sales of those items are negligible to the company anyway, it's more a hype and dream) .

A pure tech firm sells products with very high margins...... much like pharma companies. All the cost is in development..... but the marginal cost of each additional sale is negligible. That's why investors love them so much, and why they often obtain high multiples. As any sales growth often goes straight to the bottom line.

Apple has only recently been able to obtain tech like multiples..... for years they were valued as a hardware company with multiples in the mid teens. Only once their services business has exploded has their multiple expanded

Tesla makes a cool car. And their electric tech is ahead of their competitors at this time. But they are still a car company....And all the high marginal cost involved with that.
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nedsaid
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Re: Bear Cub Smells Bubble

Post by nedsaid »

000 wrote: Wed Aug 26, 2020 12:00 am 1. Tech stocks are priced to perfection. TSLA, AAPL come to mind.
2. 100% stock portfolios are all the rage. Bonds are bad. Cash is trash. Gold is gross.
3. The mainstream is pushing TINA (There Is No Alternative to stocks) as well.
4. Almost everyone is either euphoric about stocks or has succumbed to TINA.
5. Berkshire Hathaway has succumbed to holding huge portions of AAPL.
6. People who would never have owned (as much in) stocks in the past are piling in.
7. Some are day trading their stimulus checks or student loans.
8. Some are leaving good jobs in their 30s to live off stocks passively for 50+ years.
9. I have seen discussions about the stock market in non-investment contexts.

Are stocks in a bubble? Or have they reached a permanently high plateau? Or do I need a dose of optimism? :mrgreen:
We are seeing optimism in the markets, certainly. But we haven't seen euphoria, this isn't 1999. I recently performed another round of mild rebalancing, I sold a small part of my US Total Market Index putting 1/2 into US Bond Index, 1/4 into Developed Markets Index, and 1/4 into US Large Value Index.

So I would say that valuations in Large Growth are "stretched" but on the other hand the very large Internet/High Tech companies are generating insane amounts of cash. High valuations but for a pretty good reason.

As the US Market keeps hitting new highs, I will bit by bit take a bit off the top and redeploy into bonds and into cheaper stocks.
A fool and his money are good for business.
tiburblium
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Re: Bear Cub Smells Bubble

Post by tiburblium »

I doubt we will see any equity market drops of > 10% anytime soon. Everyone has now been conditioned to buy the dip, those who did not this time learned their lesson. I am not saying that is right or wrong, just from a psychological standpoint.
JBTX
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Re: Bear Cub Smells Bubble

Post by JBTX »

000 wrote: Wed Aug 26, 2020 12:00 am 1. Tech stocks are priced to perfection. TSLA, AAPL come to mind.
2. 100% stock portfolios are all the rage. Bonds are bad. Cash is trash. Gold is gross.
3. The mainstream is pushing TINA (There Is No Alternative to stocks) as well.
4. Almost everyone is either euphoric about stocks or has succumbed to TINA.
5. Berkshire Hathaway has succumbed to holding huge portions of AAPL.
6. People who would never have owned (as much in) stocks in the past are piling in.
7. Some are day trading their stimulus checks or student loans.
8. Some are leaving good jobs in their 30s to live off stocks passively for 50+ years.
9. I have seen discussions about the stock market in non-investment contexts.

Are stocks in a bubble? Or have they reached a permanently high plateau? Or do I need a dose of optimism? :mrgreen:

In general I agree with your sentiments. But I don't know what that means for what the market is going to do going forward. I don't see the conditions driving it up going away any time soon.
Robot Monster
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Location: New York

Re: Bear Cub Smells Bubble

Post by Robot Monster »

000 wrote: Wed Aug 26, 2020 12:00 am Are stocks in a bubble?
If you're asking about US stocks, Vanguard says, "no". Compare the blue line of today to where the blue line was during the dot-.com bubble, where CAPE reached 44. S&P's CAPE is only 31.69.

Vanguard says, "no":
Image

Certainly it's far away from Japan 1989.
Image
"Happiness comes from being connected in the right ways to: other people, your work, something larger than yourself."
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TheTimeLord
Posts: 8249
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Re: Bear Cub Smells Bubble

Post by TheTimeLord »

000 wrote: Wed Aug 26, 2020 12:00 am 1. Tech stocks are priced to perfection. TSLA, AAPL come to mind.
2. 100% stock portfolios are all the rage. Bonds are bad. Cash is trash. Gold is gross.
3. The mainstream is pushing TINA (There Is No Alternative to stocks) as well.
4. Almost everyone is either euphoric about stocks or has succumbed to TINA.
5. Berkshire Hathaway has succumbed to holding huge portions of AAPL.
6. People who would never have owned (as much in) stocks in the past are piling in.
7. Some are day trading their stimulus checks or student loans.
8. Some are leaving good jobs in their 30s to live off stocks passively for 50+ years.
9. I have seen discussions about the stock market in non-investment contexts.

Are stocks in a bubble? Or have they reached a permanently high plateau? Or do I need a dose of optimism? :mrgreen:
I agree with less than 50% of the list. You don't need optimism or pessimism but you could possibly use some conviction.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]
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WoodSpinner
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Re: Bear Cub Smells Bubble

Post by WoodSpinner »

kabob wrote: Wed Aug 26, 2020 7:09 am ChartSchool agrees...
Developed by J. Welles Wilder, the Relative Strength Index (RSI) is a momentum oscillator that measures the speed and change of price movements. RSI oscillates between zero and 100. According to Wilder, RSI is considered overbought when above 70 and oversold when below 30.
*** S&P500>70 - TechSector>70 - Both Overbought! ***
https://stockcharts.com/h-sc/ui?s=XLK&p ... 4778414990
https://stockcharts.com/h-sc/ui?s=XLK&p ... 4778414990

And we all know it's true,
What's a BogleHead supposed todo?
Kabob,

Could you do some remedial education on how to read and understand these charts? Always enjoy learning and I really don’t understand what they are saying.

Help ..

WoodSpinner
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JoMoney
Posts: 9771
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Re: Bear Cub Smells Bubble

Post by JoMoney »

Yes, "mainstream" is pushing TINA... but that doesn't automatically make it false.
Day trading and Gold aren't investments, it's a zero sum game (worse after expenses) and a shiny rock. The broad economy is in poor shape. Interest rates reflect that. The big question is when will interest rates rise, and at what level of interest be competitive to business prospects.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
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TheTimeLord
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Re: Bear Cub Smells Bubble

Post by TheTimeLord »

columbia wrote: Wed Aug 26, 2020 6:17 am Right now, I think cash is king.
How on could this be true? It might be true sometime soon, it might not, but I don't see how cash is king "right now".
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]
kabob
Posts: 112
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Location: Loudon, Tn

Re: Bear Cub Smells Bubble

Post by kabob »

WoodSpinner wrote: Wed Aug 26, 2020 8:20 am
kabob wrote: Wed Aug 26, 2020 7:09 am ChartSchool agrees...
Developed by J. Welles Wilder, the Relative Strength Index (RSI) is a momentum oscillator that measures the speed and change of price movements. RSI oscillates between zero and 100. According to Wilder, RSI is considered overbought when above 70 and oversold when below 30.
*** S&P500>70 - TechSector>70 - Both Overbought! ***
https://stockcharts.com/h-sc/ui?s=XLK&p ... 4778414990
https://stockcharts.com/h-sc/ui?s=XLK&p ... 4778414990

And we all know it's true,
What's a BogleHead supposed todo?
Kabob,

Could you do some remedial education on how to read and understand these charts? Always enjoy learning and I really don’t understand what they are saying.

Help ..

WoodSpinner
Go to ChartSchool ->https://school.stockcharts.com/doku.php - it's Free...
Nowizard
Posts: 3019
Joined: Tue Oct 23, 2007 5:33 pm

Re: Bear Cub Smells Bubble

Post by Nowizard »

Well, your post reflects why there is so much discussion about many, complex topics with no certain answers and how we tend to seek out advice since the degree to which we want to avoid error increases with the degree of personal importance ascribed to the topic. You will get general opinions here but ones likely to be slanted toward staying the course, investing in stocks for the long haul, etc. You can also get scathing repudiation of that approach depending on what site you read. This one is sincere, filled with helpful people, cordial interactions and good suggestions that are worthy of consideration but imperfect as are any comments about complex topics that evolve over time.

Tim
alfaspider
Posts: 3036
Joined: Wed Sep 09, 2015 4:44 pm

Re: Bear Cub Smells Bubble

Post by alfaspider »

kabob wrote: Wed Aug 26, 2020 8:27 am
WoodSpinner wrote: Wed Aug 26, 2020 8:20 am
kabob wrote: Wed Aug 26, 2020 7:09 am ChartSchool agrees...
Developed by J. Welles Wilder, the Relative Strength Index (RSI) is a momentum oscillator that measures the speed and change of price movements. RSI oscillates between zero and 100. According to Wilder, RSI is considered overbought when above 70 and oversold when below 30.
*** S&P500>70 - TechSector>70 - Both Overbought! ***
https://stockcharts.com/h-sc/ui?s=XLK&p ... 4778414990
https://stockcharts.com/h-sc/ui?s=XLK&p ... 4778414990

And we all know it's true,
What's a BogleHead supposed todo?
Kabob,

Could you do some remedial education on how to read and understand these charts? Always enjoy learning and I really don’t understand what they are saying.

Help ..

WoodSpinner
Go to ChartSchool ->https://school.stockcharts.com/doku.php - it's Free...
Phrenology, tea leaf reading, and stock chart reading. At least it's not as messy as animal entrails!
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Kenkat
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Location: Cincinnati, OH

Re: Bear Cub Smells Bubble

Post by Kenkat »

It feels like my value and international stocks are going to pay off any day now.

Any........day.........now......

Any


Day



Now
mak1277
Posts: 1569
Joined: Fri Jan 09, 2015 4:26 pm

Re: Bear Cub Smells Bubble

Post by mak1277 »

I came here to find a link of an actual bear cub chasing an actual bubble...and I'm now disappointed.
Anon9001
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Location: भारत

Re: Bear Cub Smells Bubble

Post by Anon9001 »

Kenkat wrote: Wed Aug 26, 2020 8:47 am It feels like my value and international stocks are going to pay off any day now.

Any........day.........now......

Any


Day



Now
Buy Momentum factor ETF's to make sure you don't panic sell these things. Mean Reversion takes quite a long time.
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