Current Market Valuation - No Green Indicators

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watchnerd
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Current Market Valuation - No Green Indicators

Post by watchnerd »

I thought this site was interesting, they have 10 different US stock valuation models.

From the Buffet Indicator (Strongly Overvalued), PE Model (Overalued), Interest Rate (Overvalued), to VIX Fear Index (Neutral), none of them are showing green at this moment.

https://www.currentmarketvaluation.com/

Note: this is for US stocks, specifically
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nedsaid
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Re: Current Market Valuation - No Green Indicators

Post by nedsaid »

Market indicators are interesting but not sure they are all that actionable except for at the extremes. Valuations are stretched here but this isn't 1999, there certainly isn't euphoria in the markets. It is the old being right but being right too early problem. Markets with relatively high P/E ratios can continue to go up and for longer than we think. I also have wondered if the valuation metrics are somewhat outdated. The best we can do is evaluate risk in the context of our personal and family circumstances, I have given up on the idea of market timing. But yeah, if markets look really expensive and you are close to retirement, it makes sense to at least rebalance the portfolio.
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Re: Current Market Valuation - No Green Indicators

Post by watchnerd »

nedsaid wrote: Sun May 12, 2024 12:04 pm But yeah, if markets look really expensive and you are close to retirement, it makes sense to at least rebalance the portfolio.
Or, if close to retirement, think about how much new money goes into stocks.

And, instead, maybe consider instead capital expenditures that tend to go up with inflation, e.g. a new roof.

Or energy saving capital improvements.
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Re: Current Market Valuation - No Green Indicators

Post by invest4 »

I believe valuations matter, but as already highlighted, the market can continue to bid it up. Furthermore, you need some repeatable method if you are planning to act on such things.

Some examples (using Schiller for the case, could be another similar metric) could be:

* Discontinue new contributions at Schiller PE X and resume contributions and Schiller PE Y. You keep everything you already have invested.

* Sell stocks and put in safer investments at Schiller PE X and buy back in at Schiller PE Y. You could do all at once or step wise as Schiller PE continues to climb up and down.

As the PE rises to relative extremes, I think the case becomes stronger. Of course, no one knows what will happen as the PE has generally continued to move upward over time and the whole bit is really just guessing and hoping.

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Re: Current Market Valuation - No Green Indicators

Post by Elysium »

S&P 500 or large cap growth within that may be slightly above fair value, some stocks a little bit more than others, although given most of the performance recently came from a handful of stocks it is easy to look at this. Out of those 7 or 8 stocks, may be 3 or 4 are above fair value, the rest are about fair value. As for the remaining stocks in index, they all at various levels. Overall one can say the S&P 500 may be close to fair valuation. That is saying nothing about future. Future may see some pull back if earnings expectations do not come about, or even when they do, there is some bad news about future sales then some of these fully prices stocks can fall.

That should make for a regular correction, may be a bear market at some point, We have seen that before, so what's new if there is a 10% pull back or a 20% drop. It is to be expected. Beyond that, do we expect a huge drawdown as in 2000-02 or 2008? the current valuations do not point to anything like that, except again may be some specific LCG stocks. Not a whole lot here, rebalance or not add more money to LCG, that makes sense. Other segments may be neglected like SCV or Intl, if not already well represented can still get more money added.
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Re: Current Market Valuation - No Green Indicators

Post by bd7 »

nedsaid wrote: Sun May 12, 2024 12:04 pm I also have wondered if the valuation metrics are somewhat outdated.
There it is. The "different this time" indicator is red.... :happy
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Re: Current Market Valuation - No Green Indicators

Post by Wannaretireearly »

I’m ok adding new $ to a blended TRD fund in retirement accounts (10+ years savings)
I’m no longer adding to taxable stock funds. Any remaining taxable savings are going towards ER/MM/Muni funds. Fixed income essentially.

With tech tightening in the job market, lower savings rates/high outstanding loan rates, it’s looking like Main Street is ahead of Wall Street re: an upcoming downturn.

Sometimes I wish I still had my economist subscription ;)
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Re: Current Market Valuation - No Green Indicators

Post by watchnerd »

bd7 wrote: Sun May 12, 2024 11:38 pm
nedsaid wrote: Sun May 12, 2024 12:04 pm I also have wondered if the valuation metrics are somewhat outdated.
There it is. The "different this time" indicator is red.... :happy
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Re: Current Market Valuation - No Green Indicators

Post by Northern Flicker »

bd7 wrote: Sun May 12, 2024 11:38 pm
nedsaid wrote: Sun May 12, 2024 12:04 pm I also have wondered if the valuation metrics are somewhat outdated.
There it is. The "different this time" indicator is red....
In defense of nedsaid, I'll offer that some market analysts have suggested that conventional measures of the book value of a company may undervalue the book value of tech companies due to the difficulty of and/or lack of attempt to value their intellectual property appropriately.

I'm agnostic to market valuation methods. An unforeseeable event next month could be a catalyst for a 60% drop in the market regardless of the state of valuation metrics today. I try to organize my risk management strategies accordingly.
Last edited by Northern Flicker on Mon May 13, 2024 12:24 am, edited 1 time in total.
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Re: Current Market Valuation - No Green Indicators

Post by abc132 »

What did these indicators say before the last 10% rise in stocks?
What did these indicators say before the last 30% rise in stocks?
What is their past rate of false signals?

Posts can tend towards financial porn at times.

It needs to be made actionable otherwise it is nothing but confirmation bias.

I can say I have 2x the bonds I did 5 years ago and 4x what I had 10 years ago - by ignoring such valuations.
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Re: Current Market Valuation - No Green Indicators

Post by exodusing »

Accounting standards have changed over time, which affects traditional valuation metrics.

Traditional valuation metrics, such as p/e and CAPE, compare price to prior earnings. What an investor should care about is future earnings. How well past earnings will predict future earnings is unknown. Many of today's leading companies are expected to experience very rapid growth. If so, they will appear to have high valuations, but the growth would justify those valuations.

In the end, it depends on whether you think markets do a good job at setting prices and, if not, you think they don't do a good job now but will in the future. Such thinking is not exactly consistent with efficient markets, as valuations are some of the most widely known indicators.
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Re: Current Market Valuation - No Green Indicators

Post by Cheez-It Guy »

Sounds like it's time to buy!
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Re: Current Market Valuation - No Green Indicators

Post by Logan Roy »

Ray Dalio did a fairly detailed analysis of this:
https://www.linkedin.com/pulse/we-stock ... alio-zpdre

Of note:
"We find the comparison to the tech bubble helpful for explaining why we do not see a bubble today. We can look for instance at Nvidia today versus Cisco during the tech bubble. The two cases have seen similar share price trajectory. However, the path of cash flows has been quite different. Nvidia’s two-year forward P/E is around 27 today, reflecting that, even as the market cap has grown ~10x, earnings have also grown significantly and are expected to continue to grow over the next year or two because of actual orders that we can validate. During the tech bubble, Cisco’s two-year forward P/E hit 100. The market was pricing in far more speculative/long-term growth than we see today."

Image

"As you can see in the charts below, this is true of the broader Mag-7 as well; over the last couple of years, the market cap of these companies has grown by and large in line with earnings (which have increased rapidly)."

Image


The problem with metrics is they're all fitted to a very limited amount of market history, all with specific circumstances .. Sometimes you do get irrational exuberance, but right now it seems like analysts are correctly valuing the Mag7, which are largely responsible for market valuations .. I believe median average PE ratios aren't particularly high .. What would cause a large correction in stocks would probably be a surprise inflation reading, leading to higher-for-longer rate bets – which would put the economy at more risk, stunt growth with higher borrowing costs, make cash relatively more attractive, etc.
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Re: Current Market Valuation - No Green Indicators

Post by asset_chaos »

May I live long enough to experience many more bear markets.
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Re: Current Market Valuation - No Green Indicators

Post by exodusing »

asset_chaos wrote: Mon May 13, 2024 4:39 pm May I live long enough to experience many more bear markets.
Cheaper is better than more expensive, all else being equal. The question is whether all else is equal. Is the implicit assumption that returns will be higher following a bear market than they otherwise would be? Something may be for sale at a lower price because it's damaged goods.
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Re: Current Market Valuation - No Green Indicators

Post by Logan Roy »

exodusing wrote: Mon May 13, 2024 4:53 pm
asset_chaos wrote: Mon May 13, 2024 4:39 pm May I live long enough to experience many more bear markets.
Cheaper is better than more expensive, all else being equal. The question is whether all else is equal. Is the implicit assumption that returns will be higher following a bear market than they otherwise would be? Something may be for sale at a lower price because it's damaged goods.
I think it's primarily easing – as a response to a downturn – that drives higher returns following a bear market.

I suspect that's the mistake we make when we plot CAPE/PE ratios against 10-15 year returns: the low CAPE plots simply map periods in which you were about to get stimulus.

If markets get wise to stimulus, maybe they'll stop dropping when the economy goes south?
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Re: Current Market Valuation - No Green Indicators

Post by rockstar »

Don’t know what to do with this information. I can go to cash and earn 5ish nominally. I can buy TIPS and earn 2% real. I can take some preferred risk. None are going to make a significant dent with any real growth.

I guess I’m doomed.
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Re: Current Market Valuation - No Green Indicators

Post by watchnerd »

Logan Roy wrote: Mon May 13, 2024 5:00 pm

If markets get wise to stimulus, maybe they'll stop dropping when the economy goes south?
If I take the risk out of the equity markets, do I still get the equity risk premium?
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Re: Current Market Valuation - No Green Indicators

Post by HomerJ »

watchnerd wrote: Sun May 12, 2024 11:49 am I thought this site was interesting, they have 10 different US stock valuation models.

From the Buffet Indicator (Strongly Overvalued), PE Model (Overalued), Interest Rate (Overvalued), to VIX Fear Index (Neutral), none of them are showing green at this moment.

https://www.currentmarketvaluation.com/

Note: this is for US stocks, specifically
What were they showing 3 years ago, 5 years ago, 10 years ago?

Edit:

It hasn't existed that long.

Wayback machine shows August 4th, 2020...

They were only tracking 4 US stock valuation models four years ago.

Yield Curve Model: Strongly Overvalued
Buffett Indicator Model: Strongly Overvalued
P/E Ratio Model: Overvalued
S&P500; Mean Regression Model: Overvalued

SP500 was around 3300 at the time.

But, in less than 4 years, SP500 has grown 59% (not counting dividends, so more like 65%), even starting from a STRONGLY OVERVALUED position (it was in BLOCK RED letters on the website)
Last edited by HomerJ on Mon May 13, 2024 5:35 pm, edited 4 times in total.
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Re: Current Market Valuation - No Green Indicators

Post by exodusing »

Logan Roy wrote: Mon May 13, 2024 5:00 pm
exodusing wrote: Mon May 13, 2024 4:53 pm
asset_chaos wrote: Mon May 13, 2024 4:39 pm May I live long enough to experience many more bear markets.
Cheaper is better than more expensive, all else being equal. The question is whether all else is equal. Is the implicit assumption that returns will be higher following a bear market than they otherwise would be? Something may be for sale at a lower price because it's damaged goods.
I think it's primarily easing – as a response to a downturn – that drives higher returns following a bear market.

I suspect that's the mistake we make when we plot CAPE/PE ratios against 10-15 year returns: the low CAPE plots simply map periods in which you were about to get stimulus.

If markets get wise to stimulus, maybe they'll stop dropping when the economy goes south?
Markets predictably returning more following a bear seems inconsistent with efficient markets and probably inconsistent with a distaste for market timing (neither of which means markets won't return more). But if they didn't reliably return more following a bear, then it wouldn't make sense for accumulators, as Bill Bernstein puts, it to "get on your hands and knees and pray for a bear market so you can buy cheap stocks."
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Re: Current Market Valuation - No Green Indicators

Post by WhiteMaxima »

If tomorrow stock market drop 50%, I will do big Roth conversion. It's market timing.
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Re: Current Market Valuation - No Green Indicators

Post by exodusing »

watchnerd wrote: Mon May 13, 2024 5:16 pm
Logan Roy wrote: Mon May 13, 2024 5:00 pm

If markets get wise to stimulus, maybe they'll stop dropping when the economy goes south?
If I take the risk out of the equity markets, do I still get the equity risk premium?
Based on the responses I usually get when I ask that question, a whole lot of people believe equities are low risk and will get a high equity risk premium, at least if they hold long enough, something requiring only a strong personality.
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Re: Current Market Valuation - No Green Indicators

Post by exodusing »

WhiteMaxima wrote: Mon May 13, 2024 5:23 pm If tomorrow stock market drop 50%, I will do big Roth conversion. It's market timing.
I'd say it's more tax timing and not the sort of market timing that is rightfully derided.
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Re: Current Market Valuation - No Green Indicators

Post by Chadnudj »

nedsaid wrote: Sun May 12, 2024 12:04 pm I also have wondered if the valuation metrics are somewhat outdated.
I often wonder this myself -- are we putting too much emphasis on valuation metrics based on markets from a time before the personal computer/internet/social media/cell phones/AI? Can those periods meaningfully tell us anything about today's (very different) markets?
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Re: Current Market Valuation - No Green Indicators

Post by Logan Roy »

watchnerd wrote: Mon May 13, 2024 5:16 pm
Logan Roy wrote: Mon May 13, 2024 5:00 pm

If markets get wise to stimulus, maybe they'll stop dropping when the economy goes south?
If I take the risk out of the equity markets, do I still get the equity risk premium?
I'm honestly not sure there is such a thing..

The average stock returns the same as a T-bill .. It's a tiny minority of anomalies that provide most of the market return, and plenty of foreign markets don't seem to have their fair share.

When you lump the whole market together, I'm not sure you get anything meaningful in average valuations or returns, most of the time. I think markets are only looking at individual businesses, and they're valued pretty similarly to bonds (e.g. Bond Equity Earnings-yield Ratio).
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Re: Current Market Valuation - No Green Indicators

Post by Logan Roy »

exodusing wrote: Mon May 13, 2024 5:20 pm
Logan Roy wrote: Mon May 13, 2024 5:00 pm
exodusing wrote: Mon May 13, 2024 4:53 pm
asset_chaos wrote: Mon May 13, 2024 4:39 pm May I live long enough to experience many more bear markets.
Cheaper is better than more expensive, all else being equal. The question is whether all else is equal. Is the implicit assumption that returns will be higher following a bear market than they otherwise would be? Something may be for sale at a lower price because it's damaged goods.
I think it's primarily easing – as a response to a downturn – that drives higher returns following a bear market.

I suspect that's the mistake we make when we plot CAPE/PE ratios against 10-15 year returns: the low CAPE plots simply map periods in which you were about to get stimulus.

If markets get wise to stimulus, maybe they'll stop dropping when the economy goes south?
Markets predictably returning more following a bear seems inconsistent with efficient markets and probably inconsistent with a distaste for market timing (neither of which means markets won't return more). But if they didn't reliably return more following a bear, then it wouldn't make sense for accumulators, as Bill Bernstein puts, it to "get on your hands and knees and pray for a bear market so you can buy cheap stocks."
I think what Bernstein's actually praying for is a weak economy that leads to more stimulus .. It's liquidity that makes markets rise .. In the GFC, stocks didn't actually get particularly cheap, but all that stimulus still ensured one of the longest bull markets in history. I think it's why people were going crazy over valuations for so much of it – because it didn't conform to what people expect.

Maybe markets can justify falling 50%, just on the basis that there's some chance the economy can't be rescued. But I think mostly it's just large funds' risk management systems kicking in, along with retail panic-selling. When things happen, I don't think we can say markets are particularly efficient. It gets very behavioural.
Last edited by Logan Roy on Mon May 13, 2024 5:35 pm, edited 1 time in total.
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Re: Current Market Valuation - No Green Indicators

Post by HomerJ »

Logan Roy wrote: Mon May 13, 2024 5:00 pm I suspect that's the mistake we make when we plot CAPE/PE ratios against 10-15 year returns: the low CAPE plots simply map periods in which you were about to get stimulus.
Interesting thought.

It is interesting in finance, that once a pattern is discovered and described, it often stops working.
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Re: Current Market Valuation - No Green Indicators

Post by KlangFool »

watchnerd wrote: Sun May 12, 2024 12:09 pm
nedsaid wrote: Sun May 12, 2024 12:04 pm But yeah, if markets look really expensive and you are close to retirement, it makes sense to at least rebalance the portfolio.
Or, if close to retirement, think about how much new money goes into stocks.

And, instead, maybe consider instead capital expenditures that tend to go up with inflation, e.g. a new roof.

Or energy saving capital improvements.
If someone is not 100% US stock, the new money will not be going into US stock. That is the point of diversification. You do not have to buy overvalued asset classes.

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Re: Current Market Valuation - No Green Indicators

Post by Logan Roy »

HomerJ wrote: Mon May 13, 2024 5:32 pm
Logan Roy wrote: Mon May 13, 2024 5:00 pm I suspect that's the mistake we make when we plot CAPE/PE ratios against 10-15 year returns: the low CAPE plots simply map periods in which you were about to get stimulus.
Interesting thought.

It is interesting in finance, that once a pattern is discovered and described, it often stops working.
I tried it with Shiller's CAPE vs return data .. I erased the Tech bubble (because that probably was a bubble) and the recessions (which are tiny slices really), and there's virtually no relationship between market value and subsequent returns remaining. Which means markets are basing valuations on expected growth, and they're just as likely to overestimate as underestimate.

So the way I put it, this kind of chart is really a map in disguise. And the map tells you when the economy was very weak (low valuations), and the subsequent return tells you how much stimulus was pumped in over that 10-15 year period. I don't think I'm wrong about this – it just disturbs me that we've got fields of academia and financial advice that barely seem high-school-level, in terms of identifying simple cause and effect problems I think the average Minecraft-playing teenager would spot if they weren't so turned off by it.
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Re: Current Market Valuation - No Green Indicators

Post by watchnerd »

HomerJ wrote: Mon May 13, 2024 5:18 pm
watchnerd wrote: Sun May 12, 2024 11:49 am I thought this site was interesting, they have 10 different US stock valuation models.

From the Buffet Indicator (Strongly Overvalued), PE Model (Overalued), Interest Rate (Overvalued), to VIX Fear Index (Neutral), none of them are showing green at this moment.

https://www.currentmarketvaluation.com/

Note: this is for US stocks, specifically
What were they showing 3 years ago, 5 years ago, 10 years ago?

Edit:

It hasn't existed that long.

Wayback machine shows August 4th, 2020...

They were only tracking 4 US stock valuation models four years ago.

Yield Curve Model: Strongly Overvalued
Buffett Indicator Model: Strongly Overvalued
P/E Ratio Model: Overvalued
S&P500; Mean Regression Model: Overvalued

SP500 was around 3300 at the time.

But, in less than 4 years, SP500 has grown 59% (not counting dividends, so more like 65%), even starting from a STRONGLY OVERVALUED position (it was in BLOCK RED letters on the website)
They're just aggregating models invented by others.

So presumably one could look at those models (e.g. Buffet Indicator) from other sources that are older.
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Re: Current Market Valuation - No Green Indicators

Post by esteen »

Most think US Stocks are overvalued. But we all know the market can be "wrong" longer than you or I can be solvent.
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Re: Current Market Valuation - No Green Indicators

Post by nisiprius »

They show us charts on the left.

They tell us what to do on the right.

Image
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Re: Current Market Valuation - No Green Indicators

Post by HomerJ »

esteen wrote: Mon May 13, 2024 6:05 pm Most think US Stocks are overvalued. But we all know the market can be "wrong" longer than you or I can be solvent.
Yep... which is why it is wise to ignore them. The models can be "right" and still lose you money.
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Re: Current Market Valuation - No Green Indicators

Post by billaster »

esteen wrote: Mon May 13, 2024 6:05 pm Most think US Stocks are overvalued. But we all know the market can be "wrong" longer than you or I can be solvent.
I realize that people like to quote this saying from John Maynard Keynes: "Markets can stay irrational for longer than you can stay solvent".

But keep in mind that Keynes lost money in leveraged currency exchange options. If you are not leveraged and you are not invested in time limited options, you can stay solvent forever. You simply wait for a more favorable opportunity to invest -- as long as it takes, Warren Buffett style.

People may disagree on market timing, but solvency is not a valid argument.
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Re: Current Market Valuation - No Green Indicators

Post by HomerJ »

billaster wrote: Mon May 13, 2024 9:13 pm
esteen wrote: Mon May 13, 2024 6:05 pm Most think US Stocks are overvalued. But we all know the market can be "wrong" longer than you or I can be solvent.
I realize that people like to quote this saying from John Maynard Keynes: "Markets can stay irrational for longer than you can stay solvent".

But keep in mind that Keynes lost money in leveraged currency exchange options. If you are not leveraged and you are not invested in time limited options, you can stay solvent forever. You simply wait for a more favorable opportunity to invest -- as long as it takes, Warren Buffett style.

People may disagree on market timing, but solvency is not a valid argument.
It can be if you are withdrawing money, but your point is valid.

Still, someone who has used valuations to market-time these past 30 years, has a lot LESS money (even if still solvent), than someone who ignored valuations.
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Re: Current Market Valuation - No Green Indicators

Post by billaster »

HomerJ wrote: Tue May 14, 2024 11:37 am Still, someone who has used valuations to market-time these past 30 years, has a lot LESS money (even if still solvent), than someone who ignored valuations.
You can't speak for everyone.
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Re: Current Market Valuation - No Green Indicators

Post by TimeIsYourFriend »

HomerJ wrote: Tue May 14, 2024 11:37 am
billaster wrote: Mon May 13, 2024 9:13 pm
esteen wrote: Mon May 13, 2024 6:05 pm Most think US Stocks are overvalued. But we all know the market can be "wrong" longer than you or I can be solvent.
I realize that people like to quote this saying from John Maynard Keynes: "Markets can stay irrational for longer than you can stay solvent".

But keep in mind that Keynes lost money in leveraged currency exchange options. If you are not leveraged and you are not invested in time limited options, you can stay solvent forever. You simply wait for a more favorable opportunity to invest -- as long as it takes, Warren Buffett style.

People may disagree on market timing, but solvency is not a valid argument.
It can be if you are withdrawing money, but your point is valid.

Still, someone who has used valuations to market-time these past 30 years, has a lot LESS money (even if still solvent), than someone who ignored valuations.
Unless someone had a global market-cap weighted stock allocation from the beginning, then they did not ignore valuations. They chased higher US valuations (higher US returns which have come at the cost of higher valuations), which is no different than chasing low valuations. If someone had an international allocation and then got rid of it or lowered it, then they fall squarely in that category.
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Re: Current Market Valuation - No Green Indicators

Post by WhiteMaxima »

US market has been over valued for decades, if anyone follows Buffet index and invest in under valued int'l index, he/she portfolio would be under performed. Let front runner run a bit further, don't ride the underdog.
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Re: Current Market Valuation - No Green Indicators

Post by ScubaHogg »

Logan Roy wrote: Mon May 13, 2024 5:31 pm I think what Bernstein's actually praying for is a weak economy that leads to more stimulus ..
Um, no. That’s not even close to the point he was making in the above quote. Have you read him? The point he was making is that SORR is exactly opposite for accumulators as for Decumulators (ie retirees).

An accumulator wants to buy a lot at low prices since high returns generally follow low prices. An accumulator in the Great Depression came out very well
“Conventional Treasury rates are risk free only in the sense that they guarantee nominal principal. But their real rate of return is uncertain until after the fact.” -Risk Less and Prosper
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Re: Current Market Valuation - No Green Indicators

Post by ScubaHogg »

WhiteMaxima wrote: Tue May 14, 2024 12:02 pm US market has been over valued for decades, if anyone follows Buffet index and invest in under valued int'l index, he/she portfolio would be under performed. Let front runner run a bit further, don't ride the underdog.
The longest data available from PV shows the exact opposite of your claim

https://www.portfoliovisualizer.com/bac ... yJMA3qgHCO

If we restrict it to just this century then LCV and TSM are within shouting distance of each other

https://www.portfoliovisualizer.com/bac ... v63PKPx27p
“Conventional Treasury rates are risk free only in the sense that they guarantee nominal principal. But their real rate of return is uncertain until after the fact.” -Risk Less and Prosper
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Re: Current Market Valuation - No Green Indicators

Post by ScubaHogg »

HomerJ wrote: Tue May 14, 2024 11:37 am Still, someone who has used valuations to market-time these past 30 years, has a lot LESS money (even if still solvent), than someone who ignored valuations.
Maybe, but you can make an argument they also took on less risk

Someone who levered up 1.2x these past 30 years has more money than someone who didn’t, but what conclusion do we draw from that?
“Conventional Treasury rates are risk free only in the sense that they guarantee nominal principal. But their real rate of return is uncertain until after the fact.” -Risk Less and Prosper
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Re: Current Market Valuation - No Green Indicators

Post by WhiteMaxima »

ScubaHogg wrote: Tue May 14, 2024 1:20 pm
WhiteMaxima wrote: Tue May 14, 2024 12:02 pm US market has been over valued for decades, if anyone follows Buffet index and invest in under valued int'l index, he/she portfolio would be under performed. Let front runner run a bit further, don't ride the underdog.
The longest data available from PV shows the exact opposite of your claim

https://www.portfoliovisualizer.com/bac ... yJMA3qgHCO

If we restrict it to just this century then LCV and TSM are within shouting distance of each other

https://www.portfoliovisualizer.com/bac ... v63PKPx27p
https://www.portfoliovisualizer.com/bac ... sisResults
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Re: Current Market Valuation - No Green Indicators

Post by Logan Roy »

ScubaHogg wrote: Tue May 14, 2024 1:17 pm
Logan Roy wrote: Mon May 13, 2024 5:31 pm I think what Bernstein's actually praying for is a weak economy that leads to more stimulus ..
Um, no. That’s not even close to the point he was making in the above quote. Have you read him? The point he was making is that SORR is exactly opposite for accumulators as for Decumulators (ie retirees).

An accumulator wants to buy a lot at low prices since high returns generally follow low prices. An accumulator in the Great Depression came out very well
No of course it's not the point he's making. The point he's making is perfectly clear.

Go back and read the discussion we're having, my point is that there's no such thing as 'low' or 'high', it's all relative and should all reflect realistic growth and risk expectations. This is consistent with EMH.

What I'm putting forward is that correlations between 'low valuations' and high future returns are in fact correlations between recessions and subsequent use of stimulus. So please read the discussion before jumping in.
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Re: Current Market Valuation - No Green Indicators

Post by ScubaHogg »

WhiteMaxima wrote: Tue May 14, 2024 1:32 pm
ScubaHogg wrote: Tue May 14, 2024 1:20 pm
WhiteMaxima wrote: Tue May 14, 2024 12:02 pm US market has been over valued for decades, if anyone follows Buffet index and invest in under valued int'l index, he/she portfolio would be under performed. Let front runner run a bit further, don't ride the underdog.
The longest data available from PV shows the exact opposite of your claim

https://www.portfoliovisualizer.com/bac ... yJMA3qgHCO

If we restrict it to just this century then LCV and TSM are within shouting distance of each other

https://www.portfoliovisualizer.com/bac ... v63PKPx27p
https://www.portfoliovisualizer.com/bac ... sisResults
After you run a back test you have to click on the blue text that says “link” to get a shareable link. The one you shared is just blank

I’m sure it shows TSM beating LCV, which is fine. My point was it’s highly dependent on start and end dates.
“Conventional Treasury rates are risk free only in the sense that they guarantee nominal principal. But their real rate of return is uncertain until after the fact.” -Risk Less and Prosper
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Re: Current Market Valuation - No Green Indicators

Post by Random Musings »

If it doesn't have the Super Golden Cross or John Hussman Contrarian indicators as part of it's arsenal, I really can't take it seriously.

RM
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Re: Current Market Valuation - No Green Indicators

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