Heading for a top?

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nedsaid
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Re: Heading for a top?

Post by nedsaid » Sun Jan 14, 2018 1:05 pm

letsgobobby wrote:
Sun Jan 14, 2018 11:51 am
Well it’s definitely not 2000. That was a once in a lifetime bubble; really the 07-09 crisis was the second half of the 2000-02 tech crash, as the fed lowered interest rates to prop up stock markets and liquidity flowed into real estate and debt.

Stocks are less expensive than they were in 2000 and bonds are more expensive.

When the 2008 corporate losses roll out of the calculation, CAPE will immediately drop by around 10%.

Accounting changes make CAPE look worse than it is, by about 10-15% as I understand it.

So If we are currently at 33.8, we are really more like 29 on a comparative basis, and a year from now we may be around 26. That’s assuming earnings continue at their current pace, which is a big if - granted.

But 26-29 is not a reason to get excited. It’s a reason to expect less than historical returns but not a reason to sell everything willy-nilly. Almost nothing in common with 2000.
I have a chart on my desktop that shows historical CAPE. In 2000, it got to be about 45. Plus, I don't see the euphoria of the late 1990's. It is fair to say that the market is getting expensive but this is not a mania by any means. Your comments above were right on.
A fool and his money are good for business.

Beehave
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Re: Heading for a top?

Post by Beehave » Sun Jan 14, 2018 2:58 pm

Toons wrote:
Sat Jan 13, 2018 9:26 am
I have no control over it,
Why Fret.(Nothing to Fret About)
Corrections,Bear Markets are healthy .
That is when wealth is created (ifyou are steady buying)
You just don't know it at the time.
Invest.
Reinvest


:happy
Agree, and this is a reason to keep cash on hand. Next downturn could easily see both stocks and bonds go down together. Under that circumstance the rebalancing between stocks and bonds is not the ideal way to do rebalancing. Using cash to buy stocks and bonds is.

MoonOrb
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Re: Heading for a top?

Post by MoonOrb » Sun Jan 14, 2018 3:48 pm

Beehave wrote:
Sun Jan 14, 2018 2:58 pm
Agree, and this is a reason to keep cash on hand. Next downturn could easily see both stocks and bonds go down together. Under that circumstance the rebalancing between stocks and bonds is not the ideal way to do rebalancing. Using cash to buy stocks and bonds is.
I don't understand why people want to not invest just in case the market drops. This makes zero sense to me.

Shallowpockets
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Re: Heading for a top?

Post by Shallowpockets » Sun Jan 14, 2018 4:04 pm

S and P was up 22% last year. We would have to drop that amount for you to be back at end of 2016.
Highly unlikely we get a drop like that. And, if we do, so it goes.
Lots of worry on these boards.

I guess if you wanted you could skim off that 22% and start this year with what you ended 2016 wih. Hey, the S and P is already up 4% this year.

If you worry about the top, I suppose you would have to worry on the way down too.

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Rowan Oak
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Re: Heading for a top?

Post by Rowan Oak » Thu Aug 02, 2018 1:28 pm

Toons wrote:
Sat Jan 13, 2018 9:26 am
I have no control over it,
Why Fret.(Nothing to Fret About)
Corrections,Bear Markets are healthy .
That is when wealth is created (ifyou are steady buying)
You just don't know it at the time.
Invest.
Reinvest


:happy
+1
“If you can get good at destroying your own wrong ideas, that is a great gift.” – Charlie Munger

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Rowan Oak
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Re: Heading for a top?

Post by Rowan Oak » Thu Aug 02, 2018 1:37 pm

Just realized this is from a few weeks before the Jan 26 "top" so I guess we were headed for a top that has held for around 7 months. Stay the course. More tops ahead...and bottoms.
Last edited by Rowan Oak on Fri Aug 03, 2018 2:16 pm, edited 2 times in total.
“If you can get good at destroying your own wrong ideas, that is a great gift.” – Charlie Munger

WanderingDoc
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Re: Heading for a top?

Post by WanderingDoc » Fri Aug 03, 2018 1:08 pm

Rowan Oak wrote:
Thu Aug 02, 2018 1:37 pm
Just realized this is from a few weeks before the Jan 26 "top" so I guess we were headed for a top that has lasted around 7 months. Stay the course. More tops ahead... and bottoms.
Weren't they talking about crypto? That prediction was bang on. Also, equities have been in somewhat of a bear market since February.
I'm not looking to get rich quick (stocks), I'm not looking to get rich slow (indexing), I'm looking to get rich, for sure (real estate) | Don't wait to buy real estate. Buy real estate.. and wait.

MotoTrojan
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Re: Heading for a top?

Post by MotoTrojan » Fri Aug 03, 2018 1:23 pm

WanderingDoc wrote:
Fri Aug 03, 2018 1:08 pm
Rowan Oak wrote:
Thu Aug 02, 2018 1:37 pm
Just realized this is from a few weeks before the Jan 26 "top" so I guess we were headed for a top that has lasted around 7 months. Stay the course. More tops ahead... and bottoms.
Weren't they talking about crypto? That prediction was bang on. Also, equities have been in somewhat of a bear market since February.
Equities have categorically not been in a bear market since February.

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oldcomputerguy
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Re: Heading for a top?

Post by oldcomputerguy » Fri Aug 03, 2018 1:58 pm

WanderingDoc wrote:
Fri Aug 03, 2018 1:08 pm
Also, equities have been in somewhat of a bear market since February.
Hardly. The lowest closing price for the S&P500 YTD was 2,581.00 on February 8th. Just prior to that, the highest closing price YTD for the index was 2,872.87 on January 26th. This represents a drop from high to low of 291.87, or a drop of 10.1% from the YTD high. That barely even qualifies as a correction, nowhere near a bear market. In any case, the index recovered since then and is now at 2827.22, just 1.6% off the YTD high. Nowhere near a bear market.
"I’ve come around to this: If you’re dumb, surround yourself with smart people; and if you’re smart, surround yourself with smart people who disagree with you." (Aaron Sorkin)

WanderingDoc
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Re: Heading for a top?

Post by WanderingDoc » Fri Aug 03, 2018 3:02 pm

oldcomputerguy wrote:
Fri Aug 03, 2018 1:58 pm
WanderingDoc wrote:
Fri Aug 03, 2018 1:08 pm
Also, equities have been in somewhat of a bear market since February.
Hardly. The lowest closing price for the S&P500 YTD was 2,581.00 on February 8th. Just prior to that, the highest closing price YTD for the index was 2,872.87 on January 26th. This represents a drop from high to low of 291.87, or a drop of 10.1% from the YTD high. That barely even qualifies as a correction, nowhere near a bear market. In any case, the index recovered since then and is now at 2827.22, just 1.6% off the YTD high. Nowhere near a bear market.
That's just one index. S&P is only about half of the weighted market cap of world securities. Add in international and developing markets, and it's a bear market. We aren't the only country in the world.
Going even further, I can pick out one sector or one stock that is up 30%, and say "we aren't in a bear market".
I'm not looking to get rich quick (stocks), I'm not looking to get rich slow (indexing), I'm looking to get rich, for sure (real estate) | Don't wait to buy real estate. Buy real estate.. and wait.

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oldcomputerguy
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Re: Heading for a top?

Post by oldcomputerguy » Fri Aug 03, 2018 3:24 pm

WanderingDoc wrote:
Fri Aug 03, 2018 3:02 pm
That's just one index. S&P is only about half of the weighted market cap of world securities. Add in international and developing markets, and it's a bear market. We aren't the only country in the world.
Looking at VTWSX (Vanguard World Stock Index Fund) as a proxy, close on January 26 (high point YTD) was 32.45, close on February 8 was 29.31 (low point YTD). Difference between the two is 9.6% drop from high to low, not even a correction.
"I’ve come around to this: If you’re dumb, surround yourself with smart people; and if you’re smart, surround yourself with smart people who disagree with you." (Aaron Sorkin)

david1082b
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Re: Heading for a top?

Post by david1082b » Fri Aug 03, 2018 3:35 pm

WanderingDoc wrote:
Fri Aug 03, 2018 3:02 pm
oldcomputerguy wrote:
Fri Aug 03, 2018 1:58 pm
WanderingDoc wrote:
Fri Aug 03, 2018 1:08 pm
Also, equities have been in somewhat of a bear market since February.
Hardly. The lowest closing price for the S&P500 YTD was 2,581.00 on February 8th. Just prior to that, the highest closing price YTD for the index was 2,872.87 on January 26th. This represents a drop from high to low of 291.87, or a drop of 10.1% from the YTD high. That barely even qualifies as a correction, nowhere near a bear market. In any case, the index recovered since then and is now at 2827.22, just 1.6% off the YTD high. Nowhere near a bear market.
That's just one index. S&P is only about half of the weighted market cap of world securities. Add in international and developing markets, and it's a bear market. We aren't the only country in the world.
Going even further, I can pick out one sector or one stock that is up 30%, and say "we aren't in a bear market".
Total World Stock $VT dropped approx 10% in total return from the top in late January to its bottom point in February, so global stocks perhaps went into a correction, not a bear market (which would be 20%+ drop). Total World Stock is still down around 5% in total return from the top in late January, so technically it is still in correction since it hasn't reached a new high, but not a bear market. Ex-US $VXUS bottomed out at around 11% down in late June, so a correction but not a bear market. $VXUS still in correction too being down around 9%.

http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

Of course you might have a different definition of bear market to the conventional term, but 20%+ is the usual for bear market and 10-20% for correction. To some people, bear market just means "it's down from a high". If bear market just meant that, then even being down 1% from a high would be a bear market, which would mean they happen all the time. But 20%+ drops are rarer and so there is a special term for them I guess.

david1082b
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Re: Heading for a top?

Post by david1082b » Fri Aug 03, 2018 3:52 pm

oldcomputerguy wrote:
Fri Aug 03, 2018 3:24 pm
WanderingDoc wrote:
Fri Aug 03, 2018 3:02 pm
That's just one index. S&P is only about half of the weighted market cap of world securities. Add in international and developing markets, and it's a bear market. We aren't the only country in the world.
Looking at VTWSX (Vanguard World Stock Index Fund) as a proxy, close on January 26 (high point YTD) was 32.45, close on February 8 was 29.31 (low point YTD). Difference between the two is 9.6% drop from high to low, not even a correction.
That did seem to be the case, $10,000 investment dropped to $9,030 in M* http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

5% to 9.9% gets called a "dip" I think, which happens almost every year pretty much. No new record high has been made so the world index is still in "dip".

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