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U.S. stock valuations haven’t been this extreme since 1929 and 2000

marketwatch.com

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Re: U.S. stock valuations haven’t been this extreme since 1929 and 2000

#21

Post by gragas »

TheAdamAndChe wrote: post #8

The miscalculation that I believe economists are making is the massive shift in leverage between the laborers and the owners. Historically, the two were balanced to the point that creating greater economic growth would tip the scales in the laborers' favor, thus increasing wages and inflation. What's happening now is that, due to many factors including outsourcing, illegal immigration, lobbying(bribery), capital conc…

>lobbying(bribery), capital concentration, anti-union legislation, anti-small business legislation

We've learned through the decades---and especially through the bailouts in the late 2000s---that slapping big business on the wrist is not enough to stop cronyism and government-enabled monopoly. The only way to eliminate that is to cut the snake off at its head; if there is no power to dole out, lobbying wouldn't exist.

If the government can't choose who succeeds and who fails, then only those who provide value can succeed. The only way to grow a business without a monopoly is to employ people (whether directly, or indirectly by investing capital).

Re: U.S. stock valuations haven’t been this extreme since 1929 and 2000

#22

Post by nfriedly »

closeparen wrote: post #15
nfriedly wrote: post #11

If you're working a job that isn't directly related to the stock market, and are not about to retire, then you really shouldn't care if the stock market is about to crash or not. Set up automatic investments into a Vanguard Target Retirement fund (or whatever), and know that whenever the next crash does come, you'll get an exceptionally good deal that month. Here's some good advice on the subject: http://www.mrmoneym…

>a job that isn't related to the stock market No such thing, except for maybe the government. If your business isn't sensitive to its stock price, its customers/suppliers/financiers are. Or their customers/suppliers/financiers are. Everything is connected, if you exist in the modern economy, you don't exist in a vacuum.

You're correct, I'm gong to edit it to say "not directly related", but the point I was trying to get to remains: don't worry about things that you have absolutely no control over and no good reason to worry about.

Re: U.S. stock valuations haven’t been this extreme since 1929 and 2000

#23

Post by freefm »

exelius wrote: post #16
freefm wrote: post #5

Even if there is a global downturn, the US economy will remain strong. Where else is capital going to go? If developing economies go bust, developed nations like the US will buy up their assets in a fire-sale.

China just opened up outside investment this week. Chinese capital already owns way more of America through various investment vehicles than we are willing to admit. We abdicated our global leadership to China the day Trump was elected. Our economic leadership will likely follow in the next decade.

China's economy is highly dependent on Western consumption of their goods. If the US went into recession, and Americans significantly cut back on their consumption, which many of them certainly could afford to without going into poverty, wouldn't that wreck China's economy?

Re: U.S. stock valuations haven’t been this extreme since 1929 and 2000

#24

Post by 1_2__4 »

nfriedly wrote: post #22
closeparen wrote: post #15

Earlier quoted context omitted.

>a job that isn't related to the stock market No such thing, except for maybe the government. If your business isn't sensitive to its stock price, its customers/suppliers/financiers are. Or their customers/suppliers/financiers are. Everything is connected, if you exist in the modern economy, you don't exist in a vacuum.

You're correct, I'm gong to edit it to say "not directly related", but the point I was trying to get to remains: don't worry about things that you have absolutely no control over and no good reason to worry about.

I'm sorry but that's just awful advice. Just because you don't have control over something doesn't mean you can't foresee it and take appropriate action to protect yourself in advance.

Re: U.S. stock valuations haven’t been this extreme since 1929 and 2000

#27

Post by cjhanks »

freefm wrote: post #5

Even if there is a global downturn, the US economy will remain strong. Where else is capital going to go? If developing economies go bust, developed nations like the US will buy up their assets in a fire-sale.

I don't know if that's quite right. From what I understood, one large cause in the inflation of US stocks has been from the inflow of foreign capital. Much of that capital is essentially a blind investment into ETF's.. I forget the numbers, something like 8% of total NYSE value and 30% of all trade volume. Those investments are essentially saying, "I don't really care what you do as long as you're doing it in US Dollars". They are certainly not investments evaluating the financials of specific companies.

That is a problem for the US and the World alike. A down-turn in the US economy which affected stock prices would cascade and cause an evaporation of money world wide overnight.

Re: U.S. stock valuations haven’t been this extreme since 1929 and 2000

#28

Post by nfriedly »

1_2__4 wrote: post #24
nfriedly wrote: post #22

Earlier quoted context omitted.

You're correct, I'm gong to edit it to say "not directly related", but the point I was trying to get to remains: don't worry about things that you have absolutely no control over and no good reason to worry about.

I'm sorry but that's just awful advice. Just because you don't have control over something doesn't mean you can't foresee it and take appropriate action to protect yourself in advance.

The automatic investments part is the appropriate action for most people to protect themselves in advance.

Re: U.S. stock valuations haven’t been this extreme since 1929 and 2000

#29

Post by brndnmtthws »

jedberg wrote: post #18

This article felt more like an ad for active money management (and ignoring index funds) than anything else. Which makes sense. It's driving active managers nuts the techtonic shift to passive investing. This was a good podcast on active vs passive investing: http://freakonomics.com/podcast/stupidest-money/

That and it's a classic case of trying to time the market, which is not something a savvy investor would do.

Re: U.S. stock valuations haven’t been this extreme since 1929 and 2000

#30

Post by KKKKkkkk1 »

Some dude with a blog predicts an impending stock-market crash. Well, Robert Shiller, the Nobel Prize laureate, has been predicting a stock-market crash since what, 2016? And the market kept on rising. This is not to imply that a crash or a long period of low returns is not coming, just that the opinions of financial pundits are just that.
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