101–110 of 110 posts
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In the investment industry, 9/5 is excellent.
How do you mean? Looks like an equivalent of a coin flip to me.
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This "9 out of the last 5" quote is the deadest of beaten horses on HN. It shows up at least once a week here, and it is written with such smugness and unoriginality that it makes even dad jokes funny by comparison. Let's cut to the chase and make a bot that posts "9 out of the last 5 recessions, hyuk!" on every post remotely related to finance and be done with it. It is the furthest thing from a substantive comment;…
9 out of 5 readers cringe at this type of comment. (I’ve never heard of the expression before so I found it amusing)
https://news.ycombinator.com/item?id=20372163
https://news.ycombinator.com/item?id=19995167
https://news.ycombinator.com/item?id=22352073
https://news.ycombinator.com/item?id=2127845
https://news.ycombinator.com/item?id=21023682
https://news.ycombinator.com/item?id=14417296
https://news.ycombinator.com/item?id=20641031
https://news.ycombinator.com/item?id=17266452
https://news.ycombinator.com/item?id=9476984
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Did the companies of 99/00 have many years of profits anywhere near the companies of today?
Cisco and Ericsson did.
Apple has been in 20%+ range for over a decade, Alphabet in the 25% range, Microsoft is hitting 30% regularly, and Facebook is at nearly 40% for the last 5 years.
For Amazon, I can only assume investors are factoring in huge profit margins for AWS since it seems to be singlehandedly marching Amazon’s profit margins from near 0% to 6% in the last 6 or 7 years.
Feels like a different level of profit than in previous decades.
This doesn't take into account interest rates. Buffett himself has said recently that given the current interest rates stocks are not overvalued.
On the other hand it is not likely that interest rates will remain this low for very long. How much money can be poured into 30 year bonds with less than a 2% coupon rate? How long will the Fed continue its asset purchase program? How much more supply can be added to the bond market before demand begins to run out? One way or another interest rates will begin to rise, and then the stock market will be forced to corre…
You can only invest given the information you have today.
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They don't cover the % of revenue derived from overseas. Ie the GDP of the US is less meaningful over time for the S&P 500. It really should show total market cap / GDP of relevant jurisdictions weighted.
I don't think you are wrong, but then some of the US GDP belongs to other countries so there are also some deductions to do.
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Which curve am I looking at and for what? The blue line dips a lot of times, but only sometimes does a dip coincide with a recession.
Not the OP, but I'd guess they meant "blue line greater than red line" .
No one knows exactly why this is.
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> sitting on piles of cash in the past for years and years, avoiding buying securities when they are overvalued. He never tried timing the market, simply waiting for the right moment. It’s not quite clear what you’re trying to say here, because if you popped into a newbie investment forum and said you were sitting on a pile of cash that you were avoiding investing because the market was overvalued, you’d be told that…
The denizens of the investor forum would be wrong; it isn't trying to time the market. This strategy is simply valuing the stocks. The problem with the plan is that holding piles of cash is a game for losers; you need the money to be in some sort of asset - it matters not what - to avoid the printers of the central banks. There is a real chance that stock prices never come down as much as everything else goes up.
trying to pick the stocks that are least overvalued is great and everyone should be doing it all the time. (assuming you are investing in individual stocks and not index funds)
the problem comes when you say "everything is overvalued so i'll sit in cash until the market is less overvalued" and yes that's timing the market.
> The problem with the plan is that holding piles of cash is a game for losers; you need the money to be in some sort of asset - it matters not what - to avoid the printers of the central banks. There is a real chance that stock prices never come down as much as everything else goes up.
yes, you've identified the central problem with timing the market, this is precisely why it's a bad idea in general.
As others are saying: if you accept the efficient market hypothesis then your guesses are inherently no better than random chance, unless you somehow have unique insight that nobody else in the market has. Otherwise if you've successfully identified a trading strategy that worked, it would be exploited until there was no longer any value there, and the market returns to "no better than random chance".
(there's the old joke: an economist and his friend are walking down the sidewalk. The friend spots a bill laying on the ground and says "look, a hundred dollar bill!" and bends down to pick it up. But the economist keeps walking, saying "of course it can't be, if it was then somebody would have picked it up already." It's a meme but in a macro sense it's true, there are small pockets of alpha that can be exploited on a small scale but in the macro sense the market is as efficient as it can be and everybody else is just as aware as you that "the market seems overvalued right now" too.)
Therefore the best strategy is to dollar-cost-average across some span of time and accept that you may have missed a percent here or there but that the market is generally going up by more than you missed - and that you also may have timed it poorly and cost yourself a percent or two as well.
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The denizens of the investor forum would be wrong; it isn't trying to time the market. This strategy is simply valuing the stocks. The problem with the plan is that holding piles of cash is a game for losers; you need the money to be in some sort of asset - it matters not what - to avoid the printers of the central banks. There is a real chance that stock prices never come down as much as everything else goes up.
> The denizens of the investor forum would be wrong; it isn't trying to time the market. This strategy is simply valuing the stocks. trying to pick the stocks that are least overvalued is great and everyone should be doing it all the time. (assuming you are investing in individual stocks and not index funds) the problem comes when you say " everything is overvalued so i'll sit in cash until the market is less overval…
Valuing an asset and then not buying when it is expensive is a completely different activity. It involves no prediction on how long it will be before the price corrects relative to value.