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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

#61

Post by DennisP »

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…

An expensive stock market doesn't mean you should pull everything into cash to time a crash. But it does mean (1) you should expect lower average returns over the long term, so you should plan accordingly, and (2) you should diversify across asset classes (which you should do anyway), with a lower weighting to stocks.

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

#62

Post by turk183 »

dbjacobs wrote: post #52

At the market level, stock returns only come from 4 things: dividend yield, real earnings growth, inflation, P/E expansion/contraction. Looking at 10yr+ returns, the dividends and real earnings growth are likely to be relatively stable. The big wild card is P/E expansion/contraction. Dividend yield + real earnings growth gives us a baseline real return of around 3.6%. A 30% PE contraction over the next 10 years would…

I think PE has failed as a marker because there's too much capital chasing too few investments so of course PEs will be astronomical. High PEs don't mean what people think they mean or once meant.

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

#63

Post by turk183 »

WilliamSt wrote: post #3

Assuming the market keep on growing over time as it has done for a very long time, all time highs aren't something spectacular or unusual in the stock market, in fact it occurs almost on a daily basis. As an analogy; if you go to a grocery store, all the items on the shelves are at an all time high price, but no one is expecting the price of milk to drop drastically just because it's at an all time high.

And yet, inflation is said to be low. I'm not sure it is.

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

#64

Post by sumedh »

KKKKkkkk1 wrote: post #30

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.

Robert Shiller, the Nobel Prize laureate

Shiller is an economist not an investor, in 2008 he kept saying that it will take a long time for the markets to recover, even telling it to the famous investors who were invited as guests in the class, the market went up next year.

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

#65

Post by tim333 »

zzalpha wrote: post #12

So don't try to time the market. Except this time.

Don't time it but do value it. Given the low expected returns from the current levels you might look for something else with better ones. Thought I'm not sure what exactly.

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

#67

Post by richardknop »

nemo44x wrote: post #34
aswanson wrote: post #7

We are long overdue for a correction. Put your money into bonds and buy into the fire sales in inevitable upcoming crash.

Bonds are like the biggest bubble! With interest rates being so low they have almost nowhere to go but up in interest meaning today's bonds will lose incrediable amounts of value. If you're going to buy bonds the should be rather short term and at today's interest rates and low inflation you could also hold cash. For that reason I'm mainly in stocks with a some bonds and cash.

Interest rates can technically go down even from close to zero levels, i.e. negative interest rates is a thing.

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

#69

Post by mywittyname »

turk183 wrote: post #63
WilliamSt wrote: post #3

Assuming the market keep on growing over time as it has done for a very long time, all time highs aren't something spectacular or unusual in the stock market, in fact it occurs almost on a daily basis. As an analogy; if you go to a grocery store, all the items on the shelves are at an all time high price, but no one is expecting the price of milk to drop drastically just because it's at an all time high.

And yet, inflation is said to be low. I'm not sure it is.

There are multiple, valid definitions of inflation, thus it can be low and high at the same time.

The Treasury Rate and CPI could both be low while real estate or precious metal prices explode. Likewise, real estate prices could be in a freefall while the CPI hits double digits.

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

#70

Post by mywittyname »

fooker wrote: post #55
freefm wrote: post #23

Earlier quoted context omitted.

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?

>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? No, they will manipulate their currency or adjust prices so that more people from China and India buy that stuff. Adding a few hundred million c…

The Fed manipulates US currency too. We just don't call it "currency manipulation" because, conveniently, the definition of currency manipulation is buying foreign currency. Buying up your own currency/bonds or increasing reserve requirements achieves the same result.
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