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Stock markets are booming but the good times are unlikely to last

economist.com

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Re: Stock markets are booming but the good times are unlikely to last

#61

Post by amw-zero »

purplerabbit wrote: post #6
paulpauper wrote: post #3

Experts predict 'good times will not last', and yet with a few exceptions like 2008 or 2022, prices tend to go up anyway. There is little evidence to suggest market timing works. Stock prices seemed overextended in 1996 and yet would go up for another 4 years.

This method seems to work pretty well: https://www.philosophicaleconomics.com/2013/12/the-single-gr... Unique in that it seems statistically verified. Here’s an up-to-date version of the projection: https://financial-charts.effingapp.com/

Do not use the word "verified" here.

Re: Stock markets are booming but the good times are unlikely to last

#62

Post by mysecretaccount »

nine_k wrote: post #58
kbos87 wrote: post #36

I'm heartened to see the comments here because they seem to support what I've slowly been realizing, which is that nobody knows what will happen next. There will always be a steady stream of people telling you both that the sky is falling and that we're on the upswing. As far as we can detect there's a near equal probability of either being true. Writers have their own biases and economic homeostasis is dependent on…

Since the situation cannot be described by a scalar, "the sky is falling" and "we're on the upswing" can be correct at the same time, just about different parts of the market.

Of course it can, the article is referring to the S&P 500.

Re: Stock markets are booming but the good times are unlikely to last

#63

Post by ovulator »

kbos87 wrote: post #36

I'm heartened to see the comments here because they seem to support what I've slowly been realizing, which is that nobody knows what will happen next. There will always be a steady stream of people telling you both that the sky is falling and that we're on the upswing. As far as we can detect there's a near equal probability of either being true. Writers have their own biases and economic homeostasis is dependent on…

I'm here to tell you the hard truth, that the stock market will remain absolutely static for the foreseeable future, stocks are going to the troposphere!

Re: Stock markets are booming but the good times are unlikely to last

#64

Post by djur »

andy_ppp wrote: post #12
djur wrote: post #8

Earlier quoted context omitted.

Which money printing are you referring to?

I think the US printed a couple of TRILLION dollars during COVID. The money hasn’t gone anywhere so if you’re American and don’t have the $80000 per person someone else has your cash. Edit: not sure why you’re downvoting! It was actually $3.3tn in 2020 alone which is wild.

That was during Covid, but it is 2024 now. The Fed started quantitative tightening in June 2022 and has sold over $1.3 trillion in assets; it also raised interest rates to the highest level in two decades. These are traditionally considered contractionary monetary policies, the opposite of "printing money".

Re: Stock markets are booming but the good times are unlikely to last

#65

Post by potsandpans »

purplerabbit wrote: post #6
paulpauper wrote: post #3

Experts predict 'good times will not last', and yet with a few exceptions like 2008 or 2022, prices tend to go up anyway. There is little evidence to suggest market timing works. Stock prices seemed overextended in 1996 and yet would go up for another 4 years.

This method seems to work pretty well: https://www.philosophicaleconomics.com/2013/12/the-single-gr... Unique in that it seems statistically verified. Here’s an up-to-date version of the projection: https://financial-charts.effingapp.com/

I don't know enough to be able to comment on the content, but am nonetheless extremely skeptical that this person managed to find something that

> predicts the market’s future long-term returns better than any other classic valuation metrics to date developed–price to earnings (P/E), price to book (P/B), price to sales (P/S), CAPE, q-ratio, Market Cap to GDP, Fed

Re: Stock markets are booming but the good times are unlikely to last

#66

Post by skybrian »

Barrin92 wrote: post #60
skybrian wrote: post #54

Earlier quoted context omitted.

Based on a quick Google search, looks like US stock market cap is about $50 trillion [1] and real estate is $120 trillion. [2] (There's going to be overlap since businesses own real estate.) [1] https://siblisresearch.com/data/us-stock-market-value/ [2] https://www.statista.com/outlook/fmo/real-estate/united-stat...

Okay but what's the argument in relationship to my post? As the article notes China's property market is larger despite a stock market cap of 10tn, similar in Japan real estate value is about 5x larger than Japan's stock market cap. That was the point, in the US stock market capitalization is unusually high compared both to other sectors and the economy at large.

It's plausible to me that the US stock market plays a larger role than in other countries. But you said it's the "primary thing everyone dumps their wealth into," which is a stronger, more surprising claim, and I wanted to see if it was true. Houses still seem to be people's biggest assets?

Re: Stock markets are booming but the good times are unlikely to last

#67

Post by polishdude20 »

NhanH wrote: post #55
polishdude20 wrote: post #20

Earlier quoted context omitted.

I haven't been regularly investing for a few years as I've been saving up for a downpayment. Is that a sound plan?

You should be investing in a low risk, high-liquidity market (treasury, money market) when saving up. But anyway it is a reasonably sound plan for what you are doing.

Like bonds? When we talk about liquidity, aren't something like questrade ETF's for bonds like VAB.TO for example pretty liquid? I can just sell them any day fairly easily. Then again, the interest rate of my bank is probably more than that right?

Re: Stock markets are booming but the good times are unlikely to last

#68

Post by NhanH »

polishdude20 wrote: post #67
NhanH wrote: post #55

Earlier quoted context omitted.

You should be investing in a low risk, high-liquidity market (treasury, money market) when saving up. But anyway it is a reasonably sound plan for what you are doing.

Like bonds? When we talk about liquidity, aren't something like questrade ETF's for bonds like VAB.TO for example pretty liquid? I can just sell them any day fairly easily. Then again, the interest rate of my bank is probably more than that right?

You can sell stock any day too, it's just not guaranteed you get out what you put in. What you needs is short-term bond so that you aren't stuck with the interest rate risk (when prevalent interest rate changes, your bond value changes too). Just to make a concrete example, if you buy VAB.TO in 2020, and you want your money now in 2024, you're currently down 20% from your purchase.

You need short-term bond (6-month, 1-month or even shorter) so that at worst you will get 100% of your money out by waiting for the maturity date. Money-market would be super short term: consider them as days-length bond.

But if we are talking about down payment money here, it's probably 100-200k something, which would translate to a few thousand dollars per year. Might not be worth your time, and definitely not worth it if you misunderstand and buy ETF bond or something like that. So yeah, keep it in a high-interest rate saving account is ok.

Re: Stock markets are booming but the good times are unlikely to last

#69

Post by nl »

Ralo wrote: post #45
_fizz_buzz_ wrote: post #41

Earlier quoted context omitted.

2020 is 4 years ago …

It's been living in the reverse repo market, it's slowly trickling out.

> It's been living in the reverse repo market, it's slowly trickling out.

While this is true, the "trickling out" timing doesn't appear to correlate very well stock market increases.

It's true that reverse repos have been decreasing and the stock market increasing. But the timing of movement seems too far out for there to be much of a causal link.

https://www.newyorkfed.org/markets/desk-operations/reverse-r...

https://finance.yahoo.com/quote/%5EIXIC/

Re: Stock markets are booming but the good times are unlikely to last

#70

Post by downrightmike »

nl wrote: post #32
downrightmike wrote: post #23

Earlier quoted context omitted.

The $4T that businesses got handed in march 2020, aka 20% of all USA currency ever printed. Don't think they aren't still playing with it.

But that money has already entered the stock market. It doesn't explain it now. Interest rates are high now, so in theory investment in the stock market should be lower (and it was for a long time - see all the people investing in treasuries to get the great and safe returns)

You assume it entered the stock market and didn't go elsewhere. There's no way to know where that money went.
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