U.S. stock valuations haven’t been this extreme since 1929 and 2000 • Hacker News Board

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

#71

Post by _5ysi » Wed, Aug 30, 2017, 4:51 PM UTC

Between monetary policies from the Fed that have increased the base money supply by a factor of >5 since 2008 [1], and sustained trade imbalances on the order of tens of billions per month [2], it should not be surprising that stock prices are at records highs.

There is just so much more money around that has to be invested but cannot be used; the recent high in the stock market is not just based on the business cycle and traditional productivity/population growth.

If this is your take on the stock market's dramatic rise beyond 2008, then investing further in stocks and indexes may still be the thing to do even if it feel we're getting ripped off on the price.

1. https://fred.stlouisfed.org/series/WALCL 2. https://fred.stlouisfed.org/series/BOPGSTB

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

#72

Post by notfromhere » Wed, Aug 30, 2017, 5:35 PM UTC

twelve40 wrote: post #56

cromwellian wrote: post #43

Earlier quoted context omitted.

Yep, the opening claiming leaving your money in an index fund amounts to "speculation" seemed bizarrely backwards to me. So trying to pick winners and losers isn't speculation, it's investing, but investing in a balanced portfolio spreading risk over the long term is? The latter is only speculating that over the long term, there'll be more winners than losers in your portfolio. The former relies on making individuali…

That's not what they claim though. They claim that significant exposure to US stocks, especially via indexes, right _at this moment_ looks risky since the entire US market is overheated and it requires an active investor to find any reasonable deals, if there are any left. At the same time, they could be both wrong about overheated part, and lobbying to get some active investing fees, sure, but if you do take the vie…

if only active investing by big money managers actually performed better than passive investing

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

#73

Post by notfromhere » Wed, Aug 30, 2017, 5:38 PM UTC

Dangeranger wrote: post #38

gragas wrote: post #21

Earlier quoted context omitted.

>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…

This statement is a bit nonsensical, because most lobbying has to do with encouraging the creation of laws that are favorable to a business and unfavorable to a businesses competitors. Your statement; > if there is no power to dole out, lobbying wouldn't exist. Implies that the government is picking the winner, when in fact they are writing and passing a law or regulation/deregulation. Any of these actions have effec…

businesses also lobby against anti-labor laws like 'right to work' and other measures to prevent organization

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

#74

Post by notfromhere » Wed, Aug 30, 2017, 5:39 PM UTC

1_2__4 wrote: post #25

Anytime a story or study like this comes out I can always visit the HN comment section to find armchair economists pooh-poohing it. It's like clockwork.

It's a blog on marketwatch. not exactly hard-hitting research

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

#75

Post by makomk » Wed, Aug 30, 2017, 5:57 PM UTC

twelve40 wrote: post #56

cromwellian wrote: post #43

Earlier quoted context omitted.

Yep, the opening claiming leaving your money in an index fund amounts to "speculation" seemed bizarrely backwards to me. So trying to pick winners and losers isn't speculation, it's investing, but investing in a balanced portfolio spreading risk over the long term is? The latter is only speculating that over the long term, there'll be more winners than losers in your portfolio. The former relies on making individuali…

That's not what they claim though. They claim that significant exposure to US stocks, especially via indexes, right _at this moment_ looks risky since the entire US market is overheated and it requires an active investor to find any reasonable deals, if there are any left. At the same time, they could be both wrong about overheated part, and lobbying to get some active investing fees, sure, but if you do take the vie…

If the entire US market is overheated because too much capital is chasing too few investment opportunities, which is the likely cause, then trying to cram that money into an even smaller set of investments is obviously not going to help matters. It'll sure help line the pockets of the people running the active investment funds though.

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

#76

Post by gragas » Wed, Aug 30, 2017, 7:16 PM UTC

Dangeranger wrote: post #38

gragas wrote: post #21

Earlier quoted context omitted.

>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…

This statement is a bit nonsensical, because most lobbying has to do with encouraging the creation of laws that are favorable to a business and unfavorable to a businesses competitors. Your statement; > if there is no power to dole out, lobbying wouldn't exist. Implies that the government is picking the winner, when in fact they are writing and passing a law or regulation/deregulation. Any of these actions have effec…

There is obviously a gradient of how impactful laws are on businesses.

Federally insuring speculative businesses directly affects who wins and who loses in an industry.

On the other hand, laws against fraud and bribery cannot negatively affect industries which provide value.

Regulation is fine, but only to the extent that it cannot pick winners and losers.

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

#77

Post by lazerpants » Wed, Aug 30, 2017, 7:29 PM UTC

TheAdamAndChe wrote: post #19

aswanson wrote: post #14

Earlier quoted context omitted.

That sounds like a suggestion that something very bad has to happen.

Nothing _has_ to happen. Mass media makes propaganda much easier to spread, and I consider it very likely that nothing will happen and inequality will strengthen for a long time. My point is that the system seems to be stuck in a positive feedback loop where greater capital concentration strengthens the system that created capital concentration in the first place. _Something_ would need to facilitate the movement out…

>(world war, civil war, lower-class uprisings)

You forgot plagues, not that those are more pleasant.

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

#78

Post by [deleted] » Wed, Aug 30, 2017, 10:08 PM UTC

mywittyname wrote: post #70

fooker wrote: post #55

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? 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.

[deleted]

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

#79

Post by pragmatic » Wed, Aug 30, 2017, 11:18 PM UTC

turk183 wrote: post #60

Ntrails wrote: post #58

Earlier quoted context omitted.

>have the appropriate retirement target set, along with the proper level of acceptable risk You make that sound so easy . It's not. None of the maths of retirement planning is hard - but the actual decisions really kind of are. For example, I've got 10% in corporate debt. Is that more or less risky than Equity? What's the distribution? What's the correlation? How does it compare with Reinsurance, or Property? Is prop…

If it's any consolation, 2008/9 proved that everything is pretty much correlated--stocks went down, bonds went down, everything went down. There were no safe havens except for massive government bailouts. To this day, the illegal acts that banks undertook to stay afloat have not been prosecuted (moving all unperforming assets to "off balance sheet vehicles" like holding companies). Also, mark-to-market accounting was…

One notable exception: Farm land.

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

#80

Post by zzalpha » Thu, Aug 31, 2017, 3:23 AM UTC

tim333 wrote: post #65

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.

Or just diversify and wait. The returns will find you.