Both markets made all time highs overnight. SP500 to gold ratio high but not extreme. However valuations stretched according to http://www.multpl.com/shiller-pe/. Another couple of years to run in this stock bull market?
SP500 & Nasdaq all time highs
- Thread starter havo
- Start date
Pirocco
Well-Known Member
Should have been sucking the last bulls in, it's a bull that believes that price will be driven higher after him, and if it's a bullsucker then the opposite happens.
Regarding timing, there are 2 elements involved, bank savings are a central planned loss.
The goal thus is to hold them as short as possible.
A swap A>B thus requires 1) what turns out as a peak in product A and (simultaneously) 2) what turns out as a bottom in a product B.
What is also required is enough counterparty (from the bullsuckers) money.
For ex, a swapper that wants to sell 100 tonnes gold at a peak, needs a combined bullsuckers buying of 100 tonnes gold. A single order - sale is then undesired because the price drop may make some bullsuckers to decide to not suck. The purpose of the so-called "sell on strength" trading method is to avoid this.
A 'crash' (read: a mass sell off) therefore occurs when bullsuckers money wanes, product A - price sitting on a record high, is one of the possible reasons. But the destiny-product B of the swap needs also a record bottom.
The price-to-earnings ratio is a much touted misconception. Earnings can double when stock prices double. And triple when stock prices triple. But the flaw is that other things aren't equal, conjuncture can make traders pay more or less willing to pay the formula output. Just look at the fickle relationship between the Dow Industrials and the price sticked on that group of companies. The trend is clouded with both long time (decade) and short time (years) deviations (read: byebye correlation). For ex in 1973-1974 the Dow Industrials pricetag had its worst setback (-45%) in 40 years (1937-1938 -49%), while earnings had their best improvement since 1962. Most bear markets get started in years where earnings are up. Inflation, interest rates, and attitude differences are short explanations. There is a whole book of longwinded ones too. The lesson from them? Strong earnings lead to higher stock prices, but only when the buyers want them to. And out there, there is a whole range of reasons to not want. Trend-making investors (read: the "big boys" - institutionals - state) usually insert their trade before any indicator that is public.
How do they know? Well, an indicator is based on trailing data. If the decision maker that caused what is indicated is your buddy, then you have leading data.
Regarding timing, there are 2 elements involved, bank savings are a central planned loss.
The goal thus is to hold them as short as possible.
A swap A>B thus requires 1) what turns out as a peak in product A and (simultaneously) 2) what turns out as a bottom in a product B.
What is also required is enough counterparty (from the bullsuckers) money.
For ex, a swapper that wants to sell 100 tonnes gold at a peak, needs a combined bullsuckers buying of 100 tonnes gold. A single order - sale is then undesired because the price drop may make some bullsuckers to decide to not suck. The purpose of the so-called "sell on strength" trading method is to avoid this.
A 'crash' (read: a mass sell off) therefore occurs when bullsuckers money wanes, product A - price sitting on a record high, is one of the possible reasons. But the destiny-product B of the swap needs also a record bottom.
The price-to-earnings ratio is a much touted misconception. Earnings can double when stock prices double. And triple when stock prices triple. But the flaw is that other things aren't equal, conjuncture can make traders pay more or less willing to pay the formula output. Just look at the fickle relationship between the Dow Industrials and the price sticked on that group of companies. The trend is clouded with both long time (decade) and short time (years) deviations (read: byebye correlation). For ex in 1973-1974 the Dow Industrials pricetag had its worst setback (-45%) in 40 years (1937-1938 -49%), while earnings had their best improvement since 1962. Most bear markets get started in years where earnings are up. Inflation, interest rates, and attitude differences are short explanations. There is a whole book of longwinded ones too. The lesson from them? Strong earnings lead to higher stock prices, but only when the buyers want them to. And out there, there is a whole range of reasons to not want. Trend-making investors (read: the "big boys" - institutionals - state) usually insert their trade before any indicator that is public.
How do they know? Well, an indicator is based on trailing data. If the decision maker that caused what is indicated is your buddy, then you have leading data.Irrational Exuberance by Shiller It is currently on its third edition. He won the Nobel Prize in Economic Sciences in 2013.
A must read. Schiller deserves respect for his work which was bang on as regards the Nasdaq which collapsed just as the book came out in 2000 and was well forecast by him based on PE and CAPE.
PE ratios are not a 'must touted misconception' IMO especially the Shiller PE10 Ratio.
A must read. Schiller deserves respect for his work which was bang on as regards the Nasdaq which collapsed just as the book came out in 2000 and was well forecast by him based on PE and CAPE.
PE ratios are not a 'must touted misconception' IMO especially the Shiller PE10 Ratio.
"Current Shiller PE Ratio: 27.36 +0.36 (1.35%)
4:09 pm EDT, Fri May 8
Mean: 16.60
Median: 15.99
Min: 4.78 (Dec 1920)
Max: 44.19 (Dec 1999)
Shiller PE ratio for the S&P 500.
Price earnings ratio is based on average inflation-adjusted earnings from the previous 10 years, known as the Cyclically Adjusted PE Ratio (CAPE Ratio), Shiller PE Ratio, or PE 10
"
http://www.multpl.com/shiller-pe/
My conclusion is that the S&P is approximately 40% overvalued.
4:09 pm EDT, Fri May 8
Mean: 16.60
Median: 15.99
Min: 4.78 (Dec 1920)
Max: 44.19 (Dec 1999)
Shiller PE ratio for the S&P 500.
Price earnings ratio is based on average inflation-adjusted earnings from the previous 10 years, known as the Cyclically Adjusted PE Ratio (CAPE Ratio), Shiller PE Ratio, or PE 10
"
http://www.multpl.com/shiller-pe/
My conclusion is that the S&P is approximately 40% overvalued.
Pirocco
Well-Known Member
For a particular book the author ordered a number of people to dig up old newspapers for the financial news in them, going back to the 192x. When all results were combined there was only one conclusion to draw: when they are predicting anything that involves money, economists, prominent investors and the reporters who quote them haven't been wrong on occasion. They have been unerringly errant.Oldsoul said:
To give some samples:
- The long-term outlook for stocks is bullish. U.S. News & World Report, October 28, 1968.
- Stocks can potentially appreciate in value over the next 10 years by an average of 8 to 10 percent a year. Same source, November 11, 1968.
- An increasingly bullish mood among investors points to a stronger stock market in 1981. Same source, April 20, 1981.
- Don't Climb Off the Bull Yet, The Ride isn't over. Despite their recent run-up, stocks should rise as profit improves and foreigners buy more. Fortune, August 3, 1987.
The same applied at the other end of the yoyo, headlines like:
- The Gray Mood May Last All Year.
- Stocks Will Sell Permanently Lower.
- Wall Street Won't Be the Same Again.
- Gone Are the Go-Go Days.
- Statistics Refuse to Signal Any Short-Term Hope.
- Unrelieved Gloom Clouds the Business Horizon.
- Many analysts feel stocks have a lot farther to fall for fundamental reasons. The statistics say the downturn is only beginning.
... appeared in the press from May to Juli 1970, near the bottom of the worst bear market since the 193x The Great Depression (well... the then-last one).
and when checking further for second opinions, headlines like:
- Now Even Nations Are in Danger of Default.
- A Runaway Federal Deficit.
- The Telltale Signs of a Deepening Recession.
- A Case for Gloom About Stocks.
- The Real Recession Is Yet to Come.
- Economic Woes Still Scare the Professionals.
- The Coming Divident Crisis.
... appeared in the press in 1973-1974, being a fine time to buy and a terrible time to sell.
And under those titles they all had their Techie arguments like yours.
.
Pirocco
Well-Known Member
As said: they are all right at a time. And wrong at another time. From bang on to bang off. I have my own theory about that: the more people use a specific theory to base trades / timing on, the lower their chance on succes becomes. I've already mentioned that. Zero sum markets, where ones gain requires anothers loss, tend to be clouded with "scammy" advice.Oldsoul said:
Pirocco
Well-Known Member
"At the time".Oldsoul said:
"third Edition"
"Nobel Prize in..."
versus
"Few subscribers".
That's precisely "The more people use...".
"This time must be different". Reads like the majority mantra of the Nobel prize that is granted/selected by a State committee, the very market side alot (if not most) speculation goes against. I disagree with your disagreement. Not that special, every expected but not repeated human trading behaviour comes down to a disagreement with the forecast.
Pirocco said:
I look forward to you receiving the Nobel prize for your insights as Schiller did and perhaps establishing yourself as a lecturer in economics in Yale. as he is.
Then again.....that seems.....unlikely. You have to actually be right about something.
You've never even read the book have you? You are throwing out lines like this "The price-to-earnings ratio is a much touted misconception" without having read the most important work on the topic that has been published......
Have you ever considered writing for king world news?