Anyone really worried? I am...

[brewer12345]

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Originally Posted by alphabet soup Let's see who's laughing in the next 18 months or so.

Those of us who diversify and don't spend time [MODERATOR EDIT] worrying about financial market bogeymen will most likely be laughing for quite a while.

[MODERATOR EDIT]

[Texas Proud]

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Originally Posted by alphabet soup It's a essentially a question of your time frame. If you're looking out 15-30 years, then your thinking is correct. However, for those living off their portfolio, as I am, the very seriously rotting financial infrastrucyure in the US is very worrisome.

My mother is 87 and doesn't worry a bit about the markets or any of the dooms day stuff... good for her...

My BIL has been talking dooms day stuff for over 10 years. Fortunately he invested like I had suggested and made a lot of money.. but still does the dooms day talking...

Even if you are 100% correct.... I don't care. I will lose money, but will not go broke... you invest for the most likely outcomes... and that is a diversified portfolio that takes into account most of the ups and downs of the market, not the 'all hell breaks loose' options..

And if it goes REAL BAD.... then even what you might invest in will not protect you.

[REWahoo]

I went through this thread and did some editing and deleting. Those of you who have a soapy taste in your mouth will know why.

Nothing to see here, move along...

[magellan_nh]

As to the original poster's comment... I've been a subscriber to the Index Investor (the sister of RetiredInvestor) for years. They're one of the few things on the Internet that I pay for (other than this site) and I think they're worth it.

In each issue, they provide a bunch of market and economic data along with analysis that's pretty interesting. I don't do a ton with this information in terms of my investing plan, but I like to read it in order to be more informed about the state of the world economy and world markets.

What I like most about them is that they often have unique insights on the current issues of the day, especially wrt investing. They're not afraid to step off the beaten path in their analysis, yet they don't go too far off the deep end for my taste.

Finally, the folks that run the site love to dig into the latest academic research and provide highlights and pointers to the latest papers. I use them as a filter to help stay up to date on the latest thinking coming out of academia.

Jim

[brewer12345]

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Originally Posted by REWahoo! Those of you who have a soapy taste in your mouth will know why.

"Tastes like chicken", as the altar boy said to the priest.

You never let me have any fun with the piglet sodomizers...

[unclemick]

Rats!

Skip the piglets - now that I'm getting in the mood to go bargin shopping the stupid market seems to going up.

Heck - may end up getting that kayak and exploring the Missouri Ozarks yet - Mr Market will fall in the Fall - for sure - right?

heh heh heh - sell in May and go away - is that the old cliche :.

[REWahoo]

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Originally Posted by unclemick2 Skip the piglets.. Heck - may end up getting that kayak and exploring the Missouri Ozarks yet...

Unclemick, I can't quite place it, but there is something vaguely disturbing about the mention of "piglets" and the "Ozarks" in the same post. If you can think of it please give us a squeal.

[Nords]

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Originally Posted by unclemick2 Rats! Skip the piglets - now that I'm getting in the mood to go bargin shopping the stupid market seems to going up. Heck - may end up getting that kayak and exploring the Missouri Ozarks yet - Mr Market will fall in the Fall - for sure - right? heh heh heh - sell in May and go away - is that the old cliche :.

It's OK, everyone, we can all relax now. This pesky market top should be done.

Our ER portfolio has been setting all-time highs all month and yet today was one jaw-dropping performance. So after a stratospheric leap like that there's nowhere else to go but down. I'm hoping for a 5% "sell in May" setback but 10-15% wouldn't bring a tear to my reinvesting-the-dividends eye. Hey, maybe the housing & subprime mortgage markets will suck!

It could really be different this time but it can't possibly go any higher-- right?

[unclemick]

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Originally Posted by REWahoo! Unclemick, I can't quite place it, but there is something vaguely disturbing about the mention of "piglets" and the "Ozarks" in the same post. If you can think of it please give us a squeal.

Hmmm - open mouth insert foot - I think I will let that one slide. Besides I thought the famous movie was made in Georgia or something.

heh heh heh heh - meanwhile hurry up and wait for bargins in the Fall - marketwise.

[REWahoo]

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Originally Posted by Nords It could really be different this time but it can't possibly go any higher-- right?

Well, it could be that there is a bit more climbing to do up that 'wall of worry'. Me? I'm just along for the ride.

[Alex]

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Originally Posted by cyclone6 Well, at $29 for 6 months, I appreciate a non-cheerleading assessment of economic conditions around the world. They also have some interesting - and different - asset class definitions that aren't all that common. One of my favorite quotes, cited occassionally in retiredinvestor, but also in the book "The dollar crisis", is "things that can't continue eventually don't continue". With our gutless leaders, inane economic policies, unsustainable imbalances and a populace spending more than they make and not willing to sacrifice a thing - I believe that eventually it won't continue. In other words, I believe we're close to or at the peak of our power and wealth and have much more downside potential than upside going forward...

oh goody!! another optimist!! Welcome!~!! :

Quote:

Originally Posted by brewer12345 Those of us who diversify and don't spend time [MODERATOR EDIT] worrying about financial market bogeymen will most likely be laughing for quite a while. [MODERATOR EDIT]

I agree. Invest for the long term and then continue to live and enjoy your life.

[Gone4Good]

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Originally Posted by cyclone6 So yeah, I agree - alls great...record trade defecits don't matter, a housing slump doesn't matter, a negative savings rate doesn't matter - we're gonna get 10% returns forever...

Compared to other points in recent history (WWII, the Cold War, race riots, 10% inflation, the 1980's record trade deficit , etc.) that list of concerns actually seems pretty trivial.

Even compared with things that have happened in the last 7 years, the list seems pretty trivial:
1) Tripling of oil prices
2) ~50% decline in the S&P 500
3) Two wars (ongoing)
4) Worst attack on US homeland in 60 years
5) A natural disaster that wiped out the country's 31th largest city
6) Massive corporate fraud that bankrupted several of the Fortune 500
7) Recession

And yet 10-year equity returns are right around 9% despite suffering all of those set backs.

[cyclone6]

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Originally Posted by 3 Yrs to Go Compared to other points in recent history (WWII, the Cold War, race riots, 10% inflation, the 1980's record trade deficit , etc.) that list of concerns actually seems pretty trivial. Even compared with things that have happened in the last 7 years, the list seems pretty trivial: 1) Tripling of oil prices 2) ~50% decline in the S&P 500 3) Two wars (ongoing) 4) Worst attack on US homeland in 60 years 5) A natural disaster that wiped out the country's 31th largest city 6) Massive corporate fraud that bankrupted several of the Fortune 500 7) Recession And yet 10-year equity returns are right around 9% despite suffering all of those set backs.

Some very good points. What concerns me most is the fact that 70% of the US economy is consumer spending - and virtually no one argues that the US consumer is either tapped out or nearly tapped out. Personal debt is at an all-time high, and the savings rate is now negative for the first time since the depression. If it is true that the American consumer at some stage can't get access to any more capital, and spending drops significantly, what would be the result?

One other thing to consider is this...take a look at the chart. (If a simpleton like me can figure out how to get it onto this page...) Notice the huge market gains from 1955-1985. Then we get exponential growth (granted, with a large pullpack following 2000 - when your S&P pullback occured). But then the exponential growth started again - mostly on the backs of the American consumer.

Nothing grows exponentially indefinetly. I'm not anti-market...I just believe this market is overvalued - world-wide, through a giant influx of cheap capital courtesy of the FED. The old axiom is to buy low and sell high. I think buying equities at this time is buying high - too high for my tastes.

[Gone4Good]

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Originally Posted by cyclone6 Some very good points. What concerns me most is the fact that 70% of the US economy is consumer spending - and virtually no one argues that the US consumer is either tapped out or nearly tapped out. Personal debt is at an all-time high, and the savings rate is now negative for the first time since the depression. If it is true that the American consumer at some stage can't get access to any more capital, and spending drops significantly, what would be the result? One other thing to consider is this...take a look at the chart. (If a simpleton like me can figure out how to get it onto this page...) Notice the huge market gains from 1955-1985. Then we get exponential growth (granted, with a large pullpack following 2000 - when your S&P pullback occured). But then the exponential growth started again - mostly on the backs of the American consumer. Nothing grows exponentially indefinetly. I'm not anti-market...I just believe this market is overvalued - world-wide, through a giant influx of cheap capital courtesy of the FED. The old axiom is to buy low and sell high. I think buying equities at this time is buying high - too high for my tastes.

1) Personal debt is at an all-time high but so is personal net worth. As long as folks are wealthier, they can keep spending. Real personal income growth is also starting to accelerate, so let the good times roll.
2) The world economy is increasingly less dependent on the US for growth, and thus less dependent on the US consumer.
3) Never before have individual investors had the current flexibility to invest internationally. Today there is no reason for ones portfolio to be solely dependent on the US economy. With large swatches of the world's population (notably China & India) embracing greater economic freedom and capitalism, the outlook for world economic growth has perhaps never been better.

To your chart, I think you will see a similar pattern if you graph the stock market over any time period. The fact is that the market has averaged 10% compound growth for well over 100 years. Every time frame will show the same 10% compounding growth and produce a chart similar to the one you posted. If you view the Log of the same chart (see below) you will see the growth rate has been pretty consistent over the whole period.

That compounding does not make the market "overvalued". The S&P 500 currently trades at something like 17x PE multiple, which is pretty consistent with historical averages - and actually undervalued at today's interest rates. The 30-year treasury bond trades at a 21x "PE" multiple, for example.

[haha]

Quote:

Originally Posted by cyclone6 Nothing grows exponentially indefinetly. I'm not anti-market...I just believe this market is overvalued - world-wide, through a giant influx of cheap capital courtesy of the FED. The old axiom is to buy low and sell high. I think buying equities at this time is buying high - too high for my tastes.

Hey, don't try to convince a buy and hold asset allocator that the market is too high to buy and hold. For them, that is not a meaningful statement.

Just sell your unwanted shares to them and be happy.

Ha

[cyclone6]

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Originally Posted by 3 Yrs to Go 1) Personal debt is at an all-time high but so is personal net worth. As long as folks are wealthier, they can keep spending. Real personal income growth is also starting to accelerate, so let the good times roll.

First, let me say thats its nice to have a civilized discussion without any name calling. I sure don't pretend to be an expert on these things, and like hearing the opposite point of view to help me make sure I'm not missing some important counterpoints.

As to your point 1 - agreed. It appears wages are finally starting to grow, and the job market appears robust. But are the wage increases enough to offset the housing woes we are just starting to see?

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Originally Posted by 3 Yrs to Go 2) The world economy is increasingly less dependent on the US for growth, and thus less dependent on the US consumer.

Here I have to disagree. You're not telling me that Japan and China (all of Asia, really) aren't virtually completely dependent on US consumption are you? They are export economies - with the caveat that the Japanese are finally starting to spend some of their yen domestically...

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Originally Posted by 3 Yrs to Go 3) Never before have individual investors had the current flexibility to invest internationally. Today there is no reason for ones portfolio to be solely dependent on the US economy. With large swatches of the world's population (notably China & India) embracing greater economic freedom and capitalism, the outlook for world economic growth has perhaps never been better.

I think you've seen a lot of that growth - at least when it comes to the markets. Look at the levels of all the worlds markets - Singapore, China, Hong Kong, Korea, New Zealand, Australia, India all at or right at all-time highs - Germany, France and England approaching all-time highs. Lots of available money (excess?) looking for a home...

Quote:

Originally Posted by 3 Yrs to Go To your chart, I think you will see a similar pattern if you graph the stock market over any time period. The fact is that the market has averaged 10% compound growth for well over 100 years. Every time frame will show the same 10% compounding growth and produce a chart similar to the one you posted. If you view the Log of the same chart (see below) you will see the growth rate has been pretty consistent over the whole period. That compounding does not make the market "overvalued". The S&P 500 currently trades at something like 17x PE multiple, which is pretty consistent with historical averages - and actually undervalued at today's interest rates. The 30-year treasury bond trades at a 21x "PE" multiple, for example.

There is no question the market has had a huge run since the mid 80s - and particularly since the early 90s. That run has helped move the "expected long-term return" significantly higher. I don't know of a place to give a return from 1877-1985, but I'd bet a crisp c-note that its quite a bit lower than from 1985-2007. And as for the P/E - you are right. It is not out of whack (I saw a # of about 18x) with regards to the S&P 500 average of about 15. But that has been because of recent record earnings - if earnings begin to erode, the P/Es will follow.

And don't forget that at the end of nasty bear markets, P/Es are usually somewhat below 10. That would imply, if a significant slowdown is coming, that the S&P would have quite a long ways to come down.

Again, I'm no expert here, just seems to me that things are out of balance and that markets do eventually come to balance...sometimes painfully.

[clifp]

I am not smart enough to figure out which metrics are important for evaluating the market. I don't think the market is overvalued simply because news of the market hit records is barely menitioned on the news and people aren't talking about the stock market a lot.

[brewer12345]

And what about the piglet to sodomizer ratio?

[alphabet soup]

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Originally Posted by brewer12345 And what about the piglet to sodomizer ratio?

Just when a civil, intelligent discourse gets underway, jackass will jump and bray.

[brewer12345]

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Originally Posted by alphabet soup Just when a civil, intelligent discourse gets underway, jackass will jump and bray.

Be careful, or you will provoke another flurry of moderator edits. [moderator edit].