bubble in the stock market? Or more highs yet to come?

[dtbach]

I enjoy reading the commentary on Fidelity's web site (also have a significant portion of my assets there). Lately they have had reports from some managers that the market will go higher and they have confidence in their stances. Others say that all their "markers" say we are on the cusp of another market crash.

How do you feel about where the market is at? half-full or half-empty??

 

[Midpack]

Yes it is. Could go up or down, as always...

 

[Felix Mulier]

I wish I knew! I'm one of those "retail investors" they talk about (although I use NLMFs) waiting on the sidelines to see what's going to happen. I'm going to wait a little longer. Looking for an opportunity to move some money into equities, but am still circling the airport at the moment.

 

[Meadbh]

The correct answer is: nobody knows. However, everything that I have read and heard suggests that corporate finances are in a healthy state. Assuming that macroeconomic conditions (austerity) do not stifle demand completely, this may be time of opportunity for corporations and therefore for equities.

 

[LOL!]

The market will definitely go higher .... eventually. It might drop before then though. I follow the LOL! Market Timing Newsletter which has lots of useful market timing tips. It works for me.

 

[bondi688]

Linking to these articles just to throw some fodders into the discussion. I take no position because I really do not know, so I want to hear from both sides.

Easy money will end in tears, Allan Meltzer says - Diana Furchtgott-Roth - MarketWatch

Ben’s big raging bull mart - NYPOST.com

On the other camp, there are people like Abby Cohen

You Haven't Missed the Rally: Goldman's Cohen - Yahoo! Finance

 

[dtbach]

I agree that nobody can tell what the market is going to do in the near term but I'm convinced that the economy can do better than what it is now. New vehicle sales are increasing, housing is doing better in most markets and inventories remain low.

Plus the market is about where it was in 2000. At some point one would think that the market should start making some new highs.

 

[Hnicols]

Same as it was in 2000? Funny how so much turns on where you start and end your looking. I retired 12-31-11. Someone recently suggested that I got where I got (retired early and happy) because of good market conditions in 80s and 90s. I had to admit it did seem like an extraordinary period, with incredible run-ups followed by crashes, followed by nearly a decade of stagnation. But because it is the only period I have known (and because I suspect we all think "our periods" are extraordinary), I ran an analysis looking at the compound rate of growth in S&P from late 85 when I started investing through the close of 2011 when I hung up my spurs. Turns out I experienced almost precisely the ordinary return as compared with the period from the great depression through now ( to the second decimal place). So who knows what the future holds, but my past produced exactly what I would have predicted from the past before my past. So maybe we are in a bubble, maybe we are on the early legs of a great bull market, and maybe the past won't predict the future. But I plan to keep plugging away, investing balanced and diversified, until I figure out something better.

 

[bssc]

 

[Hnicols]

And JPM will keep taking a skim from us all


Disclaimer: I hold shares in those I besmirch.

 

[dtbach]

Well this isn't going to be fun if the standard reply is "the market will fluctuate"


I'm just curious if you think the market will end higher or lower by the end of 2013. Is it on a bubble or will it climb the wall of worry?

 

[Tyro]

Well this isn't going to be fun if the standard reply is "the market will fluctuate"


I'm just curious if you think the market will end higher or lower by the end of 2013.

It can't do either if it doesn't fluctuate.

Is it on a bubble or will it climb the wall of worry?

Yes. It could be -- and do -- either, and still be little changed from the current level by the end of the year.

"going to be fun"? What, are you trolling?

 

[Animorph]

I wouldn't mind if it would go up and down a little bit more than it has. It has been a little bit off my rebalance triggers on a few funds. I'm thinking budget cuts will hurt the market this year eventually. I don't see much reason to expect a rising market without some kind of budget miracle.

 

[Lakewood90712]

Well this isn't going to be fun if the standard reply is "the market will fluctuate"


I'm just curious if you think the market will end higher or lower by the end of 2013. Is it on a bubble or will it climb the wall of worry?

Th part in red seems to be your real question . I would also say Yes. If any of us knew , we would be on our way to billonaire status, or at least pitching a market news letter .

 

[enjoyinglife102]

As always, anybody's guess. Longer term, I'm a fan of Jeremy Grantham's quantitative work at GMO. I'm baffled how historically high corporate profit margins don't receive more attention, something Grantham prominently considers in his analysis. Factoring in reversion to the mean for them and current PE's are extremely high. We'll see, but I've heard "this time is different" before if that is the prevailing attitude towards the very high profit margins.

 

[donheff]

How do you feel about where the market is at? half-full or half-empty??

I think it is somewhere in between those two.

 

[Hnicols]

We'll see, but I've heard "this time is different" before if that is the prevailing attitude towards the very high profit margins.

What this time isn't different? I thought it was a sea change, a new paradigm, a fundamental shift to the new normal. Why I haven't seen so marked a change in market fundamentals since Enron ushered in the new energy markets, or was it World Com bringing us new telecom. Well it was one of them anyway.

The fact is that we are all programmed to look for patterns (I like stripes), whether they are there to be found or not. But if we are just guessing, I would guess the market is moving up because I am starting to hear folks on the sidelines worried about missing "it". And then, once the sidelines seize the field, down it will come. In hiking we call them PUDs (pointless up and downs). So I just enjoy the trail.

 

[audreyh1]

The market will be in a bubble this year, or if not this year, then it'll be next year, or maybe the year after that. Then again..... Wait, which market are we talking about? - the stock market or the bond market?

 

[Alan]

The market will be in a bubble this year, or if not this year, then it'll be next year, or maybe the year after that. Then again..... Wait, which market are we talking about? - the stock market or the bond market?

I thought we talking about the bubble market.

 

[W2R]

The market will be in a bubble this year, or if not this year, then it'll be next year, or maybe the year after that. Then again..... Wait, which market are we talking about? - the stock market or the bond market?

I thought we talking about the bubble market.

Bubbles are cheap! Buy, buy, buy....

 

[growing_older]

I think the market is highly susceptible to political action. Based only on economic factors I think companies are doing well and the somewhat slow recovery will continue, setting up a classic wall of worry bull market. But all it takes is a little political theater to throw this all away. Too much austerity, some grandstanding intransigence by either (or both) party, and we could see a nice crash.

Since it's uncontrollable and unknowable, I plan to just stay invested at my boring index funds, and rebalance as needed however things work out.

 

[rodiy2k]

Same as it was in 2000? Funny how so much turns on where you start and end your looking. I retired 12-31-11. Someone recently suggested that I got where I got (retired early and happy) because of good market conditions in 80s and 90s. I had to admit it did seem like an extraordinary period, with incredible run-ups followed by crashes, followed by nearly a decade of stagnation. But because it is the only period I have known (and because I suspect we all think "our periods" are extraordinary), I ran an analysis looking at the compound rate of growth in S&P from late 85 when I started investing through the close of 2011 when I hung up my spurs. Turns out I experienced almost precisely the ordinary return as compared with the period from the great depression through now ( to the second decimal place). So who knows what the future holds, but my past produced exactly what I would have predicted from the past before my past. So maybe we are in a bubble, maybe we are on the early legs of a great bull market, and maybe the past won't predict the future. But I plan to keep plugging away, investing balanced and diversified, until I figure out something better.

Very well said. The solution is always the same - always invest constantly. Don't worry too much about new highs or lows and stick to whatever plan you have. Timing is very important but you can't ever say of the next calamity will happen at the same tome as when you retire. So also ensue you have a way to retire anyway. Or have a backup plan of your investments tank. Or even plan for less than you actually need so you don't set expectations too high. The new Economy is not going back to the god old 90s. Period. Expect lax but slow growth over this decade and most of all understand that markets atone the world are now mostly being dictated by central bank monetary policies not supply and demand. That is not likely to change for awhile

 

[project2501]

Well time travel isn't invented yet. Until then I believe/hope there will be another large correction this year at the end. So I keep money in three piles. Normal investment allocation, another in ultra shorting bonds, and the last a big pile of cash for any fire sales if there is a correction.

Staying the course is probably best, but I'll admit I like to time a little with some excess cash. Call it working to fund my market habit.

 

[jollystomper]

Same as it was in 2000? Funny how so much turns on where you start and end your looking. I retired 12-31-11. Someone recently suggested that I got where I got (retired early and happy) because of good market conditions in 80s and 90s.

I agree with your entire statement and wanted to highlight the comment above. Folks have said similar to me (though not yet retired early it is soon to be in my future), and one thing I point out is that, if that were the case, you would be reading many more stories of folks in the 50-60 year old range FIRE-ing instead of all the press about how so many have nothing to retire on. Those who did well over those years were much more likely to have done so by consistently staying in the market instead of trying to time "bubbles". There were significant "bubbles" during that time that looked significant at the time but are "smoothed out" when you look at then in the rearview mirror (the single day crash of 1987 being exhibit A).

 

[FinancialDave]

Well this isn't going to be fun if the standard reply is "the market will fluctuate"


I'm just curious if you think the market will end higher or lower by the end of 2013. Is it on a bubble or will it climb the wall of worry?

Absolutely the market will fluctuate, but will most likely be a littler higher by year end.