Bubbles all over the place

[haha]

https://www.thefelderreport.com/201...g-that-should-only-happen-once-in-1200-years/

OK, I think a 1200 year event qualifies as a bubble. And in a sector such as utilities that is usually believed to be conservative investors' domain! Likewise some other "bond substitutes" are at 2 sigma overvaluations. Bonds themselves are showing heroic interest rate and in some sectors default assumptions.

Another bubbly thing is the increasing reliance on index funds in stock market investing. You don't have to tell me that these are cheaper in terms of annual charges, but they also make no pretense to any price discipline in security choice. For my money, perhaps not a great all weather bet.

Always foolish to call tops, especially with bubble tops. Still, I would find this a bad time to invest new money in most of these areas. And for me, if I had money in accounts that were not subject to current taxation, I would be selling most equities that I owned in these accounts.

Ha

 

[LARS]

Preaching to the converted...


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[HillCountry]

Have to agree here. I am less than 30% in stock.

Fortunately for me, I don't need have a higher percentage to be in the market. Also, I have other investment. Yes, including but not limited to RE.

 

[Fermion]

Yes, but what if you wait five years on the sidelines waiting for the bubble to burst and it just keeps inflating 5% a year.

 

[GrayHare]

there is a bubble in bubbles

 

[haha]

Yes, but what if you wait five years on the sidelines waiting for the bubble to burst and it just keeps inflating 5% a year.

Keep on dancing if that is the way you lean!

In generations past there were nursery rhymes and children"s games to teach the deep truths of life.

Now, we head to Facebook or twitter to become even further confused.

Ha

 

[Fermion]

Yes but a mulberry bush won't feed my weasel when inflation is 2% and cash earns near zero.

 

[haha]

Yes but a mulberry bush won't feed my weasel when inflation is 2% and cash earns near zero.

That is why I say, Como quieres! Luckily, you are free to do whatever you want with your money. I have only one horse in this race, and I am on him.

Ha

 

[LARS]

Yes but a mulberry bush won't feed my weasel when inflation is 2% and cash earns near zero.

Return of principal always trumps return on principal...


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[Totoro]

Another imploding bubble is over in tech & VC land. Fortunately only rich insiders and founder hopefuls suffer from those. Many unicorns are losing their horns right now, and turn out to be limp horses instead.

Consumer staples might be strongly valued, but a P/E of x20 is still a yield of 5%. And with a steady growth promise too of say, 1% real.

Still a decent deal considering the alternatives. And if we stay in a low-growth world with poor fixed income alternatives, I find that valuation justified even for the longer term.

A once in 1.200 years event also sounds like hyperbole to me, and/or one's approach to using descriptive statistics in this fashion needs revisiting.

 

[brewer12345]

The 2000 bubble was weird because although average equity index valuations were extremely high, there was great divergence between sectors. Anything .com or tech was at insane levels, everything "real economy" was bargain basement. Do we have something like that now? Well, utilities and the like with steady dividends are probably at crazy levels. You cannot give cyclicals away, OTOH. So I would say that the divergence is not quite as spectacular as it was in 2000, but it definitely is there.

 

[haha]

A once in 1.200 years event also sounds like hyperbole to me, and/or one's approach to using descriptive statistics in this fashion needs revisiting.

I guess it is hyperbole, in the sense that the author knows that these out of distribution events are much more frequent than would be expected if stock returns were a Gaussian distribution.

Ha

 

[Lakedog]

Agree that utilities have been overvalued for a while - sold one recently that I had owned for years with plans to move back into it after they come back to earth.

 

[haha]

The 2000 bubble was weird because although average equity index valuations were extremely high, there was great divergence between sectors. Anything .com or tech was at insane levels, everything "real economy" was bargain basement. Do we have something like that now? Well, utilities and the like with steady dividends are probably at crazy levels. You cannot give cyclicals away, OTOH. So I would say that the divergence is not quite as spectacular as it was in 2000, but it definitely is there.

Excellent point. I made my retirement on tobaccos coming out of the 2000 market distress. I recently noticed that it seems likely that Carl Icahn, a big investor in cyclical issues, may step back in favor of a son and one other firm member. fF course Carl is 80, and one of my favorite people.

Ha

 

[bbbamI]

I like bubbles for the most part...but some are downright frightening.

I moved some money around last Monday because our stock allocation was a bit high. Only 35% in stocks in our port at the present...yeah, I'm a bit of a wuss I suppose. Let the bubbles pop where they may.

 

[Sunset]

Excellent point. I made my retirement on tobaccos coming out of the 2000 market distress. I recently noticed that it seems likely that Carl Icahn, a big investor in cyclical issues, may step back in favor of a son and one other firm member. fF course Carl is 80, and one of my favorite people.
Ha

Carl has not been nice to me, thankfully I don't know him too much

 

[Sunset]

I totally agree that folks are chasing yields since bonds and cd's are paying so little, while cat food keeps going up in price.

So things keep getting bid up. I believed this 4 years ago and finally capitulated 2 years ago and so far am glad I did.

Now I want to switch my 100 % stock allocation to some bond like thing, and it's like eating cow pies. Besides selling my stock and leaving it in cash, tell me what I can buy ? ?

OK, I did pick up $35K in preferred stocks paying very roughly 6% / yr. forever... but I recognize while the income is nice, they will not appreciate so its really like a bond.

I'm thinking TIPs would be better than cash as at least there is the inflation factor there.
Otherwise, I'm stuck collecting the ETF dividends and riding the roller-coaster up and down and back up .... sometime.

I'm open to suggestions as well. ... . .

 

[haha]

Carl is the anti-Buffett. One's choice here is kind of a personality test. If you cleaned erasers for that nice teacher, you'll like Warren. Shoot spitballs? You might prefer Carl.

Ha

 

[Closet_Gamer]

Another bubbly thing is the increasing reliance on index funds in stock market investing. You don't have to tell me that these are cheaper in terms of annual charges, but they also make no pretense to any price discipline in security choice. For my money, perhaps not a great all weather bet.

I think something like 9% of all investment dollars are indexed now. Index investing essentially relies on others money being used for price discovery and just riding the collective give-and-take of others trades. If 90% is still duking it out to figure out what Boeing is worth, the indexers are probably still fine.

That said, I have no clue what the tipping point is.

 

[Big_Hitter]

 

[BreathFree]

I have only one horse in this race, and I am on him.

Ha

I like this. LoL! I'm stealing this for personal use.

 

[BreathFree]

Have to agree here. I am less than 30% in stock.

Fortunately for me, I don't need have a higher percentage to be in the market. Also, I have other investment. Yes, including but not limited to RE.

This is about my situation when counting rentals. I haven't sold any stock, but I haven't purchased any in the past year either. Cash is piling up as I am still accumulating. I am probably going to by some CDs from NFCU. Can't seem to pull the trigger on risky assets at the moment.

 

[Totoro]

If 90% is still duking it out to figure out what Boeing is worth, the indexers are probably still fine.

As long as there a handful of traders, price discovery will happen no? Even if 99% of stocks are effectively passively held, wouldn't the other 1% do the whole price discovery thing?

Or put differently: as long there is money to be made by mispricing, fulltimers will be attracted. Short term swings might be bigger though as a buy or sell moves the market more, like in smaller market cap stocks.

Call it a wussy form of the efficient market hypothesis

Not that I believe in efficient markets to begin with ...

 

[Koolau]

I have been selling my stocks to fund my withdrawals while keeping my port at about 30% stock. I have some non-bond stuff (such as SPDA's, GIF, PMs, collectables, etc.) which are either less subject to bubbling OR at least have some tendency toward non-correlation with stocks or bonds. Of course, we will see, won't we.

It is my opinion that our bubbles have been caused over recent time by all of the liquidity pumped into the economy - either through low interest rates or downright printing of money. The idea, of course, was to get things "rolling" again, but no one wants to roll, so they invest their own liquidity in bubbles - what else can they do unless they put it under the mattress. When bubbles begin to burst, that liquidity could be a real problem. As usual, I have told you WAY more than I know about this subject, so YMMV.

 

[eytonxav]

Ha, I think you need a supporting "whee" from W2R to back up your sell call.