Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Do you really think the market is cheap?
Old 09-24-2008, 08:16 PM   #1
Thinks s/he gets paid by the post
wildcat's Avatar
 
Join Date: Feb 2005
Location: Lou-evil
Posts: 2,025
Do you really think the market is cheap?

Just fun, wondering what everyone's thoughts were on this one.

Personally, despite saying the % decline, I don't think the market as a whole is all that cheap given the variables at play.

Also, it seems some sectors have rallied off lows and I personally see no reason for that to happen. Maybe just short covering but I certainly think some of those sectors will drift lower - cough retail.

If the S&P 500 P/E is 15 or so, doesn't that pretty much indicate par historically? Your thoughts?
__________________

__________________
"These walls are kind of funny. First you hate 'em, then you get used to 'em. Enough time passes, gets so you depend on them"
wildcat is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 09-24-2008, 08:22 PM   #2
Moderator
bssc's Avatar
 
Join Date: Dec 2005
Posts: 9,929
Cheap.
__________________

__________________
Angels danced on the day that you were born.
bssc is offline   Reply With Quote
Old 09-24-2008, 08:30 PM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,619
I don't think it's particularly cheap, but it will pop as soon at the bailout is enacted. And it will be enacted ... it's just a matter of time. Of course after the pop, it could decline to even lower than now, but who cares?
__________________
LOL! is offline   Reply With Quote
Old 09-24-2008, 08:31 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Dawg52's Avatar
 
Join Date: Feb 2005
Location: Central MS/Orange Beach, AL
Posts: 7,438
Quote:
Originally Posted by bssc View Post
Cheap.
I hope your right. And while I'm hoping, I hope it won't be a few months down the road.
__________________
Retired 3/31/2007@52
Full time wuss.......
Dawg52 is offline   Reply With Quote
Old 09-24-2008, 08:32 PM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
HFWR's Avatar
 
Join Date: May 2005
Location: Lawn chair in Texas
Posts: 12,964
I don't know... But my bunion tells me we need to drop another 10-20% to flush this turd.
__________________
Have Funds, Will Retire

...not doing anything of true substance...
HFWR is offline   Reply With Quote
Old 09-24-2008, 08:58 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
I think the market as a whole is pretty fair priced, maybe very slightly cheap.

The S&P goes below 1080, then its starting to get cheap.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Old 09-24-2008, 09:00 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Gone4Good's Avatar
 
Join Date: Sep 2005
Posts: 5,381
Given everything that's going on, I'm really surprised we're not down a lot more. I really figured that the Monday following the Lehman bankruptcy the Dow would be down 4 digits.

Large caps are down a little over 20% from their high, doesn't seem quite enough to me. Small caps are only down a couple of percentage points (nearly hit new highs last week :confused.

I'm waiting for large caps to be 30-35% off their highs before I rebalance. So maybe I'll pull the trigger if we drop another 10% or so. Down ~30% from peak to trough is pretty typical for a bear market . . . this one might be a little angrier then most, though (and we're only 1 yr in).
__________________
Gone4Good is offline   Reply With Quote
Old 09-24-2008, 10:04 PM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 16,471
Here - check out Haha's thread Doomsday talk ridiculous, be of good heart which has a graph that indicates that the market has indeed finally gotten cheap by historical standards BUT is probably going to get cheaper.

Audrey
__________________
audreyh1 is online now   Reply With Quote
Old 09-24-2008, 10:50 PM   #9
Full time employment: Posting here.
CCdaCE's Avatar
 
Join Date: Apr 2006
Posts: 887
I don't think it's THAT cheap, like you say, it's pretty fairly valued according to P/E.

Seems like it's a percent-off sale, but picking the percent is barely in the double digits, it seems to me.

Morningstar thinks it's about a 15-20% off sale, which is pretty good, relative to history. I guess I can't argue with that, either, since it's over the whole market.

My definition of disaster must be more doom-and-gloom than theirs. I think the value stocks would be a place to look, perhaps, like in the doomsday thread above. Seems like International is getting crushed. Just depends on where you want to look.

-CC
__________________
"There's those thinkin' more or less, less is more, but if less is more, how you keepin' score?
It means for every point you make, your level drops. Kinda like you're startin' from the top..." "Society" - Eddie Vedder
CCdaCE is offline   Reply With Quote
Old 09-24-2008, 10:51 PM   #10
Thinks s/he gets paid by the post
wildcat's Avatar
 
Join Date: Feb 2005
Location: Lou-evil
Posts: 2,025
That was a pretty interesting discussion. Caveat seems to be = today is cheap compared to the last 20 years or cheap compared to the last 60 years.
__________________
"These walls are kind of funny. First you hate 'em, then you get used to 'em. Enough time passes, gets so you depend on them"
wildcat is offline   Reply With Quote
Old 09-25-2008, 07:54 AM   #11
Thinks s/he gets paid by the post
 
Join Date: Jun 2005
Posts: 1,543
Quote:
Originally Posted by CCdaCE View Post
I don't think it's THAT cheap, like you say, it's pretty fairly valued according to P/E.

Seems like it's a percent-off sale, but picking the percent is barely in the double digits, it seems to me.

Morningstar thinks it's about a 15-20% off sale, which is pretty good, relative to history. I guess I can't argue with that, either, since it's over the whole market.

My definition of disaster must be more doom-and-gloom than theirs. I think the value stocks would be a place to look, perhaps, like in the doomsday thread above. Seems like International is getting crushed. Just depends on where you want to look.

-CC
i hope no one based their investing decisions on this chart
__________________
al_bundy is offline   Reply With Quote
Old 09-25-2008, 08:05 AM   #12
Full time employment: Posting here.
CCdaCE's Avatar
 
Join Date: Apr 2006
Posts: 887
Why do you say that Al ?
__________________
"There's those thinkin' more or less, less is more, but if less is more, how you keepin' score?
It means for every point you make, your level drops. Kinda like you're startin' from the top..." "Society" - Eddie Vedder
CCdaCE is offline   Reply With Quote
Old 09-25-2008, 09:05 AM   #13
Thinks s/he gets paid by the post
 
Join Date: Jun 2005
Posts: 1,543
because from 2003 to 2007 they said the market was overvalued, when the SP500 doubled. as soon as the market tanks they say is now undervalued. if you sell when they say it's overvalued then you will lose years of gains.

in all my years of following the markets i never heard a credible explanation of how the market can be undervalued or overvalued. PE is completely useless except for very long term analysis
__________________
al_bundy is offline   Reply With Quote
Old 09-25-2008, 11:11 AM   #14
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
I don't think one can really say "overvalued" or "undervalued" based only on the current P/E ratio (or even the PE10, for that matter).

A market's "fair value" at the time depends partially on the current risk-free rate of return, at least where classic securities analysis is concerned. As a result, a P/E of 15 might be high when the risk-free return is 8%... but a P/E of 15 might be low when that risk-free return is at 2%.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 09-25-2008, 01:21 PM   #15
Recycles dryer sheets
Canadian Grunt's Avatar
 
Join Date: May 2007
Location: Edmonton
Posts: 197
I think there is going to be more market decline so it will be cheaper next year. If the bailout happens it will not lift the economy. Check the employment numbers...people are starting to entrench.

I call a lower market in February
__________________
it's the journey that matters
Canadian Grunt is offline   Reply With Quote
Old 09-25-2008, 01:25 PM   #16
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
Quote:
Originally Posted by Canadian Grunt View Post
I think there is going to be more market decline so it will be cheaper next year. If the bailout happens it will not lift the economy. Check the employment numbers...people are starting to entrench.
I don't think the bailout is intended to "lift" the economy as much as to simply prevent it from going into free fall.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 09-25-2008, 01:45 PM   #17
Recycles dryer sheets
Canadian Grunt's Avatar
 
Join Date: May 2007
Location: Edmonton
Posts: 197
Quote:
Originally Posted by ziggy29 View Post
I don't think the bailout is intended to "lift" the economy as much as to simply prevent it from going into free fall.

Perhaps the market will rebound faster with a limited freefall. The support does nothing to remove the problems that caused the financial crisis. Could the bail out lead to a protracted stagnation in the economy? maybe stagflation...
__________________
it's the journey that matters
Canadian Grunt is offline   Reply With Quote
Old 09-25-2008, 02:12 PM   #18
Thinks s/he gets paid by the post
 
Join Date: Jun 2005
Posts: 1,543
bailout is not going to bring crazy loans back so there will probably be slow growth for the next few years. think 1987 to 1994.
__________________
al_bundy is offline   Reply With Quote
Old 09-25-2008, 02:17 PM   #19
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
Quote:
Originally Posted by al_bundy View Post
bailout is not going to bring crazy loans back so there will probably be slow growth for the next few years. think 1987 to 1994.
True. But without crazy borrowed money, the growth would more likely be much more sustainable and less subject to boom and bust. In the grand scheme of things, IF that occurred, in the long run it might be a good thing.

I'd like to see the economy based more on stability and sustainability than growth. I think we've made a lot of bad economic decisions in pursuit of almighty growth at any cost.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 09-25-2008, 02:17 PM   #20
Thinks s/he gets paid by the post
 
Join Date: Apr 2006
Posts: 1,487
Quote:
Originally Posted by al_bundy View Post
i hope no one based their investing decisions on this chart
i don't make my decisions based on it, but i do reference it from time to time ... it's just someone's opinion, but likely more informed than my own. my sense is that we've recently had a "buying opportunity" (and i've been buying) but there could well be better "buying opportunities" ahead, so i'm keeping some powder dry.
__________________

__________________
d is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Hmm, stock market or Money Market/CD? Moneycoming Stock Picking and Market Strategy 4 08-14-2007 07:41 PM
Are you cheap? boont Life after FIRE 79 08-08-2006 07:36 PM
Anything, ANYTHING Cheap Out There? Craig FIRE and Money 15 01-06-2006 07:28 PM
cheap cheap vacation EricMD FIRE and Money 4 09-02-2005 10:42 AM

 

 
All times are GMT -6. The time now is 10:31 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.