Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Re: The sky is falling, the sky is falling
Old 08-18-2005, 02:09 PM   #81
Full time employment: Posting here.
 
Join Date: Mar 2005
Posts: 557
Re: The sky is falling, the sky is falling

Quote:
Originally Posted by wabmester
OK, here's a question for you bubble heads. * Do you prefer to avoid a bubble entirely or participate in the bubble and sell near the top?

If I understand Donner's rants correctly, he believes the stock market is overvalued because the P/E is higher than the historical average. * Using that metric as a rationale for exiting the market, he would have been out of stocks since the mid-1980's.

So, how do you guys decide when to exit your position in a frothy asset?
On the stock bubble, which I did not really recognize as such until after it had burst, I stayed with the asset allocation, and thus while got hit some, was somewhat cushioned.
(But the asset class went up quite nicely in the 90's as others have pointed out --unclemick for one). As to real estate, I am not certain that it is a bubble, at least not where I am, so really haven't changed too much. Then again, I haven't seen 20% a year increases in the upper midwest. Might think differently if I was in Florida or Phoenix
__________________

__________________
uncledrz 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!

Re: The sky is falling, the sky is falling
Old 08-18-2005, 02:40 PM   #82
Thinks s/he gets paid by the post
greg's Avatar
 
Join Date: Jun 2005
Posts: 1,071
Re: The sky is falling, the sky is falling

Quote:
Originally Posted by wabmester
OK, here's a question for you bubble heads. Do you prefer to avoid a bubble entirely or participate in the bubble and sell near the top?

If I understand Donner's rants correctly, he believes the stock market is overvalued because the P/E is higher than the historical average. Using that metric as a rationale for exiting the market, he would have been out of stocks since the mid-1980's.

So, how do you guys decide when to exit your position in a frothy asset?
First, the stock, bond and housing bubbles are symptoms of a much larger financial imbalance fueled by the excessive creation of money from thin air for at least the past 25 years. You need to understand the pathology by starting with the symptoms and then going in reverse to the first cause. The penultimate first social cause is due to ignorance in government, e.g. our leaders made bad choices. We elect our leaders. ergo. . . .

This is the world that both bulls and bears live in. Each of us 'guys' makes his or her financial decisions based on our understanding of these problems. Of course, one solution is to just pay someone to manage your money or accept a generally held view of how the financial markets work and how to protect yourself. The government 'helps' by forcing things down your throat. But this isn't neccesarily a bad thing because it makes you think, as a social group member, about issues that may be important to your survival. Plus it forces you to save money. This process by itself is good for people. But may have bad consequences someday.

In conclusion, I don't know for sure, and any advice from me would probably be wrong.

My original Intro post to this board a few months ago) has an article about the big bubble attached that helped me a great deal.

--Greg
__________________

__________________
Compounding: Never forget! Never not remember!
greg is offline   Reply With Quote
Re: The sky is falling, the sky is falling
Old 08-18-2005, 03:19 PM   #83
Thinks s/he gets paid by the post
wabmester's Avatar
 
Join Date: Dec 2003
Posts: 4,459
Re: The sky is falling, the sky is falling

Quote:
Originally Posted by Apocalypse . . .um . . .SOON
First, the stock, bond and housing bubbles are symptoms of a much larger financial imbalance fueled by the excessive creation of money from thin air for at least the past 25 years.
Here's a graph of money supply growth for the last 40 years:

[img width=750 height=512]http://www.theshortrun.com/data/Financial/aggregates/image003.gif[/img]

M3 is the important one, but I don't see anything remarkable about the growth in the last 25 years (in fact, M3 growth slowed considerably from 1970-1992).

My pet theory is that P/E's went up to a higher level around the time that IRA's and 401(k)'s became popular, and the forward average will be in the high teens for a *long* time to come.
__________________
wabmester is offline   Reply With Quote
Re: The sky is falling, the sky is falling
Old 08-18-2005, 03:40 PM   #84
Recycles dryer sheets
 
Join Date: Dec 2004
Posts: 147
Re: The sky is falling, the sky is falling

Quote:
Originally Posted by wabmester
OK, here's a question for you bubble heads. * Do you prefer to avoid a bubble entirely or participate in the bubble and sell near the top?

If I understand Donner's rants correctly, he believes the stock market is overvalued because the P/E is higher than the historical average. * Using that metric as a rationale for exiting the market, he would have been out of stocks since the mid-1980's.

So, how do you guys decide when to exit your position in a frothy asset?
Wab--

I tried not to rant too much! Just trying to explain my understanding of the phenomena we are witnessing at present in the financial markets.

As for the valuation thing -- I went to a considerable length a while back to explain in some detail how I value the markets and even went so far as to include instructions on how anybody can come up with his or her own estimate of what the market ought to be worth troday. What it takes is some idea of what the asset is presently earning (or paying in dividiends depending what it is your trying to put a value on), what your expected holding period is for that asset, how the earnings or dividend stream is going to grow over that period and finally, applying your own personal capitalization rate to that future flow to determine what you personally ought to be willing to pay for that asset. It ain't neurosurgery. Anybody can do it. Trouble is if you go through that exercise with even modestly reasonable assumptions you will come up with a market price you ought to be willing to pay that is 25% to 30% (at least) below what the market closed at today. Really depends on your growth rate assumptions and your own personal capitalization rate. Those are going to be different for each and every one of us individually. You can take Mr. Market's assumptions, of course, as most "investors" do. But Mr. Market is a real cheapskate. He simply is not going to pay you to take the risk of owning equities.Mr. Market just has an incredibly low cap rate right now for the reasons I have been mulling (ranting?) about. Obviously, the market is about something other than reasonable valuations right now. Hence my own struggle and puzzlement and, I guess, ranting.

Donner
__________________
"Remember, if you come this way, don't take no shortcuts and hurry along as fast as you can." (Virginia Reed, Age 12, Donner Party Survivor, 1847)
Donner is offline   Reply With Quote
Re: The sky is falling, the sky is falling
Old 08-18-2005, 03:45 PM   #85
Thinks s/he gets paid by the post
wabmester's Avatar
 
Join Date: Dec 2003
Posts: 4,459
Re: The sky is falling, the sky is falling

Quote:
Originally Posted by Donner
What it takes is some idea of what the asset is presently earning (or paying in dividiends depending what it is your trying to put a value on), what your expected holding period is for that asset, how the* earnings or dividend stream is going to grow over that period and finally, applying your own personal capitalization rate to that future flow to determine what you personally ought to be willing to pay for that asset.
Oh my. The dividend discount model? I hope you're considering that the current risk-free rate of return is close to a historic low, so you've got to lower your expected returns appropriately. And I've never been any good at extrapolating dividend growth past the very short term. You chose your valuation model, and you take your chances.
__________________
wabmester is offline   Reply With Quote
Re: The sky is falling, the sky is falling
Old 08-18-2005, 04:58 PM   #86
Recycles dryer sheets
 
Join Date: Dec 2004
Posts: 147
Re: The sky is falling, the sky is falling

Quote:
Originally Posted by wabmester
* You chose your valuation model, and you take your chances.*
Exactly my point.* Can't avoid it. You do it explicitly or implicitly every day that you hold your financial portfolio and every time you add or subtract from it.* Discounting future flows of something (earnings, dividends, sales, hits on a website, anything) is the only way I know of to put a rational price on something.* * Got a better idea?* Well, it's just the way I was taught how to do it nearly 35 years ago.* Still good theory as far as I know.* Any recent B school grads on the Board aware of a new or better way to value any earning asset?*

Most people just opt to do the implicit thing and just take what Mr. Market is offering to return to you in* return for your investment capital that you hand over to him in the form of stock, bond and now I guess we ought to include real estate ownership.* That's ok.* But be aware --he ain't offering much for the risks you take.* If Mr. Market wants my retirement capital he is going to have to pay me for the risks I am assuming when I undertake to own those asset classes.* No sign he is willing to do that anytime soon.

Donner

__________________
"Remember, if you come this way, don't take no shortcuts and hurry along as fast as you can." (Virginia Reed, Age 12, Donner Party Survivor, 1847)
Donner is offline   Reply With Quote
Re: The sky is falling, the sky is falling
Old 08-18-2005, 05:22 PM   #87
Recycles dryer sheets
 
Join Date: Dec 2004
Posts: 147
Re: The sky is falling, the sky is falling

Quote:
Originally Posted by Apocalypse . . .um . . .SOON
Donner--

Thank you.* I accept the baton.* ** *I hope to wield it with the best parts of my mind and my heart.*

A comment or two on your comments:* It's tough to gain perspective when you're sitting on top of an opaque bubble.*

I read an article a few months back that said the current AAA bonds have drifted down to BBB status over the past twenty years.* Think about this:* We, as citizens, have imposed upon Americans not even born yet the obligation to pay off our current obligations, debts (SS), and bad spending habits.* How likely is it for this obligation to be fulfilled?* Especially if all our actions now don't create a much richer and stable world for them?* Answer honestly, taking into consideration all the things happening now--and their possible outcomes.* They might actually be junk bonds.* Enough said.

I hope for your support in this endeavor,

--Apocolypse . . . um . . . Soon*
You are on to something here, Greg. But its like looking through a glass darkly. The view is pretty murky when all strive for and demand clarity. It just ain't all that clear right now. Thinking about such things strains the brain. Earns you enmity as well. Rest assured you have my support as you try to work through to the root causes of what we are facing now and in the future.
Good luck.

Donner
__________________
"Remember, if you come this way, don't take no shortcuts and hurry along as fast as you can." (Virginia Reed, Age 12, Donner Party Survivor, 1847)
Donner is offline   Reply With Quote
Re: The sky is falling, the sky is falling
Old 08-18-2005, 05:40 PM   #88
Thinks s/he gets paid by the post
wabmester's Avatar
 
Join Date: Dec 2003
Posts: 4,459
Re: The sky is falling, the sky is falling

Quote:
Originally Posted by Donner
Got a better idea?
Yeah, just believe Mr Market until you have hard evidence that he's wrong. I think the market is fairly valued for the near term. But there are enough weird economic undercurrents that something's got to give at some point; I just don't know when.

So, what do you get when you apply DDM to the market?

This place gives perfectly reasonable valuations for just about everything:

http://www.dividenddiscountmodel.com/indices/

If anything, the market looks undervalued to me given the current risk-free rate.
__________________
wabmester is offline   Reply With Quote
Re: The sky is falling, the sky is falling
Old 08-18-2005, 05:48 PM   #89
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2003
Location: Kansas City
Posts: 7,408
Re: The sky is falling, the sky is falling

Welllll!

The Saints play the Pats in preseason tonight. Depending on how the game goes - I may fill out my DRIP order form for BUD early rather than wait for the fall slump or expend further energy trying to understand why Buffett bought it.

And if the Pats look toooo good - I'll get the razz phone call from my sister.

God may look after Drunkards, Fools and the United States of America ala De Gaul - but the gris gris man (Vodoo in the stands) didn't help against Seattle.

2.27% current yield + 9.36% div growth - ballpark 16.5 P/E.

If it's a really bad season - may end up with more stocks than planned - perhaps a third file cabinet.

__________________
unclemick is offline   Reply With Quote
Re: The sky is falling, the sky is falling
Old 08-18-2005, 06:14 PM   #90
Recycles dryer sheets
 
Join Date: Dec 2004
Posts: 147
Re: The sky is falling, the sky is falling

Quote:
Originally Posted by wabmester
Yeah, just believe Mr Market until you have hard evidence that he's wrong.* I think the market is fairly valued for the near term.* *But there are enough weird economic undercurrents that something's got to give at some point; I just don't know when.

So, what do you get when you apply DDM to the market?

Wab--

I have been down this road before on the Board and I don't want to re-open that old can of worms. If you are really interested check my prior posts. The answer to your question is there.

My questions for you just out of curiousity are:

1.What's your holding period? How long do you expect to hold your financial assets?

2.What kind of annual income flow do you expect to realize from holding your asset?
Total return is good -- nominal dividends and "gains" each year over the holding
periodwill do .

3. What do you think that asset will be worth at the end of your holding period?

4. What is your personal capitalization rate? What kind of rate of return do you, the Wabmaster, demand to get in return for handing over your hard earned capital?

I'm just really a little curious about No. 4 because it appears your assessment of what a reasonable person ought to be willing to accept is correctly a function of the risk free rate. I agree. However, the risk free rate is a "conundrum" now. Way too low by Mr. Greenspan's lights and mine too. Doesn't mean that I'm willing to settle for a 100 or 200 basis point premium over risk free to buy into this market. Might make a good poll question. As far as letting Mr. Market do my thinking for me? As the Duke once said: "That'll be the day, pahdnuh!"

Donner

__________________
"Remember, if you come this way, don't take no shortcuts and hurry along as fast as you can." (Virginia Reed, Age 12, Donner Party Survivor, 1847)
Donner is offline   Reply With Quote
Re: The sky is falling, the sky is falling
Old 08-18-2005, 06:58 PM   #91
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,385
Re: The sky is falling, the sky is falling

I will certainly agree that Donner is given to long pieces. There is something about the polish of his speeches that makes me wonder what he is up too. But so far at least, no other shoe has dropped.

But I happen to think he is right. That is what makes markets.*

Haha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Re: The sky is falling, the sky is falling
Old 08-18-2005, 07:03 PM   #92
Thinks s/he gets paid by the post
wabmester's Avatar
 
Join Date: Dec 2003
Posts: 4,459
Re: The sky is falling, the sky is falling

Quote:
Originally Posted by Donner
* * * * *1.What's your holding period?* How long do you expect to hold your financial assets?
Until they pry them out of my cold dead hands. * If I live to the maximum age of 120, that will be about 80 years from now. * *Does your DDM accurately extrapolate dividend growth for an 80-year period?

Quote:
* * * * *2.What kind of annual income flow do you expect to realize from holding your asset?
* * * * * * Total return is good -- nominal* dividends and "gains"* each year over the holding* *
periodwill do .
2-4% real. * 4% means that I'll party like a maniac for 80 years, 2% means that I'll live a middle class lifestyle for 80 years.

Quote:
* * * * * 3. What do you think that asset will be worth at the end of your holding period?
When I'm dead? * Zero would be fine. * *The kid gets whatever is left over.

Quote:
* * * * * 4. What is your personal capitalization rate?* What kind of rate of return do you, the Wabmaster, demand to get in return for handing over your hard earned capital?
2-4% real. * I'm not sure how this differs from (2). * *I don't really care what the nominal return is. * Inflation and volatility are my enemies, so as long as I keep them at bay, I'm doing fine.

Now, given my ultraconservative needs, here's how I invest:

50% bonds, including TIPS, cash, etc
30% stocks
20% real estate (and a little gold)

I am not married to this allocation, but it serves my needs for as far as I can see (which is not very far). * Volatility should be low. * Returns should exceed 2% real. * And if everything goes completely to hell, I'm left holding enough real assets to trade something with the Road Warriors.
__________________
wabmester is offline   Reply With Quote
Re: The sky is falling, the sky is falling
Old 08-18-2005, 07:26 PM   #93
Thinks s/he gets paid by the post
greg's Avatar
 
Join Date: Jun 2005
Posts: 1,071
Re: The sky is falling, the sky is falling

Donner: I believe that debt is the underlying financial problem, both personal debt and gov't debt. The inability to feed this monster (with timely payments) will probably bring us down. Where the tipping point is, I don't know. This is just one possible example of what I mean. Oil continues rising until people begin to think "maybe it's time to cut back on my spending." Wal-Mart stock goes down, plus a mild panic in some other retail stocks. People panic more. They tighten their belts more. Lay offs start at individual stores. More mild tightening. etc. etc. Soon a major transition starts as people worry about not only having enough money to buy gas but having enough money to make their house/rental property payment. Retirement savings panic? Who knows.

One can point at just about any noun/object that costs money and start the deterioration process, then go backwards toward the supplier (car maker? bank? home equity?) Root cause? Debt.

Greenspan knows his weapons are just about gone. What are the governmental weapons to keep this economy/debt bomb going? We have to get money to people so that they can keep making their monthly payments--keep the machine going. Lower taxes. Not much chance of that happening soon. War? Yep, lots of money being spent there to stimulate the economy by stimulating war. Increased wages? Nope. China keeps getting more of our labor money. Refinance the home? Yep, more money now, more debt to feed. Lower capital gains tax? Yep, already done. Economy still stalling. Give money to corporations? Yep, free money for big farmers, ADM, energy companies, pharma companies (this list is long). Trickle down gone wild.

Big point for me? How do you keep getting the money to the middle class so that they can keep this machine going? Counter point? It has to appear rational, it has to appear like it makes sense, just like the housing bubble debt extraction process appeared sane to those participating in the extraction process.

These processes are what I watch for clues to the end game. Debt, the final frontier. I like reading Hussman for a technical overview of the financial markets.

Does the gov't have more weapons up their sleeve? Not too many. I still don't understand helocopter money and how it gets to the middle class? Confusing? Yes. And I'm barely worried about inflation, which the gov't is furiously trying to make real with unreal money. What a mess, IMO.

--Greg
__________________
Compounding: Never forget! Never not remember!
greg is offline   Reply With Quote
Re: The sky is falling, the sky is falling
Old 08-18-2005, 07:30 PM   #94
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,385
Re: The sky is falling, the sky is falling

Quote:
Originally Posted by wabmester
Now, given my ultraconservative needs, here's how I invest:

50% bonds, including TIPS, cash, etc
30% stocks
20% real estate (and a little gold)
This seems a very conservative allocation that should require little thought or tinkering and little expense. Where one needs or wants higher returns, or when he is afraid that downdrafts would scare him, then I think it probably is worthwhile to be more demanding about price paid for assets.

I've been actively investing for over 40 years now, and always there have large fluctuations to make it worth while to be patient.

In an earlier post you gave a rationale for expecting continued high valuations. Given that, I would not expect my MO to have much appeal to you.

Also, I would like to comment on something you said earlier in this thread. Essentially the question was "Do you ride for a while and jump off? Or do you just decline participation altogether?" You then said that the latter would put you out of stocks from about 1985. It was certainly not that way for me. I found more than enough value investments until about late 1997. Then I quit, except for some legacy holdings. By 1999 there were again great bargains, in oils, tobaccos, REITs, etc. At present nothing seems cheap, including energy. But the situation for crude as a commodity may be changing. If that turns out not to be the case, most oil and gas investments going forward will be nothing special.


Haha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Re: The sky is falling, the sky is falling
Old 08-18-2005, 07:50 PM   #95
Thinks s/he gets paid by the post
wabmester's Avatar
 
Join Date: Dec 2003
Posts: 4,459
Re: The sky is falling, the sky is falling

Quote:
Originally Posted by HaHa
You then said that the latter would put you out of stocks from about 1985. It was certainly not that way for me. I found more than enough value investments until about late 1997. Then I quit, except for some legacy holdings. By 1999 there were again great bargains, in oils, tobaccos, REITs, etc. At present nothing seems cheap, including energy.
If your definition of "value" is based on historical P/E values, then the market has been overvalued for about 20 years now.* * That doesn't mean that there haven't been cheap individual stocks or sectors, of course.

The current market P/E is about 19.* *I don't think this is outrageously high, especially given today's bond yields.* * When the P/E got to around 40 back in 2000, that was nuts, and I got out.* * I agree that stocks (in general) aren't screaming buys right now, but I don't think the bear case is very strong either (yet).

I'm a card-carrying market timer, but I tend to wait till the market has gone completely bonkers before I move.* *It looks surprisingly sane to me right now.
__________________
wabmester is offline   Reply With Quote
Re: The sky is falling, the sky is falling
Old 08-18-2005, 08:57 PM   #96
Recycles dryer sheets
 
Join Date: May 2005
Posts: 287
Re: The sky is falling, the sky is falling

Quote:
Originally Posted by wabmester
The current market P/E is about 19. I don't think this is outrageously high, especially given today's bond yields.
I think much of the consternation is overblown. Of course, I don't see any great gains ahead, either.

Quote:
There is no reason to believe that 15 or any other number is the correct earnings multiple at which the market should sell. Two important factors influence the ratio. The first is the level of long-term interest rates. In the early 1980s, when long-term government bonds had generous double-digit yields, stocks had to fall relative to earnings to provide competitive expected returns. Thus, the price/earnings multiple for the market at that time had to be below average. And when long-term interest rates are very low, as they are today, higher P/E ratios for the market are warranted. -- Burton G. Malkiel

__________________
moghopper is offline   Reply With Quote
Re: The sky is falling, the sky is falling
Old 08-19-2005, 10:17 AM   #97
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,107
Re: The sky is falling, the sky is falling

Quote:
Originally Posted by unclemick2
The Saints play the Pats in preseason tonight. Depending on how the game goes - I may fill out my DRIP order form for BUD early rather than wait for the fall slump or expend further energy trying to understand why Buffett bought it.

And if the Pats look toooo good - I'll get the razz phone call from my sister.
Hard to believe it, but the "Aints" actually won (albeit, only a preseason scrimmage). Guess you not only delayed your BUD deal but had the opportunity make a sibling razz call of your own.

REW
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Re: The sky is falling, the sky is falling
Old 08-19-2005, 10:38 AM   #98
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2003
Location: Kansas City
Posts: 7,408
Re: The sky is falling, the sky is falling

Yep

Saints be praised - will take when I get it - locally the ad for season tickets came on during periods when they were doing good - sort of like Wall Street rolling out new products for sectors of the market 'when in season.'

May be a long season - we had to keep the regulars in against the Pat tryouts - then the Saints penalties and misques(by the regulars).

Still - hope springs eternal - will hold fire on Bud a tad longer.

I also notice Warren has dipped his toe in a little with - Tyco, Lexmark, Home Depot, and Lowes.

Heh, heh, heh. - football and hormone stocks - heck I may break down and even do a little fishing this fall.

ER is good.
__________________
unclemick is offline   Reply With Quote
Re: The sky is falling, the sky is falling
Old 08-19-2005, 10:44 AM   #99
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Re: The sky is falling, the sky is falling

Quote:
Originally Posted by Donner


Exactly my point.* Can't avoid it. You do it explicitly or implicitly every day that you hold your financial portfolio and every time you add or subtract from it.* Discounting future flows of something (earnings, dividends, sales, hits on a website, anything) is the only way I know of to put a rational price on something.* * Got a better idea?* Well, it's just the way I was taught how to do it nearly 35 years ago.* Still good theory as far as I know.* Any recent B school grads on the Board aware of a new or better way to value any earning asset?*


Donner

The biggest problems with the DDM are:

- stock buybacks are at least as popular a way to return cash to shareholders and don't enter the model

- future earnings and dividends are damned hard to accurately forecast

There are lots of ways to skin the valuation cat. Aside from the DDM, the ones that make sense to me are based on an options-type way of valuing businesses, using volatility and other inputs into a Black-Scholes type model. In any case, all of these models rely on assumptions, and you know what that means.

I have come to the conclusion that I can't really tell if the market is under or over-valued unless it is grossly so (early 2000, mid 2003, etc.). That is why I have settled for picking individual stocks. I think I can do a pretty good job of valuing individual businesses, especially smaller ones. Works for me.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Re: The sky is falling, the sky is falling
Old 08-19-2005, 01:02 PM   #100
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,385
Re: The sky is falling, the sky is falling

Quote:
Originally Posted by brewer12345
The biggest problems with the DDM are:

Stock buybacks are at least as popular a way to return cash to shareholders and don't enter the model
Not really-stock buybacks for the most part do not reduce stock outstanding, at best they only partially offset the dilution caused by excessive option grants.

Quote:
- future earnings and dividends are damned hard to accurately forecast
Dividends, and even smoothed earnings of aggregates are among the most predictible of all economic time series.

HaHa
__________________

__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha 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
Protect Yourself from the Falling Dollar ShokWaveRider FIRE and Money 8 07-05-2006 12:02 PM
Large Yellowish Object in Sky MikeD Other topics 6 10-17-2005 10:19 AM
The sky is McCulleying, the . . . . greg FIRE and Money 11 09-02-2005 10:04 AM
The dollar is falling and it can't get up. riskadverse FIRE and Money 4 05-27-2005 12:06 PM
Re: The sky is falling wabmester Other topics 28 04-21-2004 08:21 AM

 

 
All times are GMT -6. The time now is 12:49 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.