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Third biggest bubble in US history?
Old 07-17-2014, 09:47 PM   #1
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Third biggest bubble in US history?

We’re in the third biggest stock bubble in U.S. history - Brett Arends's ROI - MarketWatch

Credible article on equity valuations, referencing work done by Andrew Smithers using Tobin q valuation method.

Duh, I'll just keep my AA da same as always, yuk, yuk.
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Old 07-17-2014, 10:07 PM   #2
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I am shocked.

Ha
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Old 07-17-2014, 10:48 PM   #3
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Funny... I just came hear to post this... Studying history does have its merits.
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Old 07-17-2014, 10:57 PM   #4
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Old 07-17-2014, 11:56 PM   #5
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So we are expected to take a study produced by "Mr. Smithers" seriously?
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Old 07-18-2014, 12:25 AM   #6
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I am hoping for some double-bubble,
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Old 07-22-2014, 07:39 AM   #7
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So......are we supposed to convert everything to cash?

You hear so much talk, but no real action plans for the investor.
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Old 07-22-2014, 07:45 AM   #8
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Market Watch usually has two or three articles on their home page on both the Bull and Bear side. That was they can always have the "seerer" that predicted the next "big one" whether it is up or down.

financial porn.
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Old 07-22-2014, 09:27 AM   #9
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Question...
Why does a company buy back its' own stock?
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Old 07-22-2014, 09:35 AM   #10
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Is this like a knock knock joke ? Ok, I'll bite. Why does a company buy back it's own stock?


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Old 07-22-2014, 09:40 AM   #11
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Is this like a knock knock joke ? Ok, I'll bite. Why does a company buy back it's own stock?


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Because it was stapled to a chicken?
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Old 07-22-2014, 09:49 AM   #12
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Ermergerd, I will shift to bonds! Wait, interest rates are going to go up? I'll buy gold! Wait, gold is overvalued? I'll buy coffee! Coffee's in a bubble? I'll stick with cash. Inflation is rising?! Where's that 20-year-old FOREX trader when you need him!?!
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Old 07-22-2014, 12:42 PM   #13
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Question...
Why does a company buy back its' own stock?
Several reasons:

* They consider the stock significantly undervalued;
* They want to increase the value and EPS of remaining shares, giving shareholders more equity per share;
* They have more money than they know what to do with and don't want to pay out huge taxable dividends...
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Old 07-22-2014, 01:00 PM   #14
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* They consider the stock significantly undervalued;
* They want to increase the value and EPS of remaining shares, giving shareholders more equity per share;
* They have more money than they know what to do with and don't want to pay out huge taxable dividends...
In addition, all of the CEOs and directors have a large chunk of company stock and options to purchase more. More buyers (i.e. the repurchase) makes the stock price go up.

They also are generally rewarded for company earning more money. That is, when the EPS goes up, they get bigger bonuses.
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Old 07-22-2014, 01:36 PM   #15
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Several reasons:

* They consider the stock significantly undervalued;
* They want to increase the value and EPS of remaining shares, giving shareholders more equity per share;
* They have more money than they know what to do with and don't want to pay out huge taxable dividends...
That and look what IBM is doing with their stock.. Since 2010, they've purchased back $50Billion of stock all to try to reach their 2015 roadmap goal of $20 EPS. I think as of yesterday, they have now less than 1 billion available shares on the market.. Their lowest amount in decades.

They're doing all this even though their revenues over the last several years have been almost abysmal... For them, it's just a patch or a bandaid to try to reach their goals.

Anyway, off my soap box.
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Old 07-22-2014, 01:47 PM   #16
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In addition, all of the CEOs and directors have a large chunk of company stock and options to purchase more. More buyers (i.e. the repurchase) makes the stock price go up.

They also are generally rewarded for company earning more money. That is, when the EPS goes up, they get bigger bonuses.
That's the real reason. The top execs get a very large payback in the form of stock options when the stock goes up. The CEO at the company I work for "only" makes $2 million per year officially, but he has over $110 million in stock options!
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Old 07-22-2014, 01:58 PM   #17
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That and look what IBM is doing with their stock.. Since 2010, they've purchased back $50Billion of stock all to try to reach their 2015 roadmap goal of $20 EPS. I think as of yesterday, they have now less than 1 billion available shares on the market.. Their lowest amount in decades.

They're doing all this even though their revenues over the last several years have been almost abysmal... For them, it's just a patch or a bandaid to try to reach their goals.

Anyway, off my soap box.
The problem is that they too often do it for the wrong reasons, or just to show they are "doing something" to justify confidence in the stock's value. But every time they increase the EPS through a buyback, the better their stock options look, too.
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Old 07-22-2014, 02:02 PM   #18
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There's a word for this: noise.
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Old 07-22-2014, 02:16 PM   #19
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There's a word for this: noise.
Hopefully that noise is not the bubble popping...

I think we are in bubble territory and not just for stocks. Almost every asset class out there looks bubblicious to me. I am quite concerned about it, but I don't know of a good hiding place. So I am spreading the money around and crossing my fingers.
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Old 07-22-2014, 03:03 PM   #20
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I think we are in bubble territory and not just for stocks. Almost every asset class out there looks bubblicious to me. I am quite concerned about it, but I don't know of a good hiding place. So I am spreading the money around and crossing my fingers.
Agreed. As long as War On Savers continues and cash continues to yield 0.1% I suspect this will continue as savers and investors are desperate for *anything* that has the expectation of a higher yield.
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