Why I believe we are about to embark on a historic bull market run

[Closet_Gamer]

It's a self-repairing process but the concern is based on the false premise that there is a risk the price discovery will stop happening. It won't, because passive investors' activity will never dominate trading.

If price discovery does stop happening though, then the other side of that coin is that mispricing is occurring. (Blind, ignorant, buyers, etc.) The whole premise of stock picking is to take advantage of mispricing, so the long knives will be right there when needed. Ben Graham will be back in vogue.

This.

Passive investing is taking a free ride on the price discovery process. To the extent price discover weakens, there will be excess returns available and people will move in to capture them. I don't know the math, but I suspect that if even 1 or 2% of trades were "active", the market would remain pretty efficient and if not would quickly rebound back to the point of price efficiency.

The fact that we still see big moves in individual stocks in response to news (good or bad) and that other specific stock's prices hold based on sentiment about long term potential tells me that price discovery is alive and well.

Finally, while I don't agree with the OP, I do appreciate the creation of a fun thread!

 

[Oz investor]

Whether ya agree with RM or not, he's at least taken a stance and shared that and reason why. He's not always right, not always wrong either.

+1

my percentage of correct guesses is terrible , but the few i do get correct have been stellar ( my best has been 18,000% gain PLUS divs. since i bought them in 2011 ) what i am much better at is taking some of those outlandish gains and putting them somewhere that can grow nicely as well ( and pay divs )

 

[Oz investor]

***Finally, while I don't agree with the OP, I do appreciate the creation of a fun thread! ***

+ 1

obviously if the OP is correct with another 2-3 or even 5 year leg higher , i will sigh and add it to my list of failed predictions .( remember i am 90% plus in stocks i should be his biggest supporter )

and isn't discussion what this forum is all about ??

 

[target2019]

I agree. I don't understand all the negativity towards his posts.

Negativity towards Running_Man posts might be caused by a few things:
1. It's frustrating to hear arguments against your indexing beliefs. RM believes in trading according to his rules. Some larger number of readers on this forum are equally convinced in their index approach.
2. He has lucid responses to posts, which seems to confound certain respondents.
3. We don't know nuthin'. Just threw this one in as I think every good response makes 3 points.

I prefer to stay at a higher level of analysis, since I don't know enough to go deeper. I'm no pundit, but I believe we are at a point in an economic cycle similar to late 90's. I know there is hope that humans are making decisions at the Fed and elsewhere to keep this thing going. I hope this happens, but don't have a bet on it. I'm gonna hold to indexing (at 50/50 AA approximately).

 

[nancyfrank232]

All I know is that the markets laugh at these kinds of predictions and analysis

Treat all the stuff in this thread as entertainment and you’re good

 

[Dawg52]

All I know is that the markets laugh at these kinds of predictions and analysis

Treat all the stuff in this thread as entertainment and you’re good

Reading doom & gloom and then the complete opposite from the same poster within a two year period does make for an entertaining thread.

 

[nancyfrank232]

Reading doom & gloom and then the complete opposite from the same poster within a two year period does make for an entertaining thread.

Without manic participants in the markets would definitely make it impossible to do well

 

[BeachOrCity]

A stopped clock is right twice a day...

This is just gambling and as long as one is careful to only gamble with Funds they are ok losing, no major harm done.

Merry Christmas everyone.

 

[MichaelB]

Let’s remember to comment on the ideas and not the people.

 

[HFWR]

For my purposes, indexing works fine. My goal was to build assets that pay dividends and have the potential for growth/cap gains. Did that, and so far it’s w*rking just hunky. Might go in crapper at some point, but I’ll have lots of company...

Gave up trading, and trying to “outsmart” Wall Street, after the dot bomb era.

 

[Lsbcal]

...
7) Once the passive market achieves more than 50% of the market, the lack of active managers is going to increasingly reduce the liquidity to the market and move will become explosive, by the end 10-20 percent increase in a month will be seen. I expect something along the lines of a 30-35 percent gain followed by a 35-40 percent gain followed by a 90-100 percent gain will occur in stocks.
...

I went searching for the amount of passive funds in the market and came up with a Forbes article about this sort of thing:

Vanguard founder John Bogle provided a breakdown on index ownership in his latest book:

Yes, U.S. index funds have grown to huge size, with their holdings of U.S. stocks doubling from 3.3% of their total market value in 2002, to 6.8% in 2009, and then doubling again to an estimated 14% in 2018. Other mutual funds now hold an estimated 20% of corporate shares, bringing the mutual fund total to almost 35%, the nation’s most dominant single holder of common stocks.

So, index funds represent less than 15% of share ownership in public companies. And, according to former Vanguard CEO Bill McNabb, indexing in stocks and bonds globally represents less than 5% of global assets.

link: https://fortune.com/2019/09/14/passive-investing-stock-market-bubble-etfs/

So we seem to be a long way from the 50% point for passive indexes in the stock market.

But I still like the optimistic path your thread takes us Running_Man.

 

[Chuckanut]

Well its no news, I guess, to observe that you have a wild imagination.

Gentlemen, RB, OS, and a few others, I have great respect for all of you and take what you write seriously. But, it's almost Christmas. How about some Peace on Earth and Goodwill to All.

 

[NW-Bound]

Gee, people take things too seriously.

The OP has gone on a limb to state his thesis. He is not our financial advisor and will not invest our money in this manner. In fact, he himself will bet only a small amount on this.

Relax. You would think people are discussing politics or religions here or something.

I myself have been watching youtube videos on how to carve a whole leg of jamon. It's not as easy as it seems. Don't spend all your time arguing about investment choices and money.

 

[Dtail]

Gee, people take things too seriously.

The OP has gone on a limb to state his thesis. He is not our financial advisor and will not invest our money in this manner. In fact, he himself will bet only a small amount on this.

Relax. You would think people are discussing politics or religions here or something.

I myself have been watching youtube videos on how to carve a whole leg of jamon. It's not as easy as it seems. Don't spend all your time arguing about investment choices and money.

Gentlemen, RB, OS, and a few others, I have great respect for all of you and take what you write seriously. But, it's almost Christmas. How about some Peace on Earth and Goodwill to All.

+1 and amen to both posts.
Perhaps some jamon in 2019. The pictures all look delicious.

 

[W2R]

Let’s remember to comment on the ideas and not the people.

I hadn't been reading this thread until last night, when I read the whole thing and was shocked at all the mean posts. You'd think the forum was just a bunch of crabby old frustrated unwashed drunks instead of our usual brilliant, talented, experienced (and undoubtedly handsome, too!) guys.

Seriously, there's a reason why I come to this forum every day, and that reason is the quality of the posts. I learn a lot here about the market and such topics, and I am not especially interested in reading bad things about any of you.

Relax. You would think people are discussing politics or religions here or something.

That too! I mean really, what does any of this matter. We can't influence the market so we might as well just read the thread and occasionally submit a tactful, cordial comment.

Gentlemen, RB, OS, and a few others, I have great respect for all of you and take what you write seriously. But, it's almost Christmas. How about some Peace on Earth and Goodwill to All.

Best comment yet.

 

[Lsbcal]

OK, I highlighted my positive end note in that last post.

Happy holidays and wishing you all good returns in 2020.

 

[Lsbcal]

I hadn't been reading this thread until last night, and was shocked at all the mean posts. You'd think the forum was just a bunch of crabby old frustrated unwashed drunks instead of our usual brilliant, talented, experienced (and undoubtedly handsome, too!) guys.
...

Well there are a few of those negative types here:

 

[CSdot]

Haven't read the entire thread, which appears to have gotten heated, but I clicked on the thread because I was having the opposite feeling this morning when I saw my results for 2019. Rather than exuberance (irrational or otherwise), I was wondering if the market might be a little too frothy right now.

 

[JJpop]

Wow

I bought back in on April 4th as I reported in that same thread:
http://www.early-retirement.org/forums/f44/sold-all-my-stocks-90933-15.html#post2034060
I then in October of 2019 bought 1% of my portfolio in S&P500 puts as detailed here:
http://www.early-retirement.org/forums/f44/so-i-bought-s-and-p-500-2500-puts-94093.html

Which I sold on December 24,26 and 30th
http://www.early-retirement.org/forums/f44/so-i-bought-s-and-p-500-2500-puts-94093-12.html#post2162942

With all due respect,this 2018 posts 100 pct eliminates any credibility.Honestly,you have no idea about what the market will do as you proved then and are proving now.

 

[2177V]

The financial markets are generally unpredictable. George Soros

I agree. Financial markets are based on fear versus greed. Human psychology is involved so this is why the market is generally difficult to predict. There will ALWAYS be people who are bullish and people who is bearish. I am not gonna counter argue Running Man's bullish comment except Running Man's already stated that his AA is not 100% stock...which I find amusing.

I am bearish...so I have switched from 60/40 AA to 100% treasury bonds last summer. My financial objective has changed to an asset preservation strategy simply because I already made enough money in the 10 years bull market to live a comfortable retirement. If my life expectancy is 100+ years, then my strategy would be different. For now, I want to enjoy my life and I read these comments for entertainment.

My wife is 20 years younger than me and she just opened a Roth IRA so I set up her AA as 50% treasury bonds and 50% Vanguard Wellington. She can only contribute $6K per year and she is conservative by nature.

My point and my opinion: There is a good time to be aggressive and a good time to be conservative. This is not a good time to be aggressive with the $22 trillion dollar US deficient, European, Japan's, and Emerging markets are in a funk, some of the US LEI are declining and the yield curve has inverted this year. I prefer to make decisions on data and not other people's opinions and people's speculation of a bear or bull market.

 

[almost there]

When folks think this, (orig post) it's time to exit the markets. Lol lol.

 

[indiajust]

Not exactly a panic stricken crossing point, 2024.

Add in the Fed money printing machine and it may get interesting. Just looked at Weimar germany stock market. Wild explosion of real assets as money ruined by central bank. Even so, the stock market compensated fairly well for the currency destruction, up until the final year or so when the currency went to zero. Markets abandoned the mark and restated vs gold I think.

https://www.wealthmanagement.com/mutual-funds/slow-demise-mutual-funds, chart about halfway through.

 

[HFWR]

I’ve no idea, and for now am at 60/30/10, though I do see things that could, and maybe should, throw a wrench in the works.

As some CNBC talking head reiterated recently, the business cycle hasn’t been repealed. Here in DFW, land that until recently was vacant is now covered with apartments, motels, restaurants, and shopping centers. McMansions are going up left and right. I wonder how much of this new development will wither under higher rates and slower growth?

With big deficits and easy money, things are indeed going well, but weren’t those things considered undesirable not so long ago? Add to that political unrest/uncertainty, trade issues, and just the human propensity to “screw the pooch”...

 

[audreyh1]

I went searching for the amount of passive funds in the market and came up with a Forbes article about this sort of thing:



link: https://fortune.com/2019/09/14/passive-investing-stock-market-bubble-etfs/

So we seem to be a long way from the 50% point for passive indexes in the stock market.

I read an article that indicated over 70% of the US stock market was not mutual funds or etfs active and passive combined. https://thefinancialbodyguard.com/index-funds-are-they-really-a-cause-for-concern/

 

[unclemick]

So now that I let (since 2006) those computers auto re balance my 'passive funds' and my male hormones haven't picked a few good stocks the civil war among my relatives will be Chiefs, Pats, Seahawks or Saint's.

Personally me thinks the Market's too high but I let age (76) rather than wisdom put it's thumb on the scale. 40/60.

heh heh heh -