I'm up 7.9% since the U.S. Presidential Election--who woulda thunk

[supernova72]

Took a snapshot on November 9th and just looked a my personal performance through April 4th 2017. Up 7.9%. Not making a political statement but I'm sure glad I stayed the course vs. a panic attack. I was expecting a downturn of sorts. Asset Allocation is 70/30. Cheers.

 

[JohnnyBGoode]

I'm with you supernova72. Putting aside specific politics, I thought we were headed for a major downward correction in November. But I stayed the course and was "rewarded". Good lesson reinforced!

 

[GravitySucks]

So with all the press about the pending doom of the US economy that was certain to follow the election you didn't cash out and stock up on gold and ammo. Me too.

 

[Midpack]

Anyone got a Ten Foot Pole ?

 

[supernova72]

So with all the press about the pending doom of the US economy that was certain to follow the election you didn't cash out and stock up on gold and ammo. Me too.

Ha. No guns buried in the back yard here! I did make a slight strategic change during this timeframe of moving out of bonds to my 401K offered Stable Value fund----but that was more to do with thinking rates would rise and my SV fund returns 2.1%. So I kind of lucked out there.

If I had a nickel for every doomsday story I read about financial collapse I would have ER'd 20 years ago!

 

[Big_Hitter]

you know me - I love poles

 

[W2R]

Anyone got a Ten Foot Pole ?

I wouldn't touch it with a 10 foot pole, but look! I found these on sale:

​

 

[laurence]

I know, I know, market timing is dirty, but at this point isn't the P/E ratio getting scary? I'm happy for the returns, but over the last 18 months the market has really been on a tear.

 

[joeea]

I know, I know, market timing is dirty, but at this point isn't the P/E ratio getting scary?

I'm not scared. Your mileage may vary.

I'm happy for the returns, but over the last 18 months the market has really been on a tear.

I can't remember how long I've been hearing "the P/E ratio is too high", "we are overdue for a crash", "time to cash out". It's certainly been at least 5 years.

Stay the course, or change your asset allocation until you are comfortable for the long haul. Ignore the noise.

 

[supernova72]

I wouldn't touch it with a 10 foot pole, but look! I found these on sale:

​

That's a good one. Last time I saw a pole that tall someone was swinging from it...Ha. Reno NV 2013.

 

[exnavynuke]

I know, I know, market timing is dirty, but at this point isn't the P/E ratio getting scary? I'm happy for the returns, but over the last 18 months the market has really been on a tear.

"The market can stay irrational longer than you can stay solvent" is a great saying.

Then there's data, like 6 consecutive years with P/E ratios of the market of 24 or higher (late 90's to tech bubble, we're around 26-27 currently) which says trying to time it based on P/E doesn't look like a good idea. Or the fact that just because average historic P/E ratios are lower than current ratios doesn't mean that 50 years from now the average historic P/E ratios won't be higher than today's P/E ratio.

CAPE is an even more flawed way to try and determine if the market is overvalued imo.

 

[MichaelB]

CAPE is an even more flawed way to try and determine if the market is overvalued imo.

Shiller PE10 is a pretty effective way to estimate future returns. It sheds no light on volatility, which matters, or timing, which also matters.

 

[ERD50]

I know, I know, market timing is dirty, but at this point isn't the P/E ratio getting scary? ....

It would be interesting do do a search on this, but it seems to me some established members of this forum have been calling out the high P/E ratio for 4-5 years now? I'm sure they will be right someday, but what do they miss in the interim?

I'm always reminded that I knew the market was getting way over-valued in the 90's big bull run, and I was right. However, I was fully convinced of that by 1997, and the market still had a big rise left in it, and it didn't drop near that point until March 2009 (look at total return, not just NAV). How would I pick a place to get back in? I'd have to be prescient/lucky to pick March 2009 exactly. Maybe I'd still be out? Maybe I'd get back in at a higher point (sell low - buy high)?

I would have missed:

1997 - 33.36%
1998 - 28.58%
1999 - 21.04%

Nope, I'm staying the course as well.

-ERD50

 

[GravitySucks]

I will admit to planning on buying another rung to the bond ladder using the recent gains in the equities portion of the portfolio, but I'll lie to myself calling it rebalancing instead of market timing.

 

[RobLJ]

I may skim gains past this years 4.4% into an intermediate treasury bond fund (I am underallocated to this area), as insurance against a slump, which would move my allocation towards the minimum stock percentage. If the market drops 10%, I usually invest cash or some bond funds back into stocks. I have a 6% range for stocks before triggering a rebalance but when the market is on a prolonged tear, I often do some rebalancing before the trigger is hit. Sometimes the market can go up faster than I can rebalance since I don't like to do it more than once or twice a year. (I haven't done anything the last two years).

 

[joeea]

I will admit to planning on buying another rung to the bond ladder using the recent gains in the equities portion of the portfolio, but I'll lie to myself calling it rebalancing instead of market timing.

Whatever it takes to be able to sleep at night...

 

[FIREd]

Net worth is up yuge since November.

 

[joeea]

Net worth is up yuge since November.

Bigly!

 

[NW-Bound]

I consider this a collective "Wh***" thread. Tomorrow, I will start selling covered calls more actively.

Selling covered calls is for cowardly bears, which I am one.

 

[exnavynuke]

Shiller PE10 is a pretty effective way to estimate future returns. It sheds no light on volatility, which matters, or timing, which also matters.

I think it's less effective when "outlier" years are present (such as right now where the outlier "great recession" is still part of it). Given the equivalent market conditions 2 years from now, the PE10 would look a lot more attractive right?

 

[supernova72]

It would be interesting do do a search on this, but it seems to me some established members of this forum have been calling out the high P/E ratio for 4-5 years now? I'm sure they will be right someday, but what do they miss in the interim?



I'm always reminded that I knew the market was getting way over-valued in the 90's big bull run, and I was right. However, I was fully convinced of that by 1997, and the market still had a big rise left in it, and it didn't drop near that point until March 2009 (look at total return, not just NAV). How would I pick a place to get back in? I'd have to be prescient/lucky to pick March 2009 exactly. Maybe I'd still be out? Maybe I'd get back in at a higher point (sell low - buy high)?



I would have missed:



1997 - 33.36%

1998 - 28.58%

1999 - 21.04%



Nope, I'm staying the course as well.



-ERD50

I like it! Stay the course [emoji41]

 

[audreyh1]

I think it's less effective when "outlier" years are present (such as right now where the outlier "great recession" is still part of it). Given the equivalent market conditions 2 years from now, the PE10 would look a lot more attractive right?

We'll see. I'm interested to see this too.

 

[W2R]

I consider this a collective "Wh***" thread. Tomorrow, I will start selling covered calls more actively.

Selling covered calls is for cowardly bears, which I am one.

I am not feeling too "Wh***"-ish today. I just spent $4800 on dental implants, so my stash has gone down compared with two weeks ago.

On the bright side, it's nice to have the money for quality dental surgery.

 

[laurence]

It feels like greater fool territory now, but I would never sell, I get that I need to stay the course with my existing assets or potentially miss out. But DW and I are not putting anything in the market past maxing the 401ks+company match this year (about 50k) and instead putting our extra money on paying off our rental house. We'll have it paid off in four years and then have a nice income stream from it. Can't bear to put it on the primary house though, at 3.5%

 

[samclem]

I know, I know, market timing is dirty, but at this point isn't the P/E ratio getting scary? I'm happy for the returns, but over the last 18 months the market has really been on a tear.

There's something to be said for using P/E10 to adjust allocations. Doing so can leave you on the "wrong" side of the market for a long time (a decade or more) and would probably be career suicide for a funds manager, but it has historically produced better results over the long term and better rewards for the risk taken (higher Sharpe ratios). I would not use P/E10 as a binary in-out signal to sell all stocks/go 100% stocks, but using it to adjust your stock allocation up or down 10-15% from a central value seems to have merit.
We had a good discussion on this here, with links to papers. Of course, it might not work at all in the future.

BTW: When stocks are at very high valuations, historically govt bonds have been a better "counterweight" than corporate bonds. IIRC, the reason why is that when stocks take a big tumble from a height, the markets get spooked and there's a rush to quality with govt bonds getting bid up more than corporate ones.