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Old 01-20-2021, 09:37 AM   #21
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Current S&P 500 P/E is ~38... historical mean/median is 15-16... so if market reverted to 120% of historical mean that would be 19... a 50% decline from current levels.
I agree with your thoughts. But it can get a lot crazier before it reverts. And with free money all over the place, I think it will get a lot crazier.

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Old 01-20-2021, 09:55 AM   #22
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To quote Bobby McFerrin "Don't Worry, Be Happy"


If it falls 50%, and you have no concern about your portofolio value at that level, it is all good.
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Old 01-20-2021, 10:03 AM   #23
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The markets are being propped up by central banks (QE, artificially low interest rates, and ever increasing debt). Stock buybacks, leverage and multiple expansion for the past 5 years are also a main driver. Risk taking and speculation is also in overdrive due to the "Fed backstop".

No idea how long it can continue. Maybe they'll start talking quadrillions in easy money instead of trillions, who knows. It's a huge Ponzi and will collapse on itself one day. Make no mistake, markets are up, but we are in no way a prosperous economy. Since 2008, we added $17T in debt. Most of America's wealth has already been transferred with things of value sold off or outsourced to other countries. Enjoy the fake prosperity while it lasts.
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Old 01-20-2021, 10:11 AM   #24
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Outside of QE and lots of new investors, there isn't any rhyme or reason that makes any sense.
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Old 01-20-2021, 10:17 AM   #25
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Outside of QE and lots of new investors, there isn't any rhyme or reason that makes any sense.
Actually, the reason was in the OP:

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4 month ago I moved a huge (to me) to cash
Pretty obvious, isn't it?
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Old 01-20-2021, 10:27 AM   #26
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Outside of QE and lots of new investors, there isn't any rhyme or reason that makes any sense.
A few trillion of fiscal stimulus? Massive earnings and jobs growth? Record low interest rates make future earnings flows more valuable (this last one I mention perhaps least we'll understood)?
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Old 01-20-2021, 10:38 AM   #27
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My perspective is that unemployment isn't anywhere near as bad as the media makes it sound. Right now it's 6.7%. In what scenario is that bad? We are only 3.5% off from pre-pandemic levels. The small blip it was bumped to 14.8%, I think most businesses had an inventory they worked off. I've worked in manufacturing and it was routine to lay off after building up inventory as a way to reduce expenses and they did it on purpose; build more stuff than they could sell now, lay off to cut the expenses as they sold off the excess. That is a proven successful business model.
Personally, I can not understand why food lines are so huge with an unemployment rate this low. There weren't from 2008 to 2014 when unemployment was above our current level, so why now?
I also think that because people are unable to spend on entertainment and independent restaurants, they are instead spending money on durable goods; fixing up their homes, upgrading appliances, even stocking up on essential supplies. That's a diversion of money from businesses that are not listed on the stock exchange to those that are.
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Old 01-20-2021, 10:55 AM   #28
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So I keep rebalancing.

Same here. Just finished up getting back to nominal.
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Old 01-20-2021, 11:43 AM   #29
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A few trillion of fiscal stimulus? Massive earnings and jobs growth? Record low interest rates make future earnings flows more valuable (this last one I mention perhaps least we'll understood)?
And I could cite 10 reasons why is should be at record lows.
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Old 01-20-2021, 12:07 PM   #30
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My perspective is that unemployment isn't anywhere near as bad as the media makes it sound. Right now it's 6.7%. ...

Personally, I can not understand why food lines are so huge with an unemployment rate this low. ...
I think the food lines are more indicative of the hurt out there than the 6.7% unemployment rate... let's face it.. people are not going to wait in long lines for hours for free groceries unless they have no other choice. Due to the pandemic, a lot of people have temporarily withdrawn from the workforce and are not looking for jobs since those jobs would put them in peril... so the denominator of the unemployment rate is temporarily understated. Also, many small business employers are gone and those jobs are not coming back or if they do will come back slowly... look at teh number of empty storefronts... there are lots of them.

We will undoubtedly see some pent up demand once the virus subsides from those on the upper right side of the K recovery... but the lower right side of the K recovery will take a lot longer.... and if pre-covid the economy was 70% consumer spending then I think that lower right side of the K will hold things down for a long time to come.
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Old 01-20-2021, 12:16 PM   #31
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Real unemployment, if measured properly, is over 25%. If you want to believe the BLS and the MSM fantasy numbers, that's fine.

Alternate Unemployment Charts
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Old 01-20-2021, 12:38 PM   #32
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I think the food lines are more indicative of the hurt out there than the 6.7% unemployment rate... let's face it.. people are not going to wait in long lines for hours for free groceries unless they have no other choice.
This x1000. I volunteer on occasion at a food pantry that is in a rural area. In the last 6 months, the number of participants has more than tripled. A little over a year ago, we were able to let folks pick pretty much anything they would like off the shelves. Today, they have to be rationed. There are a LOT of people hurting out there and you don't have to look to far to see that. I think a lot of people live in a bubble.
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Old 01-20-2021, 12:57 PM   #33
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Tetto. Agree with you. What's happening? Being retired. I just cashed out IRA funds.
a couple of weeks ago.

If I was younger, 20-30yr. Working. Job safe. I'd just let it ride!

As, Warren Buffet said. Sell when people are buying, and buy when people are crying.
Very simple approach. If you can "overcome" humane nature. Which does the
exact opposite.
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Old 01-20-2021, 01:11 PM   #34
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Tetto. Agree with you. What's happening? Being retired. I just cashed out IRA funds.
a couple of weeks ago.

If I was younger, 20-30yr. Working. Job safe. I'd just let it ride!

As, Warren Buffet said. Sell when people are buying, and buy when people are crying.
Very simple approach. If you can "overcome" humane nature. Which does the
exact opposite.

I think the human nature aspect has a lot to do with current market as well as the previously discussed: lack of alternatives, market is future looking, low inflation rate, gov't borrowing and stimulus money, etc. The market does seem to react (over react?) to momentum. Right now there is a lot of upward momentum and FOMO, plus the stories of the high rising stocks that seem to make the news which feeds FOMO more. People want to join in, becomes a supply and demand issue. Therefore rising tide lifts all ships type result. Sure not all stocks rise, but we are talking about overall market here and not individual stocks.
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Old 01-20-2021, 01:56 PM   #35
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I think the food lines are more indicative of the hurt out there than the 6.7% unemployment rate... let's face it.. people are not going to wait in long lines for hours for free groceries unless they have no other choice. Due to the pandemic, a lot of people have temporarily withdrawn from the workforce and are not looking for jobs since those jobs would put them in peril... so the denominator of the unemployment rate is temporarily understated. Also, many small business employers are gone and those jobs are not coming back or if they do will come back slowly... look at teh number of empty storefronts... there are lots of them.

We will undoubtedly see some pent up demand once the virus subsides from those on the upper right side of the K recovery... but the lower right side of the K recovery will take a lot longer.... and if pre-covid the economy was 70% consumer spending then I think that lower right side of the K will hold things down for a long time to come.
Good points made. Also there are quite few out there that got screwed over with the illusion that being a 1099 employee somehow bypassed a lot of taxes. Now many, particularly in the construction and service industries are nearly indentured servants. Pay has shrunk, yet they can't get unemployment.

My Mr Bigshot neighbor previously bragged about having 40 employees. When the SHTF last Spring he was at the trough complaining that since he really didn't have employees he was getting cheated out of gov't stimulus $. All "employees" were 1099's with no benefits. I also suspect under the table as well. Wink and nod if you know what I mean.

However these same workers also don't need to pay the rent or student loans. Maybe it will average out, but I tend to agree that it will be a significant drag down the road. Some will win and others lose.
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Old 01-20-2021, 03:20 PM   #36
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Well, you could invest in international stocks. The Vanguard Total International Index has a trailing PE of 19.8. But, International has underperformed for years. Don't ask me how I know.
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Old 01-20-2021, 03:40 PM   #37
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I have been investing consistently since 1998. I chart my growth and comparing January 1 with the following January 1 for each of the past 23 years I have only experienced two (2) negative years. Those two (2) down years were 2008 and 2018.

That means 1998, 1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2019 and 2020 (21 years) were all positive investment years for me.

Point being, trying to time the market can hurt the long term growth of your portfolio.
My experience is similar to yours. I started getting serious about investing in 1998, when I finally got a bunch of debt from a bad divorce paid off. I've had three years, where finished out lower at the end of the year than the start. Those were 2002, 2008, and 2018. However, if you count the years where I had a negative return for the year, I have to include 2000, 2001, and 2011. It's just that in those years, the additional amount I invested was greater than the loss.
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Old 01-20-2021, 04:19 PM   #38
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And I could cite 10 reasons why is should be at record lows.
I do not doubt that. But I was trying to help you understand the rhyme and the reason from the perspective of the market, to.respond to your statement.
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Old 01-20-2021, 04:36 PM   #39
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My perspective is....woohoo, I'm gonna be rich! Who doesn't like to see there investments making more money in a day than they make in a month?

But seriously, there is nowhere else to put money at the moment, and being all in has worked, over the long run, every time it has been tried.
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Old 01-20-2021, 06:29 PM   #40
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The runup in the stock market from election day to inauguration day (today) was the largest for any incoming president since... Herbert Hoover! Didn't seem to help him much.

(not trying to e political, I just thought that was funny)
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