|
|
01-19-2021, 04:34 PM
|
#1
|
Recycles dryer sheets
Join Date: Dec 2016
Location: New England
Posts: 356
|
The stock market highs
What in gods name is driving this market? I really don’t get these stratospheric heights we are seeing. I’m 7 years away from “needing” my money and 4 month ago I moved a huge (to me) to cash. I’m just not getting what’s happening; is there another massive crash lurking around the corner? It’s pretty well documented that businesses are not making any money!
|
|
|
|
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!
|
01-19-2021, 04:38 PM
|
#2
|
Thinks s/he gets paid by the post
Join Date: Dec 2016
Location: DC area
Posts: 2,464
|
It mostly seems to be driven by the lack of alternatives. Bonds and cash are earning negative real rates. Gold, Bitcoin, and other non-productive assets are also priced extremely high. And there is a lot of cash sitting on the sidelines to keep the party going.
https://fred.stlouisfed.org/series/WRMFSL
__________________
FI and Semi-ER March 24, 2017
Consulting to stay engaged
"All models are wrong, some are useful." - George Box
“There is always a well-known solution to every human problem: neat, plausible, and wrong.” - H.L. Mencken
|
|
|
01-19-2021, 04:49 PM
|
#3
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2016
Posts: 8,968
|
Fantastic news! I'm getting ready to sell equities to fund our lifestyle for the year!
|
|
|
01-19-2021, 04:54 PM
|
#4
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2007
Posts: 13,184
|
If I were a market timer I'd have sold off a bunch too. Fortunately I'm not, so I just keep my AA intact and roll with it.
|
|
|
01-19-2021, 04:58 PM
|
#5
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2017
Location: City
Posts: 10,308
|
Quote:
Originally Posted by Tetto
... is there another massive crash lurking around the corner? ...
|
Of course there is. If history is any guide, there always is. And the market always recovers. So the two questions are "When?" and "How long will it take?"
" There are two kinds of investors, be they large or small: Those who don't know where the market is headed, and those who don't know that they don't know." (Bill Bernstein, author and advisor)
__________________
Ignoramus et ignorabimus
|
|
|
01-19-2021, 05:02 PM
|
#6
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2008
Location: NC
Posts: 21,148
|
Quote:
Originally Posted by Tetto
What in gods name is driving this market? I really don’t get these stratospheric heights we are seeing. I’m 7 years away from “needing” my money and 4 month ago I moved a huge (to me) to cash. I’m just not getting what’s happening; is there another massive crash lurking around the corner? It’s pretty well documented that businesses are not making any money!
|
The market sets new highs time after time, that’s normal. Would you like that to stop?
There were 1,100 new all time highs between 1950 and 2014 for example. That’s 6.8% of all trading days or roughly 1 out of every 15 days the market is open that it’s closed at a new high level.
That’s not to say the market won’t sell off some day, they absolutely will at some point. There are any number of reasons for stocks to decline. But stocks don’t have to crash merely because they hit all-time highs.
It’s perfectly normal. Long term investors know that...
If new highs ever stop, then we’ve really got something to worry about...
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57
Target AA: 50% equity funds / 45% bonds / 5% cash
Target WR: Approx 1.5% Approx 20% SI (secure income, SS only)
|
|
|
01-19-2021, 05:30 PM
|
#7
|
Thinks s/he gets paid by the post
Join Date: Jun 2017
Location: Cincinnati
Posts: 1,080
|
Quote:
Originally Posted by Tetto
What in gods name is driving this market? I really don’t get these stratospheric heights we are seeing. I’m 7 years away from “needing” my money and 4 month ago I moved a huge (to me) to cash. I’m just not getting what’s happening; is there another massive crash lurking around the corner? It’s pretty well documented that businesses are not making any money!
|
I'm unsure as well as to what is driving it. Seems ahead of itself, but as someone stated, lack of alternatives probably playing a big part. Market often doesn't make sense to me, but enjoying the ride.
|
|
|
01-19-2021, 05:47 PM
|
#8
|
Recycles dryer sheets
Join Date: Dec 2016
Location: New England
Posts: 356
|
Quote:
Originally Posted by Midpack
The market sets new highs time after time, that’s normal. Would you like that to stop?
There were 1,100 new all time highs between 1950 and 2014 for example. That’s 6.8% of all trading days or roughly 1 out of every 15 days the market is open that it’s closed at a new high level.
That’s not to say the market won’t sell off some day, they absolutely will at some point. There are any number of reasons for stocks to decline. But stocks don’t have to crash merely because they hit all-time highs.
It’s perfectly normal. Long term investors know that...
If new highs ever stop, then we’ve really got something to worry about...
|
I could understand if airlines were packed with people flying all over the world spending money; if the Main Street businesses were bustling with customers, now it’s all online and how much longer can that endure? High after high, it’s very counterintuitive; and all this stellar news, people making bank in the market in the midst of a pandemic the likes which we’ve never seen before? Or so we’ve been told....
|
|
|
01-19-2021, 05:51 PM
|
#9
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2008
Location: NC
Posts: 21,148
|
Quote:
Originally Posted by Tetto
I could understand if airlines were packed with people flying all over the world spending money; if the Main Street businesses were bustling with customers, now it’s all online and how much longer can that endure? High after high, it’s very counterintuitive; and all this stellar news, people making bank in the market in the midst of a pandemic the likes which we’ve never seen before? Or so we’ve been told....
|
We’ve had historically high P/E ratios before, this isn’t the highest. The market will correct at some point, followed by new highs - that’s what we all want no? Trying to guess when has been a fools errand for 99.99% of investors.
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57
Target AA: 50% equity funds / 45% bonds / 5% cash
Target WR: Approx 1.5% Approx 20% SI (secure income, SS only)
|
|
|
01-19-2021, 06:56 PM
|
#10
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2016
Posts: 9,373
|
Quote:
Originally Posted by Midpack
The market sets new highs time after time, that’s normal. Would you like that to stop?
There were 1,100 new all time highs between 1950 and 2014 for example. That’s 6.8% of all trading days or roughly 1 out of every 15 days the market is open that it’s closed at a new high level.
That’s not to say the market won’t sell off some day, they absolutely will at some point. There are any number of reasons for stocks to decline. But stocks don’t have to crash merely because they hit all-time highs.
It’s perfectly normal. Long term investors know that...
If new highs ever stop, then we’ve really got something to worry about...
|
That was very well said, and I totally agree.
|
|
|
01-19-2021, 07:23 PM
|
#11
|
Recycles dryer sheets
Join Date: Apr 2014
Posts: 188
|
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.
|
|
|
01-19-2021, 08:12 PM
|
#12
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2016
Location: Northern Virginia
Posts: 7,515
|
The stock market discounts the future, it does not rate the present.
We pretty much know 2021 will be a huge year for job growth and earnings growth. To the market it is baked in the cake.
Add to that record low interest rates which make future earnings flows more valuable and you would expect record high market values.
THEN add $2-3 T of new stimulus.
That the markets are at historical highs relative to benchmarks is no surprise given these and other factors.
But this is not 1999.
|
|
|
01-19-2021, 08:56 PM
|
#13
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 37,931
|
Quote:
Originally Posted by CincyDave
I'm unsure as well as to what is driving it. Seems ahead of itself, but as someone stated, lack of alternatives probably playing a big part. Market often doesn't make sense to me, but enjoying the ride.
|
Way ahead of itself!
Unfortunately that sh!t can go on for years.....
So I keep rebalancing.
__________________
Retired since summer 1999.
|
|
|
01-19-2021, 09:14 PM
|
#14
|
gone traveling
Join Date: Aug 2020
Posts: 682
|
Low interest rates and a good economy. Yes, a good economy. Companies are starting to report earnings and some of the results are blowing the roof off.
Imagine when 5 million people are fully back to work, and consumer spending reflect near full employment. What will earnings and equity prices look like then?
|
|
|
01-20-2021, 04:42 AM
|
#15
|
Thinks s/he gets paid by the post
Join Date: Dec 2015
Location: Michigan
Posts: 4,939
|
Quote:
Originally Posted by Montecfo
The stock market discounts the future, it does not rate the present.
We pretty much know 2021 will be a huge year for job growth and earnings growth. To the market it is baked in the cake.
Add to that record low interest rates which make future earnings flows more valuable and you would expect record high market values.
THEN add $2-3 T of new stimulus.
That the markets are at historical highs relative to benchmarks is no surprise given these and other factors.
But this is not 1999.
|
+1
__________________
"The mountains are calling, and I must go." John Muir
|
|
|
01-20-2021, 05:17 AM
|
#16
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2008
Location: On a hill in the Pine Barrens
Posts: 9,669
|
It's a crap shoot. Picture the wealthy in a field taking aim at clay pigeons launched high in the sky. And there are your shattered investments on the ground.
🤗
|
|
|
01-20-2021, 05:47 AM
|
#17
|
Thinks s/he gets paid by the post
Join Date: Jul 2013
Posts: 1,871
|
Quote:
Originally Posted by RunningBum
If I were a market timer I'd have sold off a bunch too. Fortunately I'm not, so I just keep my AA intact and roll with it.
|
Which, of course, is what everybody should do.
|
|
|
01-20-2021, 07:13 AM
|
#18
|
Thinks s/he gets paid by the post
Join Date: May 2014
Posts: 1,390
|
I think the stock market moves a lot of the times based on sentiment. That is , a feeling that is herd based made of individual traders. At least that is a theory, and if it's true it would explain why following the news and trying to make sense out of market moves based on that news doesn't make sense. That is a theory and not something I am claiming to be true or false, I think it's true but I am not making the claim.
Of course this theory still wouldn't explain what the current bullish sentiment in the stock market is based on. That could change soon or it may not, but change at some point it certainly will.
My feeling is that we can sometimes tell why a shift in stock market sentiment occurs, but we can never keep our finger on the pulse of that sentiment for very long and that is why in theory, when sentiment changes suddenly we never know why or for how long it has changed . It also could help to explain why following the news or trying to figure out stock market moves based on events doesn't seem to make sense.
So I think it makes sense to stay invested and know your risk tolerance and act accordingly.
__________________
Understanding both the power of compound interest and the difficulty of getting it is the heart and soul of understanding a lot of things. Charlie Munger
The first rule of compounding: Never interupt it unnecessarily. Charlie Munger
|
|
|
01-20-2021, 07:46 AM
|
#19
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,204
|
Quote:
Originally Posted by Midpack
We’ve had historically high P/E ratios before, this isn’t the highest. The market will correct at some point, followed by new highs - that’s what we all want no? Trying to guess when has been a fools errand for 99.99% of investors.
|
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.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
|
|
|
01-20-2021, 08:30 AM
|
#20
|
Thinks s/he gets paid by the post
Join Date: Jul 2013
Posts: 1,871
|
Of course, these ratios are in the middle of a pandemic.
Forward looking P/E is somewhere in the mid 20s. Still high, but not nose bleed territory.
|
|
|
|
|
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
|
|
Thread Tools |
|
Display Modes |
Linear Mode
|
Posting Rules
|
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
HTML code is Off
|
|
|
|
» Recent Threads
|
|
|
|
|
|
|
|
|
|
|
|
|
» Quick Links
|
|
|