Third biggest bubble in US history?

[gcgang]

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.

 

[haha]

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

Duh, I'll just keep my AA da same as always, yuk, yuk.

I am shocked.

Ha

 

[WinterHaven]

Funny... I just came hear to post this... Studying history does have its merits.

 

[Onward]

Don't just do something.... Stand there!

 

[brewer12345]

So we are expected to take a study produced by "Mr. Smithers" seriously?

 

[heeyy_joe]

I am hoping for some double-bubble,

 

[Floridatennisplayer]

So......are we supposed to convert everything to cash?

You hear so much talk, but no real action plans for the investor.

 

[2B]

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.

 

[imoldernu]

Question...
Why does a company buy back its' own stock?

 

[gcgang]

Is this like a knock knock joke ? Ok, I'll bite. Why does a company buy back it's own stock?


Sent from my iPhone using Early Retirement Forum

 

[Fermion]

Is this like a knock knock joke ? Ok, I'll bite. Why does a company buy back it's own stock?


Sent from my iPhone using Early Retirement Forum

Because it was stapled to a chicken?

 

[nash031]

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

Duh, I'll just keep my AA da same as always, yuk, yuk.

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!?!

 

[ziggy29]

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...

 

[Senator]

* 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.

 

[WinterHaven]

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.

 

[skyvue]

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!

 

[ziggy29]

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.

 

[Options]

There's a word for this: noise.

 

[FIREd]

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.

 

[ziggy29]

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.

 

[M Paquette]

Meh.

M... E... H...

Meh.

I've seen papers, good academic stuff, proclaiming the predictive value of Tobin's 'q' before. Ed Tower wrote a good one in 2011. One of his models, including momentum, tried for a near term forecast, predicting an 18% drop in real wealth over the four years from the end of 2010 from investing in the S&P 500 index.

This does not appear to have happened.

Tobin’s Q Versus CAPE Versus CAPER: Predicting Stock Market Returns Using Fundamentals and Momentum by Edward Tower :: SSRN

I'm pretty sure there isn't a single Magic Bullet which will forecast the future with any sort of accuracy. If the stock market were to suddenly become such a deterministic engine, there would be no sane reason for speculation or trading, and stocks would become the sedate, predictable asset for those weary of the thrills and volatility of the bond market.

 

[ziggy29]

I'm pretty sure there isn't a single Magic Bullet which will forecast the future with any sort of accuracy. If the stock market were to suddenly become such a deterministic engine, there would be no sane reason for speculation or trading, and stocks would become the sedate, predictable asset for those weary of the thrills and volatility of the bond market.

Yep -- if there were no risk in stocks, there would be no reward for assuming the risk in the form of higher expected long-term returns. That seems to be lost on some people who think there's some "free lunch" way to know when it's time to reliably get in and get out.