So much bullish sentiment

[Montecfo]

Why would that be? Would you have expected a roaring 20s boom in January 2020? If not, then why in January 2021? At best, and I really don't believe this, if there were 3/4 of a year of pent up demand that wouldn't seem to cause a long boom.

I stated many of the reasons in this thread. I was not saying it would last a decade if that is what you got from it. That's why I said "early 20s"

Jan 2020 and Jan 2021 could hardly be more different. In Jan 2020 we did not have 0 percent interest pledged to continue for years. We also did not have trillions in fiscal stimulus. We were not reshoring supply chains in Jan 2020. In that month we also did not care where our drugs were manufactured. These are only some examples. .The changes to our economy since last January have been dramatic.

But feel free to craft your own analogies. There is nothing at stake here.

 

[DrRoy]

Interest rates 20 years ago were about 400% higher than they are today. What effect does that have on asset prices?

Earnings (and dividends) are valued higher when interest rates are lower.

 

[Ronstar]

Earnings (and dividends) are valued higher when interest rates are lower.

When I was in business, our company earnings were a lot higher when interest rates were lower.

1 because our most of our customer base (real estate developers) was better off due to lower rates so that we generated more earnings from increased sales.

2 because the cost of our business debt was lower so our earnings were higher.

Generally the health of most business is better when rates are low, so equities should do better when rates are low.

 

[JoeWras]

I miss read "Bullish" [emoji6]

Came her to say that! Glad I'm not the only one.

Things are out of whack. So much cash in the system. It will be an adventure to see how this settles out.

 

[Stormy Kromer]

I don't know what's going to happen any more than I can predict the weather for the 4th of July next summer.


I'm just glad I'm here to see it and get to participate with my diversified little portfolio. We've been through a lot of bad weather over the last 35 years and enjoy it when its nice out. But, we're ready for some rain once in a while.


Enjoy the sunny days, but remember to pack your raincoat.

 

[ExFlyBoy5]

I don't know what's going to happen any more than I can predict the weather for the 4th of July next summer.


I'm just glad I'm here to see it and get to participate with my diversified little portfolio. We've been through a lot of bad weather over the last 35 years and enjoy it when its nice out. But, we're ready for some rain once in a while.


Enjoy the sunny days, but remember to pack your raincoat.

This x1000. It is impossible to determine what the market is going to do. I think it about pointless to "look at the past" because how investments are made (and companies are run) have never been like what we see today. The number of investors will continue to climb and the days of calling up your broker (or even pit trading) are largely over with. As they say at WDW...

"Hello and welcome aboard; Please keep you arms inside the vehicle at all times and enjoy the ride."

 

[eytonxav]

I think two things are driving the market right now, potential for more stimulus soon and outlook for easing relationship with China.

 

[ExFlyBoy5]

I think two things are driving the market right now, potential for more stimulus soon and outlook for easing relationship with China.

While I don't disagree with you, I would also point out that there are 100+ reasons why it should be cratering. But yet here we are...

 

[Vincenzo Corleone]

I don't know what's going to happen any more than I can predict the weather for the 4th of July next summer.


I'm just glad I'm here to see it and get to participate with my diversified little portfolio. We've been through a lot of bad weather over the last 35 years and enjoy it when its nice out. But, we're ready for some rain once in a while.


Enjoy the sunny days, but remember to pack your raincoat.

+1

I had taken a lot of our chips off the table in mid-late February because of Covid. My objective, I reasoned, was risk management, not to make the most money possible. I was convinced Covid was going to cause a severe downturn until a vaccine was developed. When the market tanked in March, I was feeling good about my decision. But then, as you know, the market quickly bounced back. As I waited for the "real" downturn, we were making new personal highs in our NW, despite having taken a lot of money offline (it helped that my wife still works).

I put the chips I had taken offline back on the table when a vaccine was announced, realizing that I was wrong* to mess with it in the first place. The Fed and Congress have managed to prop things up. What the consequences of this will be - if any, I don't know.

I have anxiety about the future, but we have around six years of expenses in cash that I think should allow us to weather whatever storm may arise. In the meantime, the bulk of our money is enjoying this ride.

I promised my wife to not impulsively mess with our investments again.

* Edited to add: But I wonder if I was really "wrong". After all, my objective was "risk management". And I did rest easy after decreasing our stock allocation. I suppose that objective was realized. <shrug>The jury is still out.

 

[Badger]

I'll leave all the fancy calculations, historical backgound, speculations, and crystal balls to those more academically astute than I. I'm just not buying into the Bull(ishness) at the moment. I have quite a bit (for me) in cash yet I still wind up with more at the end of the year than what it started. All the dividends from tIRAs and taxable accounts have been/are swept into MM accounts. If there is an opportunity for "buys" in the next year or two maybe I will snatch up some more stock. But I'm not sure what the point would be at my stage in life.



Cheers!

 

[GravitySucks]

Between this thread and the FOMO thread I finally got of my butt to start my rebalance.

Thanks folks!

 

[NW-Bound]

Not selling anything yet, because my stock AA at 57% is low compared to the 70-80% I usually carry.

I am very leery of the crazy stocks with stratospheric P/E, and even some with no products, no sales let alone any earnings. When they crash, the effect may spill over to my "innocent" stocks.

I will continue to monitor closely to decide what to do when people start to cry out loud for losing money in the above hot stocks.

 

[chassis]

What happens to equity markets when this chart returns to its pre-pandemic level?

 

[Lsbcal]

Not selling anything yet, because my stock AA at 57% is low compared to the 70-80% I usually carry.

I am very leery of the crazy stocks with stratospheric P/E, and even some with no products, no sales let alone any earnings. When they crash, the effect may spill over to my "innocent" stocks.

I will continue to monitor closely to decide what to do when people start to cry out loud for losing money in the above hot stocks.

And here I was so bullish until I saw this version of the Etrade baby. LOL!!

Seriously I am bullish and at max allocations in stocks. Have been for some months now.

 

[GravitySucks]

What happens to equity markets when this chart returns to its pre-pandemic level?

Maybe it won't. Quite possible that a one income family might become more common. Or maybe one full time and one part time.
Less pre-made food, less lawn and cleaning service, less child care outsourced. A few people have realized they've been taking home less than they thought.

 

[monte1022]

I wish our long term plans included more "secure" income streams such as a decent pensions. At 50/50, we are now at the lowest stock allocation in our lives. The portfolio and 2xSS will be the only things keeping DW and yours truly out of the poorhouse. The plan works here, but having baked a nice retirement cake, I really really wanted a thick layer of icing. If we have a significant correction before I give up w*rk, then we may consider 60/40.

Having lost everything in the dot.com crash, I never ever again want to be put into the position of telling DW that we are broke. In 2004 I restarted the "plan" and this time I used common sense. If financial devastation comes our way again then it WILL NOT be because I did not educate myself and practice risk management.

Today we are at 2.9m. When we drop 50% again I hope to refer back to this post and smile because I took steps to avoid the despair felt during my first failed attempt at financial freedom.

 

[ownyourfuture]

That E*TRADE commercial reminded me of a clip from South Park.

 

[RobLJ]

I'm watching our stock allocation creep up since March to now 47 (I had diminished it to 42% in Feb in fear of a COVID crash--and 39% in March when I put some of cash back into equities to get back up to 42%; it may have hit 37% but I was too afraid to look at the bottom), and in fact since I'm more bullish on international/Asian (due purely to value), I stuck 1% in international and probably will do so again.

At 55% I'll rebalance to 52% or thereabouts (if we get there) since I qualify for SS and can withdraw from DW's IRAs next year, so I'm a lot less concerned about SORR than I was the last 5 years. If we have a 5-10% downturn, I'll probably stick some cash in small caps since they seem more of a value.


I have no clue on interest rates/inflation since I expected a burst since '09 and we really haven't seen it.

 

[Lsbcal]

...

I have no clue on interest rates/inflation since I expected a burst since '09 and we really haven't seen it.

From Liz Ann Sonders (Schwab):

So, I get the question all the time: What about inflation? Why haven’t we had inflation in light of all of this massive stimulus? And the answer is, well, we've had plenty of it, it's just been in asset prices, not in the real economy.

I don't know about others but we are planning on getting a new car as soon as the vaccine is in our arms. And there are other planned spendings. For sure we will travel and .... spend like drunken sailors. Haven't consulted DW on that last thought.

 

[Markola]

^^^^^. Hmmm. Sonders’ observation is pretty undeniable, no?

What are the implications?

 

[OldShooter]

It took me 30 years to figure out that nobody in the investment business knows anything useful. Now DW and I watch Mr. Market and just laugh. The trend is our friend -- the trend over the years, that is. Everything else is just noise.

 

[UnrealizedPotential]

For myself that is why AA is so important. If we have a downturn I will have the patience not to sell, and if equities do well I can still participate in the gains. I will be the first to admit I will not do as well as if I were fully invested in equities, but I also will not suffer the full wrath of the market when it turns down.

 

[audreyh1]

^^^^^. Hmmm. Sonders’ observation is pretty undeniable, no?

What are the implications?

Considering that QE has been around since 2010, and markets really took off in 2013 after massive QE was added, seems like we’ve been here before.

Except that QE never ended - only a little of it was reversed - so we still don’t know the implications! Except that CPI inflation keeps staying low while asset inflation keeps going up. But no one knows how this ends.

 

[Fermion]

I have usually been about 85% stocks but am sitting around at 50% right now, 50% cash. I think there is the potential for the market to go higher but the risk is just not worth it.

I am confident that I will miss out on some gains and confident also that I will be able to snap up some bargains. My bet this year is volatility.

 

[Sniggle]

I just do not see any other place for my money besides stocks. My gut tells me that the market is too hot, as does the fact that I have been checking my 401K daily lately (this is a sure sign that the end times are coming). But isn't it awesome to see paper gains in 1 day equal to a months salary?

I concur with what seems to be the consensus that low interest rates and a supportive fed will continue to provide support for the market, until it doesn't (meteor strike, China invades Taiwan or someplace else, Nancy Pelosi announces she is carrying Mitch's love child).

If I get 5+ up the next couple of months, I will probably take some off the table and wait for a pull back.