According to history, the bear market is officially over as of 2/15/2023 [emoji322]

[Montecfo]

PE ratios arent predictive...think about it...beginning of 2009 the PE was like 40....year later the market was up like 70%....

Sure. But not like we have had some massive earnings decline that drove PE's up from historically normal level.

 

[COcheesehead]

Now that the S&P has finished Q1 over 7%, there has never been a time that the full year has finished lower.

 

[USGrant1962]

+2. Of course, my thinking is that PE ratios ultimately have to return to some sort of normal.

With S&P500 around 22 today, what do you think is normal? S&P500 PE has been around 20 plus-or-minus since 1990. Basically our whole investing lifetimes. It has only touched 15 a couple of times since 1990. The whole run from 2015 to 2021 was with PE at/above 20.

https://www.multpl.com/s-p-500-pe-ratio

 

[FREE866]

Sure. But not like we have had some massive earnings decline that drove PE's up from historically normal level.

Thats just an example....I heard all about the Schiiler-Cape PE thing as far back as 2013 , warning people that "PEs are too high"...if I invested based on that logic and had reduced stock exposure ( which was the strong implication) I'd still be working today....PE is one indicator...its not that simple to hinge an investment strategy on one indicator

 

[OverThinkMuch]

Now that the S&P has finished Q1 over 7%, there has never been a time that the full year has finished lower.

Yes, 1987 had +2.0% for the "full year", but someone who invested after Q1 lost 18.5%. 1987 shows +20.5% Q1 followed by -18.5% for Q2/Q3/Q4 in the data you provided.

Some of those years had higher than average inflation, and Q2/Q3/Q4 only showed 1.4% to 1.8% gains (1971, 1986, 2012). A nominal gain of under 2% could have lost to cash, and to inflation. I wonder how that graph looks when divided into low / average / high inflation periods.

 

[COcheesehead]

Yes, 1987 had +2.0% for the "full year", but someone who invested after Q1 lost 18.5%. 1987 shows +20.5% Q1 followed by -18.5% for Q2/Q3/Q4 in the data you provided.

Some of those years had higher than average inflation, and Q2/Q3/Q4 only showed 1.4% to 1.8% gains (1971, 1986, 2012). A nominal gain of under 2% could have lost to cash, and to inflation. I wonder how that graph looks when divided into low / average / high inflation periods.

You can always cherry pick time frames to prove a point. Even the chart I posted has a bias for first quarter returns.

 

[Montecfo]

Thats just an example....I heard all about the Schiiler-Cape PE thing as far back as 2013 , warning people that "PEs are too high"...if I invested based on that logic and had reduced stock exposure ( which was the strong implication) I'd still be working today....PE is one indicator...its not that simple to hinge an investment strategy on one indicator

I appreciate the discussion. And I agree, CAPE is an interesting metric, but not a buy or sell signal.

 

[Montecfo]

With S&P500 around 22 today, what do you think is normal? S&P500 PE has been around 20 plus-or-minus since 1990. Basically our whole investing lifetimes. It has only touched 15 a couple of times since 1990. The whole run from 2015 to 2021 was with PE at/above 20.

https://www.multpl.com/s-p-500-pe-ratio

I can't answer for PB4, but I will say this: PE's require context. A PE of 22 when interest rates are 1-2% is not the same as a PE of 22 when rates are say double that.

 

[pacergal]

It's nice being green.
A new bull would be welcome.

 

[OverThinkMuch]

You can always cherry pick time frames to prove a point. Even the chart I posted has a bias for first quarter returns.

You said "never"[1] which can be disproved with a single counterexample[2].

The thread title is about a bull market starting. People cannot invest retroactively in the past 3 months of stock returns. The "full year" [1] doesn't matter - only returns going forward. Even in the data you posted someone can lose 18.5% from here [2] or wind up losing against cash.


[1]

Now that the S&P has finished Q1 over 7%, there has never been a time that the full year has finished lower.

[2]

Yes, 1987 had +2.0% for the "full year", but someone who invested after Q1 lost 18.5%. 1987 shows +20.5% Q1 followed by -18.5% for Q2/Q3/Q4 in the data you provided.

 

[plex]

Waiting for unemployment to spike, the thing that happens at the end of pretty much every bear market. Gray period happen, line go up at least 2%, then grey period end, well for a little bit, something like the 70's where the Fed waffled over and over dealing with stagflation caused by the comparitvely massive for that time money printing in the 60's would have several gray periods. Sounds familiar (possibly much worse now, the 60's was only a 40% increase in M1, not a nearly 2000% increase like in the 2010-2020 period, M2 is also bad but not as bad as M1, about 100% increase in the 60's vs 150% in 2010-2020)...

https://www.macrotrends.net/1316/us-national-unemployment-rate

https://fred.stlouisfed.org/series/M1SL
https://fred.stlouisfed.org/series/M2SL

My guess is the dollar is very quickly accelerating towards losing its status as the world's reserve currency and/or the 20's will have a long and persistently high inflation.

 

[COcheesehead]

You said "never"[1] which can be disproved with a single counterexample[2].

The thread title is about a bull market starting. People cannot invest retroactively in the past 3 months of stock returns. The "full year" [1] doesn't matter - only returns going forward. Even in the data you posted someone can lose 18.5% from here [2] or wind up losing against cash.


[1]

[2]

It’s not a counter example. 1987 still finished positive and you disproved nothing. Read the chart again. Years that start with a first quarter over 7% finish positive. You cherry picked it by saying if someone invested after the first quarter of 1987, they would have lost money. That is not what the chart is demonstrating.

 

[Montecfo]

Not sure what stocks you’re invested in but the S&P 500 bottomed in October 2022 and has been increasing ever since. Sure, we are not yet back to where we were at the peak (January 3, 2022) but we are making progress!

Dow and SP500 down over past two months. Nasdaq barely positive.

Bear market rally fizzling? Or tech offering new leadership?

 

[OverThinkMuch]

It’s not a counter example. 1987 still finished positive and you disproved nothing. Read the chart again. Years that start with a first quarter over 7% finish positive. You cherry picked it by saying if someone invested after the first quarter of 1987, they would have lost money. That is not what the chart is demonstrating.

You don't seem to have read my post:

People cannot invest retroactively in the past 3 months of stock returns. The "full year" [1] doesn't matter - only returns going forward.

 

[Gumby]

This hardly seems something worthy of an argument.

 

[COcheesehead]

This hardly seems something worthy of an argument.

I agree. It doesn’t make sense.

 

[Gumby]

I agree. It doesn’t make sense.

That's not exactly what I meant.

But this would be good opportunity to introduce a new forum mantra (shamelessly copied from another forum) - Stop, Drop and Roll.

In addition to being what you should do when you're on fire, it's what to do when you find yourself at loggerheads with another poster and the rhetoric is escalating. Rather than continuing to duke it out:

1. Stop engaging with your opponent;

2. Drop the thread, move on to something else and come back when you're not mad;

3. Roll it to the moderators if it is really a problem by using the little red triangle icon.

 

[razztazz]

That's not exactly what I meant.

But this would be good opportunity to introduce a new forum mantra (shamelessly copied from another forum) - Stop, Drop and Roll.

In addition to being what you should do when you're on fire, it's what to do when you find yourself at loggerheads with another poster and the rhetoric is escalating. Rather than continuing to duke it out:

1. Stop engaging with your opponent;

2. Drop the thread, move on to something else and come back when you're not mad;

3. Roll it to the moderators if it is really a problem by using the little red triangle icon.

--------------------------------------------
Sound advice. I'm glad I thought of it 20 years ago. I remember back in the 90's a wise old internet saying that used to go around on the "intellectual" message boards: The first one to stop responding to a thread has acknowledged that he's lost. I could never see how that was self evident. Seemed like a Pee-wee Herman-like conclusion. Maybe the first one to stop responding has acknowledged that he only works with adults? Or knows something about the drinking habits of horses?