Anyone really worried? I am...

[unclemick]

Rats!

Skip the piglets - now that I'm getting in the mood to go bargin shopping the stupid market seems to going up.

Heck - may end up getting that kayak and exploring the Missouri Ozarks yet - Mr Market will fall in the Fall - for sure - right?

heh heh heh - sell in May and go away - is that the old cliche :.

 

[REWahoo]

Skip the piglets..

Heck - may end up getting that kayak and exploring the Missouri Ozarks yet...

Unclemick, I can't quite place it, but there is something vaguely disturbing about the mention of "piglets" and the "Ozarks" in the same post. If you can think of it please give us a squeal.

 

[Nords]

Rats!
Skip the piglets - now that I'm getting in the mood to go bargin shopping the stupid market seems to going up.
Heck - may end up getting that kayak and exploring the Missouri Ozarks yet - Mr Market will fall in the Fall - for sure - right?
heh heh heh - sell in May and go away - is that the old cliche :.

It's OK, everyone, we can all relax now. This pesky market top should be done.

Our ER portfolio has been setting all-time highs all month and yet today was one jaw-dropping performance. So after a stratospheric leap like that there's nowhere else to go but down. I'm hoping for a 5% "sell in May" setback but 10-15% wouldn't bring a tear to my reinvesting-the-dividends eye. Hey, maybe the housing & subprime mortgage markets will suck!

It could really be different this time but it can't possibly go any higher-- right?

 

[unclemick]

Unclemick, I can't quite place it, but there is something vaguely disturbing about the mention of "piglets" and the "Ozarks" in the same post. If you can think of it please give us a squeal.

Hmmm - open mouth insert foot - I think I will let that one slide. Besides I thought the famous movie was made in Georgia or something.

heh heh heh heh - meanwhile hurry up and wait for bargins in the Fall - marketwise.

 

[REWahoo]

It could really be different this time but it can't possibly go any higher-- right?

Well, it could be that there is a bit more climbing to do up that 'wall of worry'. Me? I'm just along for the ride.

 

[Alex]

Well, at $29 for 6 months, I appreciate a non-cheerleading assessment of economic conditions around the world. They also have some interesting - and different - asset class definitions that aren't all that common.

One of my favorite quotes, cited occassionally in retiredinvestor, but also in the book "The dollar crisis", is "things that can't continue eventually don't continue".

With our gutless leaders, inane economic policies, unsustainable imbalances and a populace spending more than they make and not willing to sacrifice a thing - I believe that eventually it won't continue. In other words, I believe we're close to or at the peak of our power and wealth and have much more downside potential than upside going forward...

oh goody!! another optimist!! Welcome!~!! :

Those of us who diversify and don't spend time [MODERATOR EDIT] worrying about financial market bogeymen will most likely be laughing for quite a while.

[MODERATOR EDIT]

I agree. Invest for the long term and then continue to live and enjoy your life.

 

[Gone4Good]

So yeah, I agree - alls great...record trade defecits don't matter, a housing slump doesn't matter, a negative savings rate doesn't matter - we're gonna get 10% returns forever...

Compared to other points in recent history (WWII, the Cold War, race riots, 10% inflation, the 1980's record trade deficit , etc.) that list of concerns actually seems pretty trivial.

Even compared with things that have happened in the last 7 years, the list seems pretty trivial:
1) Tripling of oil prices
2) ~50% decline in the S&P 500
3) Two wars (ongoing)
4) Worst attack on US homeland in 60 years
5) A natural disaster that wiped out the country's 31th largest city
6) Massive corporate fraud that bankrupted several of the Fortune 500
7) Recession

And yet 10-year equity returns are right around 9% despite suffering all of those set backs.

 

[cyclone6]

Compared to other points in recent history (WWII, the Cold War, race riots, 10% inflation, the 1980's record trade deficit , etc.) that list of concerns actually seems pretty trivial.

Even compared with things that have happened in the last 7 years, the list seems pretty trivial:
1) Tripling of oil prices
2) ~50% decline in the S&P 500
3) Two wars (ongoing)
4) Worst attack on US homeland in 60 years
5) A natural disaster that wiped out the country's 31th largest city
6) Massive corporate fraud that bankrupted several of the Fortune 500
7) Recession

And yet 10-year equity returns are right around 9% despite suffering all of those set backs.

Some very good points. What concerns me most is the fact that 70% of the US economy is consumer spending - and virtually no one argues that the US consumer is either tapped out or nearly tapped out. Personal debt is at an all-time high, and the savings rate is now negative for the first time since the depression. If it is true that the American consumer at some stage can't get access to any more capital, and spending drops significantly, what would be the result?

One other thing to consider is this...take a look at the chart. (If a simpleton like me can figure out how to get it onto this page...) Notice the huge market gains from 1955-1985. Then we get exponential growth (granted, with a large pullpack following 2000 - when your S&P pullback occured). But then the exponential growth started again - mostly on the backs of the American consumer.

Nothing grows exponentially indefinetly. I'm not anti-market...I just believe this market is overvalued - world-wide, through a giant influx of cheap capital courtesy of the FED. The old axiom is to buy low and sell high. I think buying equities at this time is buying high - too high for my tastes.

 

[Gone4Good]

Some very good points. What concerns me most is the fact that 70% of the US economy is consumer spending - and virtually no one argues that the US consumer is either tapped out or nearly tapped out. Personal debt is at an all-time high, and the savings rate is now negative for the first time since the depression. If it is true that the American consumer at some stage can't get access to any more capital, and spending drops significantly, what would be the result?

One other thing to consider is this...take a look at the chart. (If a simpleton like me can figure out how to get it onto this page...) Notice the huge market gains from 1955-1985. Then we get exponential growth (granted, with a large pullpack following 2000 - when your S&P pullback occured). But then the exponential growth started again - mostly on the backs of the American consumer.

Nothing grows exponentially indefinetly. I'm not anti-market...I just believe this market is overvalued - world-wide, through a giant influx of cheap capital courtesy of the FED. The old axiom is to buy low and sell high. I think buying equities at this time is buying high - too high for my tastes.

1) Personal debt is at an all-time high but so is personal net worth. As long as folks are wealthier, they can keep spending. Real personal income growth is also starting to accelerate, so let the good times roll.
2) The world economy is increasingly less dependent on the US for growth, and thus less dependent on the US consumer.
3) Never before have individual investors had the current flexibility to invest internationally. Today there is no reason for ones portfolio to be solely dependent on the US economy. With large swatches of the world's population (notably China & India) embracing greater economic freedom and capitalism, the outlook for world economic growth has perhaps never been better.

To your chart, I think you will see a similar pattern if you graph the stock market over any time period. The fact is that the market has averaged 10% compound growth for well over 100 years. Every time frame will show the same 10% compounding growth and produce a chart similar to the one you posted. If you view the Log of the same chart (see below) you will see the growth rate has been pretty consistent over the whole period.

That compounding does not make the market "overvalued". The S&P 500 currently trades at something like 17x PE multiple, which is pretty consistent with historical averages - and actually undervalued at today's interest rates. The 30-year treasury bond trades at a 21x "PE" multiple, for example.

 

[haha]

Nothing grows exponentially indefinetly. I'm not anti-market...I just believe this market is overvalued - world-wide, through a giant influx of cheap capital courtesy of the FED. The old axiom is to buy low and sell high. I think buying equities at this time is buying high - too high for my tastes.

Hey, don't try to convince a buy and hold asset allocator that the market is too high to buy and hold. For them, that is not a meaningful statement.

Just sell your unwanted shares to them and be happy.

Ha

 

[cyclone6]

1) Personal debt is at an all-time high but so is personal net worth. As long as folks are wealthier, they can keep spending. Real personal income growth is also starting to accelerate, so let the good times roll.

First, let me say thats its nice to have a civilized discussion without any name calling. I sure don't pretend to be an expert on these things, and like hearing the opposite point of view to help me make sure I'm not missing some important counterpoints.

As to your point 1 - agreed. It appears wages are finally starting to grow, and the job market appears robust. But are the wage increases enough to offset the housing woes we are just starting to see?

2) The world economy is increasingly less dependent on the US for growth, and thus less dependent on the US consumer.

Here I have to disagree. You're not telling me that Japan and China (all of Asia, really) aren't virtually completely dependent on US consumption are you? They are export economies - with the caveat that the Japanese are finally starting to spend some of their yen domestically...

3) Never before have individual investors had the current flexibility to invest internationally. Today there is no reason for ones portfolio to be solely dependent on the US economy. With large swatches of the world's population (notably China & India) embracing greater economic freedom and capitalism, the outlook for world economic growth has perhaps never been better.

I think you've seen a lot of that growth - at least when it comes to the markets. Look at the levels of all the worlds markets - Singapore, China, Hong Kong, Korea, New Zealand, Australia, India all at or right at all-time highs - Germany, France and England approaching all-time highs. Lots of available money (excess?) looking for a home...

To your chart, I think you will see a similar pattern if you graph the stock market over any time period. The fact is that the market has averaged 10% compound growth for well over 100 years. Every time frame will show the same 10% compounding growth and produce a chart similar to the one you posted. If you view the Log of the same chart (see below) you will see the growth rate has been pretty consistent over the whole period.

That compounding does not make the market "overvalued". The S&P 500 currently trades at something like 17x PE multiple, which is pretty consistent with historical averages - and actually undervalued at today's interest rates. The 30-year treasury bond trades at a 21x "PE" multiple, for example.

There is no question the market has had a huge run since the mid 80s - and particularly since the early 90s. That run has helped move the "expected long-term return" significantly higher. I don't know of a place to give a return from 1877-1985, but I'd bet a crisp c-note that its quite a bit lower than from 1985-2007. And as for the P/E - you are right. It is not out of whack (I saw a # of about 18x) with regards to the S&P 500 average of about 15. But that has been because of recent record earnings - if earnings begin to erode, the P/Es will follow.

And don't forget that at the end of nasty bear markets, P/Es are usually somewhat below 10. That would imply, if a significant slowdown is coming, that the S&P would have quite a long ways to come down.

Again, I'm no expert here, just seems to me that things are out of balance and that markets do eventually come to balance...sometimes painfully.

 

[clifp]

I am not smart enough to figure out which metrics are important for evaluating the market. I don't think the market is overvalued simply because news of the market hit records is barely menitioned on the news and people aren't talking about the stock market a lot.

 

[brewer12345]

And what about the piglet to sodomizer ratio?

 

[alphabet soup]

And what about the piglet to sodomizer ratio?

Just when a civil, intelligent discourse gets underway, jackass will jump and bray.

 

[brewer12345]

Just when a civil, intelligent discourse gets underway, jackass will jump and bray.

Be careful, or you will provoke another flurry of moderator edits. [moderator edit].

 

[alphabet soup]

Be careful, or you will provoke another flurry of moderator edits. [moderator edit].

Over 6200 posts When do you find the time to leave your mom's basement?

 

[brewer12345]

Over 6200 posts When do you find the time to leave your mom's basement?

Actually, like Uncle Mick, I am really a 16 YO girl in Missoula.

 

[cyclone6]

Over 6200 posts When do you find the time to leave your mom's basement?

The best thing to do with people like Brewer12345 is to just ignore them. I've known a few of the type in my real life - and tried to reason with them and explain things like logic, thoughtfulness and decency. Unfortunately, when you see such well thought out responses as Brewer12345 has posted recently, you can see that there is no hope. They derive some sort of pleasure out of being an arrogant, ignorant fool.

As much as I'd like to, I can't get angry at them. They typically have miserable lives, hate themselves, and try to make themselves feel better by being rude, loud and obnoxious. In the end all I can do is feel sorry for them and hope that one day they'll become an admirable person instead of pitiable...

Getting back on subject for just a minute, I mentioned that I am no expert in the world of finance. I am not the only one. I was in Thailand in 1997 when the Asian economic crisis first erupted when the Thai baht was broken by George Soros and his hedge fund. The crisis quickly spread to Indonesia and Malaysia. Several months later Korea was inflicted with the "Asian flu". Japan teetered, and damn near collapsed with all of the bad loans they had outstanding in the region.

Alan Greenspan and Robert Rubin (secretary of the treasury at the time) responded - with (I think) 6 interest rate cuts in the US in just over a couple of months. Most if not all were made outside the regular FOMC meetings - a very unusual occurance.

I saw Rubin years later on a network news show - long after the Clinton administration was out of power, and he was asked about the Asian financial meltdown. His response was refreshingly honest. He said that nobody in Washington really knew what to do - that globalization and all the free flows of capital and the interactions were unknowns. So the decision was made to cut rates drastically in the US - and in effect flood the world with money. It worked, in the end, and the immediate crisis was adverted. But I still find it rather amazing that the sectretary of the treasury admitted that they really didn't know exactly what was happening, or what remedy could stem the tide...

 

[brewer12345]

Ho5uc, is that you?

Think about it: bolding usernames, multi-paragraph posts that don't lead anywhere, relentless doom & gloom.

You might want to spend a little more time hanging out around the bar before you try to cut a regular down to size, shorty. You might pick the wrong hombre the mess with.

Just a friendly suggestion.

 

[sgeeeee]

The best thing to do with people like Brewer12345 is to just ignore them. . . .

As much as I'd like to, I can't get angry at them. They typically have miserable lives, hate themselves, and try to make themselves feel better by being rude, loud and obnoxious. In the end all I can do is feel sorry for them and hope that one day they'll become an admirable person instead of pitiable.... . .

Alright, don't be afraid to tell us the truth now, Brewer. Are you miserable? Do you hate yourself? We're here for you, man.

 

[brewer12345]

Alright, don't be afraid to tell us the truth now, Brewer. Are you miserable? Do you hate yourself? We're here for you, man.

Well, my friend UncleMick says its just when its "that time of the month." Otherwise, she says I am a pretty happy, well-adjusted girl. Aside from the times I score some crystal meth. O0

 

[Nords]

The best thing to do with people like Brewer12345 is to just ignore them. I've known a few of the type in my real life - and tried to reason with them and explain things like logic, thoughtfulness and decency. Unfortunately, when you see such well thought out responses as Brewer12345 has posted recently, you can see that there is no hope. They derive some sort of pleasure out of being an arrogant, ignorant fool.
As much as I'd like to, I can't get angry at them. They typically have miserable lives, hate themselves, and try to make themselves feel better by being rude, loud and obnoxious. In the end all I can do is feel sorry for them and hope that one day they'll become an admirable person instead of pitiable...

All right, you guys, go to neutral corners for a minute. Brewer, you've seen this behavior before and you oughta know better than to get hooked by it!

Cyclone, amid some impatient invective, Brewer gave you a fairly reasonable suggestion that you position your asset allocation according to your concerns. That suggestion was four pages of posts ago.

You continue to use a "Yeah, but" tactic that's commonly used by other posters who have proven to be more interested in trolling than in arriving at a conclusion and a course of action. I'm not saying that you're trolling, but you're making it hard for the posters who've seen this a few times before to tell the difference.

When each poster has countered your concerns, you've gone on with "Yeah, but..." and raised additional concerns that continue to be addressed, received another "Yeah, but..." and so on.

While you've raised lots of concerns that could keep a lot of people awake at night, what do you propose to do about it? Are you going to go to 100% Treasuries or cash? Are you going to short the market? Or are you just going to keep on hammering away at your "Yeah, but..." theme? What's your decision, or what's your point?

Hence the frustration you're seeing from other posters. So I suggest that you arrive at some sort of conclusion, agree to revisit the situation in a few months, and get on with your life.

 

[cyclone6]

I am really surprised. I thought this board was about specific knowledge, opinions and debate. I can't see where a little back-and-forth, debate, is detrimental. The fact is many of us - or let me speak just for myself - don't know where the economy is headed or the best investment strategy to currently follow. The "yeah, buts" you complain about are simply attempts to flesh out the posters thoughts to back up their statements. Debate.

And I had a pretty good one going with 3 Yrs to Go. Point-to-point. On subject.

There was even a post that commended the discussion:

Just when a civil, intelligent discourse gets underway, jackass will jump and bray.

The main idea here is that thoughts can be changed - molded - by hearing others thoughts opposite to your own. Maybe alter what you might do. I am no troll...I am sitting on a bunch of cash that I am looking to invest. I was simply looking for others opinions on where we might be next year, or 5 years from now. Like alphabet soup, if I do hang it up in the next few months then the tired, old "it doesn't matter if you have 30 years" has no meaning to me...what happens in the near term certainly does.

You forgot to mention that Brewer's first comment to the discussion, which seemed to be going along just fine at the time, other than the helpful "position yourself accordingly", included the terminology "piglet sodomizers". Quite constructive.

If this board is nothing more than yet another cheerleading forum, where only those who agree with the conventional wisdom that can be heard anywhere, then in my opinion it falls far short of what it should be - an open forum to air ideas and theories on investment and conditions that drive investment direction. In short, the free speech the internet is supposed to be about.

But I must admit that I would miss the opportunity to throw around contrarian theories advocated by many mainstream economists and academia much more knowledgeable than myself - and hearing what the masses either in or considering FIRE think...

And please don't worry about me getting on with my life. My life is going on just about as well as I could hope - hell, I even broke 90 on the golf course yesterday. I just want to figure out how to invest the money I have as smartly as possible, hang 'em up, continue my overseas adventures and maybe, just maybe, score that hole-in-one one day...

 

[haha]

The "yeah, buts" you complain about are simply attempts to flesh out the posters thoughts to back up their statements. Debate.

Stop and think. Including the post above, you have 22 posts, all very recent. Maybe the posters you refer to aren't really interested in "backing up their statements". Why should they be? Are you paying them? Have you given them anything of value?

Brewer has given things of value, and a number of people here have benefited from his knowledge and experience. So maybe you need a little time in grade?

You could look into the archives here and you will find that not everyone here is a buy and hold set-it and forget-it investor, but maybe they aren't interested in giving you a brief about why, or in molding you or even being molded by you.

Ha

 

[chinaco]

I am really surprised. I thought this board was about specific knowledge, opinions and debate. I can't see where a little back-and-forth, debate, is detrimental. The fact is many of us - or let me speak just for myself - don't know where the economy is headed or the best investment strategy to currently follow. The "yeah, buts" you complain about are simply attempts to flesh out the posters thoughts to back up their statements. Debate.

You are correct, there is a bit of group think on this board. My thoughts and opinions are very similar to many on this board. Mainly because I have studied. I have ingored some of the known sage advice (and paid the price). As I approach ER the conservative yet simple aproaches seem to fit.


I think it is OK to have a little debate. Some of us might get a little thin skinned if our wisdom is challenged. As far as I am concerned, fire away. What you probably need to know is if you get too combative... people will begin to ingore you.


I do not think most people are into big challenges and debates, rather sharing perspectives. If you make point-by-point counter arguments and challenges... It will be a turn-off.


Plus, When it comes to the market, there are a number of ways to win... it just depends on how much risk one is willing to accept. Hopefully people understand the risks and what the risks mean (how they can bite your portfolio and impact one's FI and/or timing of ER).