The Markets

[DEC-1982]

The economy has been chugging along for the last 8 years, and seems likely to do so. The default alternative to equities, bonds, doesn't look great.

On an aside, the currently high CAPE will "naturally" come down as low profits from the 2007-2009 recession are taken out of the CAPE and replaced by better profits. It's hard to imagine that 2017-2019 profits will be as bad as the profits from 2007-2009 but you never know.

 

[CountryGal]

Wouldn't that be a good reason to adjust your asset allocation now?

Unless you're talking about buying more stocks

Actually I think we should be a little heavier on stocks. I pulled back some around the election, expecting a downturn.

One of us is retired and one is about a year away.

 

[Blue Collar Guy]

On an aside, the currently high CAPE will "naturally" come down as low profits from the 2007-2009 recession are taken out of the CAPE and replaced by better profits. It's hard to imagine that 2017-2019 profits will be as bad as the profits from 2007-2009 but you never know.

This is an interesting thought. Im not capable of doing the math, but what would the current CAPE be if it was 8 years instead of 10?

 

[audreyh1]

The economy has been chugging along for the last 8 years, and seems likely to do so. The default alternative to equities, bonds, doesn't look great.

On an aside, the currently high CAPE will "naturally" come down as low profits from the 2007-2009 recession are taken out of the CAPE and replaced by better profits. It's hard to imagine that 2017-2019 profits will be as bad as the profits from 2007-2009 but you never know.

This is an interesting thought. Im not capable of doing the math, but what would the current CAPE be if it was 8 years instead of 10?

I've run the numbers and it only comes down a few points - maybe 3? Not too comforting. So >30 goes to >27. Still way high in nosebleed zone.

There is a website somewhere that lets you model it. I don't find it this moment. But here is another reference from March of 2017 that shows it only drops slightly. And CAPE has still risen since then! - https://earlyretirementnow.com/2017/03/22/cape-fear/