Lsbcal
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Too bad, I bumped this old thread to hopefully find a link to Running_Man’s post shortly after June 3 when he bought back in.
Yes, let's hear from Running_Man.
Too bad, I bumped this old thread to hopefully find a link to Running_Man’s post shortly after June 3 when he bought back in.
It seems that you are posting an opinion and not convincing data. Why not backtest your theory complete with buy/sell criteria? Then if it works come back and let us know the results of the data.
I personally have not found a process based solely on the PE ratio that works in the short term (say, 1 year). Plenty of studies have been done on Shiller's PE10 method and point to some correlation with very long term timing but not short term. I think valuation based timing does not seem to work but please prove me wrong by using convincing data and buy/sell criteria.
Hi Vchan, nothing wrong with an opinion. I have plenty of them too
What I and others have observed is that no one variable will predict the future.
Too bad, I bumped this old thread to hopefully find a link to Running_Man’s post shortly after June 3 when he bought back in.
We've been on a historic bull market run for now going into eleven years.
I believe the market historically is now in very over valued territory viewed from SP 500 earnings PE wise. And this market is historically long in the tooth.
The wild card causing economic distortions is the un-precedented Covid plague, and now the recovery from it that perhaps seems in sight with the vaccines.
Maybe another several months to a year of good times, but I think a sizable correction in stock market is overdue, and who knows what might trigger it. Some other unanticipated event, perhaps foreign affairs.
With record personal savings that no one is spending until COVID goes away and cheap corporate money, I think this bull can run for a couple of more years.
What is wrong with that?
There will be a bull market for at least 7-10 more years. Dow 50,000 is coming. Interest rates are low. More people are saving more money and looking for stock investments in the covid19 survival mode. If you're not spending money on travel, luxuries, and useless stuff, you put it in savings - but the banks are not giving you high interest .. so the only options are stocks. Earnings are low due to covid, but future P/E will go down as people get vaccinated and life returns to normal. I think there will be a big infrastructure investment to pump prime the economy.
Essentially it allows the backtester to follow Will Rogers' wise words: "Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it."
I think probably you are right and is now the consensus.
So yes, we could get multiple bad months (not sequentially) of -5% or so but that is common in a basically up market. Before the pandemic we had around 1 bad month on average per year.
Here is a veteran who belies the "consensus" of bull market. He suggest major correction coming:
https://finance.yahoo.com/news/wall-street-veteran-says-market-173407061.html
That's not really the kind of information I consider to be actionable.
There's always a number of people predicting 15% corrections, the problem is knowing exactly when it will happen. Better to just ride them out rather than think you can time the top and subsequent bottom. That's just fantasy land.
There are all kinds of PE's. Using the most recent 12 months we have a PE=40.9. Estimated PE's are maybe 22. If we knew the future earnings for sure then that would be interesting. Even Shiller has moved to recognizing that PE10 should maybe be interpreted in the context of current interest rates.
What I and others have observed is that no one variable will predict the future.
I don't like that saying because it implies that the thousands of hours I've spent researching companies to invest in and digging deep into their business plans were a waste of time. That I could have done just as well throwing darts at a stock list and I don't buy that.
I can see first hand how my research has paid off, both in the companies I chose to buy and also in those I chose to stay away from over the years.
I also dislike the idea that fundamentals get ignored, and I don't buy into the idea that understanding fundamentals has zero value (case in point: Berkshire Hathaway). But as a retail investor trading shares held by index funds, when the flight to cash happens, that lowers all boats, irrespective of how well a company is positioned. The key at that point would be to double-down on the issues that were 'unfairly' devalued. Or more in tune with the current situation, short issues that are hyped above fundamentals. The problem is, like the casino solution to keep doubling your bet until you win, you run up against a limit, and you leave with no chips.I don't like that saying because it implies that the thousands of hours I've spent researching companies to invest in and digging deep into their business plans were a waste of time. That I could have done just as well throwing darts at a stock list and I don't buy that.
I also dislike the idea that fundamentals get ignored, and I don't buy into the idea that understanding fundamentals has zero value (case in point: Berkshire Hathaway). But as a retail investor trading shares held by index funds, when the flight to cash happens, that lowers all boats, irrespective of how well a company is positioned. The key at that point would be to double-down on the issues that were 'unfairly' devalued. Or more in tune with the current situation, short issues that are hyped above fundamentals. The problem is, like the casino solution to keep doubling your bet until you win, you run up against a limit, and you leave with no chips.
The key is to take a long-term approach, ..................
When taking a long-term approach, corrections and recessions don't matter - just ride them out. Stocks have always come back. ..............
VChan, I appreciate your posts, and Running_Man’s too. To read others’ views is helpful to me. If I wanted to hear opinions only corroborating my own thought, I could talk to myself in the mirror. A wide open forum is best, even if some of the voices are extreme or unconventional, and esp. if they have data or info to support their view.