Really choppy waters in the markets. We may be this way for a while. But what do I know
U.S. stocks in free fall
Re: U.S. stocks in free fall
Re: U.S. stocks in free fall
10y treasury yield peaked at 1.765% back in March 2021 (after dropping all the way down to 0.39% in 2020). It dropped again to 1.12% in August 2021 and it's now back up to 1.74%, and might soon be surpassing it's previous post-COVID high of 1.765%
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Re: U.S. stocks in free fall
That would be awesome!
IMHO, Investing should be about living the life you want, not avoiding the life you fear. |
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- peskypesky
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Re: U.S. stocks in free fall
well, correct me if I'm wrong, but the Fed is going to be taking actions for several months ahead to tame inflation....and those actions are almost certain to lower stock prices...so yeah, I think choppy waters ahead for sure.
Re: U.S. stocks in free fall
it will be interesting to see where rates go when the fed does actually end it's buying program and what price the market actually will bear.. each of the prior qe rounds ended in illiquid markets, rate spikes and the commencement of another emergency round of qe. unique to this situation of course, and significantly complicating things, is that we do finally have inflation. if you enjoy economics and monetary policy as i do, interesting time to see what the impact will be to equity prices and bond interest rates as the fed tries to exit qe and combat significant inflation.. one that will probably be studied many years from now.456M wrote: ↑Thu Jan 06, 2022 9:51 am10y treasury yield peaked at 1.765% back in March 2021 (after dropping all the way down to 0.39% in 2020). It dropped again to 1.12% in August 2021 and it's now back up to 1.74%, and might soon be surpassing it's previous post-COVID high of 1.765%
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Re: U.S. stocks in free fall
I can't see how the bond market won't collapse when/if the Fed stops buying them up. I mean, who else is going to want negative returns?staustin wrote: ↑Thu Jan 06, 2022 10:08 am it will be interesting to see where rates go when the fed does actually end it's buying program and what price the market actually will bear.. each of the prior qe rounds ended in illiquid markets, rate spikes and the commencement of another emergency round of qe. unique to this situation of course, and significantly complicating things, is that we do finally have inflation. if you enjoy economics and monetary policy as i do, interesting time to see what the impact will be to equity prices and bond interest rates as the fed tries to exit qe and combat significant inflation.. one that will probably be studied many years from now.
Re: U.S. stocks in free fall
And here I am still increasing my bond allocation by 1% to keep up with the glide pathpeskypesky wrote: ↑Thu Jan 06, 2022 10:27 am I can't see how the bond market won't collapse when/if the Fed stops buying them up. I mean, who else is going to want negative returns?
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- Chief_Engineer
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Re: U.S. stocks in free fall
If no buys then yields will go up.peskypesky wrote: ↑Thu Jan 06, 2022 10:27 am I can't see how the bond market won't collapse when/if the Fed stops buying them up. I mean, who else is going to want negative returns?
Re: U.S. stocks in free fall
Plus there are investors who are required to hold a portion of assets in UST -- like some pension funds, the Social Security Trust Fund and sovereigns.Chief_Engineer wrote: ↑Thu Jan 06, 2022 10:48 amIf no buys then yields will go up.peskypesky wrote: ↑Thu Jan 06, 2022 10:27 am I can't see how the bond market won't collapse when/if the Fed stops buying them up. I mean, who else is going to want negative returns?
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
Re: U.S. stocks in free fall
Here comes the taper.
Stocks-80% || Bonds-20% || Taxable-VTI/VXUS || IRA-VT/BNDW
Re: U.S. stocks in free fall
Our monthly purchase of VTSAX went through yesterday. I haven’t seen prices like that since we bought in December!
Re: U.S. stocks in free fall
I'm partial to enjoying the one's starting from 1801JoinTheLocalizer wrote: ↑Thu Jan 06, 2022 8:55 am...
People tend to chart the S&P as if it was invented in 1981. These last 40 years has been incredibly bullish but it's entirely possible we're seeing the closing acts of that, dare I say, fad.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
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Re: U.S. stocks in free fall
Neat chart, albeit a non sequitur.JoMoney wrote: ↑Thu Jan 06, 2022 7:06 pmI'm partial to enjoying the one's starting from 1801JoinTheLocalizer wrote: ↑Thu Jan 06, 2022 8:55 am...
People tend to chart the S&P as if it was invented in 1981. These last 40 years has been incredibly bullish but it's entirely possible we're seeing the closing acts of that, dare I say, fad.
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Re: U.S. stocks in free fall
The (real) returns have been negative for ages and the nominal in Europe. There are buyers....peskypesky wrote: ↑Thu Jan 06, 2022 10:27 amI can't see how the bond market won't collapse when/if the Fed stops buying them up. I mean, who else is going to want negative returns?staustin wrote: ↑Thu Jan 06, 2022 10:08 am it will be interesting to see where rates go when the fed does actually end it's buying program and what price the market actually will bear.. each of the prior qe rounds ended in illiquid markets, rate spikes and the commencement of another emergency round of qe. unique to this situation of course, and significantly complicating things, is that we do finally have inflation. if you enjoy economics and monetary policy as i do, interesting time to see what the impact will be to equity prices and bond interest rates as the fed tries to exit qe and combat significant inflation.. one that will probably be studied many years from now.
Re: U.S. stocks in free fall
Yup, there will always be buyers of US debt. Heck, people were buying Venezuelan debt when they were in hyper inflation.sean.mcgrath wrote: ↑Thu Jan 06, 2022 7:15 pmThe (real) returns have been negative for ages and the nominal in Europe. There are buyers....peskypesky wrote: ↑Thu Jan 06, 2022 10:27 amI can't see how the bond market won't collapse when/if the Fed stops buying them up. I mean, who else is going to want negative returns?staustin wrote: ↑Thu Jan 06, 2022 10:08 am it will be interesting to see where rates go when the fed does actually end it's buying program and what price the market actually will bear.. each of the prior qe rounds ended in illiquid markets, rate spikes and the commencement of another emergency round of qe. unique to this situation of course, and significantly complicating things, is that we do finally have inflation. if you enjoy economics and monetary policy as i do, interesting time to see what the impact will be to equity prices and bond interest rates as the fed tries to exit qe and combat significant inflation.. one that will probably be studied many years from now.
A return to non QE rates will hurt over the short term but I think Mr. Market will be ok with 10 year rates at 5%. Won’t be fun getting there.
Consistently sets low goals and fails to achieve them.
Re: U.S. stocks in free fall
There are those who say we have a strong economy. If that's true, going to normalized rates at any time will be ok.youraveragejoe wrote: ↑Wed Jan 05, 2022 11:13 pm Unless if someone can interject and put some facts out, doesn't it make more sense to raise the prime rates slowly?
Strategic Macro Senior (top 1%, 2019 Bogleheads Contest)
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Re: U.S. stocks in free fall
One quick note on the "YouIndex" is that it doesn't really account for contributions or withdrawals. It only extrapolates what your current holdings are doing now from far in the past. Also, if you have any other accounts (retirement funds from your employer) that aren't properly allocated appropriately, then it really means nothing. I just want you to know that you may have been down or up, but it has no real basis if you are in the accumulation phase. I'm sorry I didn't have better news about the app.gas_balloon wrote: ↑Wed Jan 05, 2022 6:40 pmPersonalCapital tells me my "YouIndex" dropped only 1.53% compared to S&P500's massive 1.93% drop. I feel like a conquerer!runner540 wrote: ↑Wed Jan 05, 2022 3:15 pmpeskypesky wrote: ↑Wed Jan 05, 2022 2:21 pmgas_balloon wrote: ↑Wed Jan 05, 2022 12:54 pmSweet! All of us international stocks holder can enjoy our 1 day of victory after 10+ years of underperformancecanadianbacon wrote: ↑Wed Jan 05, 2022 12:13 pm Growth/tech/meme getting crushed.
International/SCV are OK.
Can’t wait to check tonight after markets close
Re: U.S. stocks in free fall
I see people say this from time to time and wonder if they actually think that a 180 degree rotation of a screen turns a bad day into a good day. A 180 degree rotation of a curve graphed over an interval does not change the increase or decrease from open to close. Am I taking people too literally when they say it?rocketsrule wrote: ↑Thu Jan 06, 2022 8:13 am If you turn your monitor upside down you can pretend it was a good day
What you need to do is pull up the charts on your phone, turn the screen away from you and look at it in a mirror. That is how you make the slope of the charts change from bad to good!
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Re: U.S. stocks in free fall
The uncertainty was perhaps priced in before the meeting and it ended up being not as bad as what was priced in. But the FOMC minutes made it sound like it would happen earlier and faster. Maybe people are thinking - what's going on that we don't know about.Marseille07 wrote: ↑Thu Jan 06, 2022 12:18 am I just find it fascinating that the market bought +1.6% the day the FOMC made a decision last month, but sold 2% when the FOMC minutes from the same meeting got published.
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Re: U.S. stocks in free fall
Getting ready to load up my spaceship next week!
Keep buying and stay the course.
Tony
Keep buying and stay the course.
Tony
John C. Bogle: “Simplicity is the master key to financial success."
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Re: U.S. stocks in free fall
Invest we must!
"The greatest enemy of a good plan is the dream of a perfect plan"
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Re: U.S. stocks in free fall
I always say buy until it hurts. Then find a way to buy even more!
Best.
Tony
John C. Bogle: “Simplicity is the master key to financial success."
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Re: U.S. stocks in free fall
credit card rewards. Selling collectible. Bonus money. Sometimes there. isn't any "extra".sean.mcgrath wrote: ↑Thu Jan 06, 2022 10:14 pmThis is why I am always puzzled when people say they 'buy the dip.' Where does the extra money come from -- they sell the car? As Peter Lynch said, I am always fully invested.
"The greatest enemy of a good plan is the dream of a perfect plan"
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Re: U.S. stocks in free fall
Oh, good point! I actually still have a beany babyBluemnatra wrote: ↑Thu Jan 06, 2022 10:20 pmcredit card rewards. Selling collectible. Bonus money. Sometimes there. isn't any "extra".sean.mcgrath wrote: ↑Thu Jan 06, 2022 10:14 pmThis is why I am always puzzled when people say they 'buy the dip.' Where does the extra money come from -- they sell the car? As Peter Lynch said, I am always fully invested.
Re: U.S. stocks in free fall
Unless I can buy the dip between about the 15th-18th of each month, I miss out. That's when I have leftover money I can invest after paying bills.sean.mcgrath wrote: ↑Thu Jan 06, 2022 10:14 pm This is why I am always puzzled when people say they 'buy the dip.' Where does the extra money come from -- they sell the car? As Peter Lynch said, I am always fully invested.
Aside from that time of the month, my checking and savings accounts are at a balance that I feel compelled to keep around in cash for things I need right away if an emergency comes and I can't wait a few days to cash some bond or money market shares.
Re: U.S. stocks in free fall
It's some of us dry powder folkssean.mcgrath wrote: ↑Thu Jan 06, 2022 10:14 pm This is why I am always puzzled when people say they 'buy the dip.' Where does the extra money come from -- they sell the car? As Peter Lynch said, I am always fully invested.
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Re: U.S. stocks in free fall
But it has to be meaningful. You kept 30% of your portfolio in cash for the last ten years, just hungering for a dip? :-pgas_balloon wrote: ↑Thu Jan 06, 2022 10:49 pmIt's some of us dry powder folkssean.mcgrath wrote: ↑Thu Jan 06, 2022 10:14 pm This is why I am always puzzled when people say they 'buy the dip.' Where does the extra money come from -- they sell the car? As Peter Lynch said, I am always fully invested.
Re: U.S. stocks in free fall
Why 10 years? I unloaded then in December 2018, March 2020. There is an event that happens roughly every 2-3 yes to unload the dry powder and then reaccumulate it over next 2-3yrs. If S&P500 goes down again below 4300 (about 10% from recent high) I'll unload it again.sean.mcgrath wrote: ↑Thu Jan 06, 2022 10:52 pmBut it has to be meaningful. You kept 30% of your portfolio in cash for the last ten years, just hungering for a dip? :-pgas_balloon wrote: ↑Thu Jan 06, 2022 10:49 pmIt's some of us dry powder folkssean.mcgrath wrote: ↑Thu Jan 06, 2022 10:14 pm This is why I am always puzzled when people say they 'buy the dip.' Where does the extra money come from -- they sell the car? As Peter Lynch said, I am always fully invested.
There isn't much logic in it though since I could've bought it a year ago when s-p was at 4200. It just gives me satisfaction
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Re: U.S. stocks in free fall
Makes sense. Just curious, at the peak, how much of your total portfolio % do you keep in dry powder?gas_balloon wrote: ↑Thu Jan 06, 2022 10:54 pmWhy 10 years? I unloaded then in December 2018, March 2020. There is an event that happens roughly every 2-3 yes to unload the dry powder and then reaccumulate it over next 2-3yrs. If S&P500 goes down again below 4300 (about 10% from recent high) I'll unload it again.sean.mcgrath wrote: ↑Thu Jan 06, 2022 10:52 pmBut it has to be meaningful. You kept 30% of your portfolio in cash for the last ten years, just hungering for a dip? :-pgas_balloon wrote: ↑Thu Jan 06, 2022 10:49 pmIt's some of us dry powder folkssean.mcgrath wrote: ↑Thu Jan 06, 2022 10:14 pm This is why I am always puzzled when people say they 'buy the dip.' Where does the extra money come from -- they sell the car? As Peter Lynch said, I am always fully invested.
There isn't much logic in it though since I could've bought it a year ago when s-p was at 4200. It just gives me satisfaction
Re: U.S. stocks in free fall
It's no set %. I just keep saving from my salary paycheck and invest them whenever we are in correction territory with S&P500. For example in between March 2020 and Dec 2018 I had about 40K that I had saved up to invest.sean.mcgrath wrote: ↑Thu Jan 06, 2022 11:23 pmMakes sense. Just curious, at the peak, how much of your total portfolio % do you keep in dry powder?gas_balloon wrote: ↑Thu Jan 06, 2022 10:54 pmWhy 10 years? I unloaded then in December 2018, March 2020. There is an event that happens roughly every 2-3 yes to unload the dry powder and then reaccumulate it over next 2-3yrs. If S&P500 goes down again below 4300 (about 10% from recent high) I'll unload it again.sean.mcgrath wrote: ↑Thu Jan 06, 2022 10:52 pmBut it has to be meaningful. You kept 30% of your portfolio in cash for the last ten years, just hungering for a dip? :-pgas_balloon wrote: ↑Thu Jan 06, 2022 10:49 pmIt's some of us dry powder folkssean.mcgrath wrote: ↑Thu Jan 06, 2022 10:14 pm This is why I am always puzzled when people say they 'buy the dip.' Where does the extra money come from -- they sell the car? As Peter Lynch said, I am always fully invested.
There isn't much logic in it though since I could've bought it a year ago when s-p was at 4200. It just gives me satisfaction
(AGE minus 23%) Bonds | 5% REITs | Balance 80% US (75/25 TSM/SCV) + 20% International (80/20 Developed/Emerging)
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Re: U.S. stocks in free fall
Can't speak for that person, but as the S&P rose to over 30 PE, I started selling off into cash. About 70% cash now. That's just in the 401k since I'm limited to mostly index funds or some rather obscure high expense ratio distractor investments.sean.mcgrath wrote: ↑Thu Jan 06, 2022 10:52 pmBut it has to be meaningful. You kept 30% of your portfolio in cash for the last ten years, just hungering for a dip? :-pgas_balloon wrote: ↑Thu Jan 06, 2022 10:49 pmIt's some of us dry powder folkssean.mcgrath wrote: ↑Thu Jan 06, 2022 10:14 pm This is why I am always puzzled when people say they 'buy the dip.' Where does the extra money come from -- they sell the car? As Peter Lynch said, I am always fully invested.
As it lowers to 20-25 PE I will buy back in. I don't care what the nominal value is. This is especially true with a monetary tightening cycle when things are forced back to rational levels.
The Schiller PE is nearly concentric with peaks and resulting valleys as it pertains to economic booms and busts (1987, 1929, 2000, 2008). A couple of other drops in the mid 70s aligned with the removal of the Nixon price controls/OPEC oil embargo for added measure.
To me it's not rocket science. Denying the value aspect is the "this time it's different" fools' gold I personally prefer avoiding.
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Re: U.S. stocks in free fall
This is a suboptimal strategy and likely to underperform buy and hold at suitable asset allocation.JoinTheLocalizer wrote: ↑Fri Jan 07, 2022 6:43 amCan't speak for that person, but as the S&P rose to over 30 PE, I started selling off into cash. About 70% cash now.sean.mcgrath wrote: ↑Thu Jan 06, 2022 10:52 pmBut it has to be meaningful. You kept 30% of your portfolio in cash for the last ten years, just hungering for a dip? :-pgas_balloon wrote: ↑Thu Jan 06, 2022 10:49 pmIt's some of us dry powder folkssean.mcgrath wrote: ↑Thu Jan 06, 2022 10:14 pm This is why I am always puzzled when people say they 'buy the dip.' Where does the extra money come from -- they sell the car? As Peter Lynch said, I am always fully invested.
As it lowers to 20-25 PE I will buy back in. I don't care what the nominal value is. This is especially true with a monetary tightening cycle when things are forced back to rational levels.
The Schiller PE is nearly concentric with peaks and resulting valleys as it pertains to economic booms and busts (1987, 1929, 2000, 2008). A couple of other drops in the mid 70s aligned with the removal of the Nixon price controls/OPEC oil embargo for added measure.
To me it's not rocket science. Denying the value aspect is the "this time it's different" fools' gold I personally prefer avoiding.
As a risk averse investor you should just get back in at something like 60:40 then stay there.
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Re: U.S. stocks in free fall
This is a suboptimal strategy and likely to underperform buy and hold at suitable asset allocation.JoinTheLocalizer wrote: ↑Fri Jan 07, 2022 6:43 amCan't speak for that person, but as the S&P rose to over 30 PE, I started selling off into cash. About 70% cash now.sean.mcgrath wrote: ↑Thu Jan 06, 2022 10:52 pmBut it has to be meaningful. You kept 30% of your portfolio in cash for the last ten years, just hungering for a dip? :-pgas_balloon wrote: ↑Thu Jan 06, 2022 10:49 pmIt's some of us dry powder folkssean.mcgrath wrote: ↑Thu Jan 06, 2022 10:14 pm This is why I am always puzzled when people say they 'buy the dip.' Where does the extra money come from -- they sell the car? As Peter Lynch said, I am always fully invested.
As it lowers to 20-25 PE I will buy back in. I don't care what the nominal value is. This is especially true with a monetary tightening cycle when things are forced back to rational levels.
The Schiller PE is nearly concentric with peaks and resulting valleys as it pertains to economic booms and busts (1987, 1929, 2000, 2008). A couple of other drops in the mid 70s aligned with the removal of the Nixon price controls/OPEC oil embargo for added measure.
To me it's not rocket science. Denying the value aspect is the "this time it's different" fools' gold I personally prefer avoiding.
As a risk averse investor you should just get back in at something like 60:40 then stay there.
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Re: U.S. stocks in free fall
Agree to disagree but that's what makes investing decisions the spice of lifeminimalistmarc wrote: ↑Fri Jan 07, 2022 6:47 amThis is a suboptimal strategy and likely to underperform buy and hold at suitable asset allocation.JoinTheLocalizer wrote: ↑Fri Jan 07, 2022 6:43 amCan't speak for that person, but as the S&P rose to over 30 PE, I started selling off into cash. About 70% cash now.sean.mcgrath wrote: ↑Thu Jan 06, 2022 10:52 pmBut it has to be meaningful. You kept 30% of your portfolio in cash for the last ten years, just hungering for a dip? :-pgas_balloon wrote: ↑Thu Jan 06, 2022 10:49 pmIt's some of us dry powder folkssean.mcgrath wrote: ↑Thu Jan 06, 2022 10:14 pm This is why I am always puzzled when people say they 'buy the dip.' Where does the extra money come from -- they sell the car? As Peter Lynch said, I am always fully invested.
As it lowers to 20-25 PE I will buy back in. I don't care what the nominal value is. This is especially true with a monetary tightening cycle when things are forced back to rational levels.
The Schiller PE is nearly concentric with peaks and resulting valleys as it pertains to economic booms and busts (1987, 1929, 2000, 2008). A couple of other drops in the mid 70s aligned with the removal of the Nixon price controls/OPEC oil embargo for added measure.
To me it's not rocket science. Denying the value aspect is the "this time it's different" fools' gold I personally prefer avoiding.
As a risk averse investor you should just get back in at something like 60:40 then stay there.
The IRA, where obviously one has a lot more flexibility for investments, crushed the broad market, mostly because of shipping, energy and commodity allocation after obvious policy blunders like massive lockdowns and ESG forced a return on uranium and coal for basic energy requirements, as well as the base metals (copper, nickel etc) required to assemble EV. They underperformed the gambling plays like ARK, meme, and "edgy" tech, but I prefer value as opposed to gambling. Plus many pay decent dividends. The largest play was buying oil based stocks when oil turned negative in 2020 and slowly relinquishing them as oil turned toward $80/bbl.
Shipping hasn't had much investment since the GFC and few if any ships are being built, plus over 100 are queued out to sea. That seemed rather obvious as a play as things opened up also, since many run single digit PEs. My investments are muy boring.
Re: U.S. stocks in free fall
I think a handy property of this is that one can manipulate their results as their mind sees fit. With a shifting control volume one can always show results better than 'that other path others took'. Suboptimal but still positive. I think that is a key feature for firms like EJ and all the others. 'Yeah but I have more money now!'JoinTheLocalizer wrote: ↑Fri Jan 07, 2022 6:43 amCan't speak for that person, but as the S&P rose to over 30 PE, I started selling off into cash. About 70% cash now. That's just in the 401k since I'm limited to mostly index funds or some rather obscure high expense ratio distractor investments.sean.mcgrath wrote: ↑Thu Jan 06, 2022 10:52 pmBut it has to be meaningful. You kept 30% of your portfolio in cash for the last ten years, just hungering for a dip? :-pgas_balloon wrote: ↑Thu Jan 06, 2022 10:49 pmIt's some of us dry powder folkssean.mcgrath wrote: ↑Thu Jan 06, 2022 10:14 pm This is why I am always puzzled when people say they 'buy the dip.' Where does the extra money come from -- they sell the car? As Peter Lynch said, I am always fully invested.
As it lowers to 20-25 PE I will buy back in. I don't care what the nominal value is. This is especially true with a monetary tightening cycle when things are forced back to rational levels.
The Schiller PE is nearly concentric with peaks and resulting valleys as it pertains to economic booms and busts (1987, 1929, 2000, 2008). A couple of other drops in the mid 70s aligned with the removal of the Nixon price controls/OPEC oil embargo for added measure.
To me it's not rocket science. Denying the value aspect is the "this time it's different" fools' gold I personally prefer avoiding.
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Re: U.S. stocks in free fall
Looks like NFP missed, 199K actual on 400K~425K forecast / consensus. This report tends to be volatile, but November was low too.
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Re: U.S. stocks in free fall
Another lovely day for tech.
Re: U.S. stocks in free fall
Nicely below 15k now
Re: U.S. stocks in free fall
The S&P 500 needs to correct by a third, to reach fair value?
When one compares the equal-weight Nasdaq ETF QQEW and the popular Nasdaq 100 ETF QQQ, one can observe that both were neck-and-neck until early 2015. What was the CAPE on April 1st 2015? 26.79.
The CAPE value on January 1st 1999 was 40.57 vs today's "peak" of 39.35. The average CAPE value over that 22 years is 27.48, very close to the market CAPE value when megacap Tech/Growth began to diverge from the rest of the market.
When one compares the equal-weight Nasdaq ETF QQEW and the popular Nasdaq 100 ETF QQQ, one can observe that both were neck-and-neck until early 2015. What was the CAPE on April 1st 2015? 26.79.
The CAPE value on January 1st 1999 was 40.57 vs today's "peak" of 39.35. The average CAPE value over that 22 years is 27.48, very close to the market CAPE value when megacap Tech/Growth began to diverge from the rest of the market.
Amateur Self-Taught Senior Macro Strategist
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Re: U.S. stocks in free fall
This assumes of course that earnings side stays constant. We all know that in a contracting economy with tightening monetary supply, those earnings are going to suffer. Thus, CAPE goes down. Thus, the fair market of S&P is lower than you stated.Forester wrote: ↑Fri Jan 07, 2022 12:55 pm The S&P 500 needs to correct by a third, to reach fair value?
When one compares the equal-weight Nasdaq ETF QQEW and the popular Nasdaq 100 ETF QQQ, one can observe that both were neck-and-neck until early 2015. What was the CAPE on April 1st 2015? 26.79.
The CAPE value on January 1st 1999 was 40.57 vs today's "peak" of 39.35. The average CAPE value over that 22 years is 27.48, very close to the market CAPE value when megacap Tech/Growth began to diverge from the rest of the market.
Re: U.S. stocks in free fall
CAPE (Cyclically Adjusted Price-to-Earnings ratio) can be discussed in: CAPE: A much stronger predictor of stock returns than many think
Re: U.S. stocks in free fall
Stock price dropping hard
Re: U.S. stocks in free fall
Which one? VTI is still higher than where I bought this morning.
A useful razor: anyone asking about speculative strategies on Bogleheads.org has no business using them.
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Re: U.S. stocks in free fall
Got it, thanks. So you are patient enough to keep dry powder for years if necessary, I suppose. Have you been doing it long enough to benchmark vs. buy and hold?JoinTheLocalizer wrote: ↑Fri Jan 07, 2022 6:43 amCan't speak for that person, but as the S&P rose to over 30 PE, I started selling off into cash. About 70% cash now. That's just in the 401k since I'm limited to mostly index funds or some rather obscure high expense ratio distractor investments.sean.mcgrath wrote: ↑Thu Jan 06, 2022 10:52 pmBut it has to be meaningful. You kept 30% of your portfolio in cash for the last ten years, just hungering for a dip? :-pgas_balloon wrote: ↑Thu Jan 06, 2022 10:49 pmIt's some of us dry powder folkssean.mcgrath wrote: ↑Thu Jan 06, 2022 10:14 pm This is why I am always puzzled when people say they 'buy the dip.' Where does the extra money come from -- they sell the car? As Peter Lynch said, I am always fully invested.
As it lowers to 20-25 PE I will buy back in. I don't care what the nominal value is. This is especially true with a monetary tightening cycle when things are forced back to rational levels.
The Schiller PE is nearly concentric with peaks and resulting valleys as it pertains to economic booms and busts (1987, 1929, 2000, 2008). A couple of other drops in the mid 70s aligned with the removal of the Nixon price controls/OPEC oil embargo for added measure.
To me it's not rocket science. Denying the value aspect is the "this time it's different" fools' gold I personally prefer avoiding.
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Re: U.S. stocks in free fall
I doubt it'll take years for return to the mean to occur. In each bust cycle the leadup has been over just a couple of years at most. This one has been more stubborn but fortunately it seems to be unwinding now. What goes up must come down.sean.mcgrath wrote: ↑Fri Jan 07, 2022 1:48 pmGot it, thanks. So you are patient enough to keep dry powder for years if necessary, I suppose. Have you been doing it long enough to benchmark vs. buy and hold?JoinTheLocalizer wrote: ↑Fri Jan 07, 2022 6:43 amCan't speak for that person, but as the S&P rose to over 30 PE, I started selling off into cash. About 70% cash now. That's just in the 401k since I'm limited to mostly index funds or some rather obscure high expense ratio distractor investments.sean.mcgrath wrote: ↑Thu Jan 06, 2022 10:52 pmBut it has to be meaningful. You kept 30% of your portfolio in cash for the last ten years, just hungering for a dip? :-pgas_balloon wrote: ↑Thu Jan 06, 2022 10:49 pmIt's some of us dry powder folkssean.mcgrath wrote: ↑Thu Jan 06, 2022 10:14 pm This is why I am always puzzled when people say they 'buy the dip.' Where does the extra money come from -- they sell the car? As Peter Lynch said, I am always fully invested.
As it lowers to 20-25 PE I will buy back in. I don't care what the nominal value is. This is especially true with a monetary tightening cycle when things are forced back to rational levels.
The Schiller PE is nearly concentric with peaks and resulting valleys as it pertains to economic booms and busts (1987, 1929, 2000, 2008). A couple of other drops in the mid 70s aligned with the removal of the Nixon price controls/OPEC oil embargo for added measure.
To me it's not rocket science. Denying the value aspect is the "this time it's different" fools' gold I personally prefer avoiding.
Additionally, it didn't take having to wait years if you look outside just index funds. In mid-2020, when oil went negative, it was obvious we were in an odd territory and energy was become WAY oversold, along with shipping and base metal mining plays. It was as if the market priced in a lockdown lifestyle in perpetuity, which we all know is laughable. Some of that is still held, some was sold off as we got to much higher valuations.
Then when ESG became huge and coal shunned, plays like BTU at $5/share were a no-brainer, as well as shippers like DAC when they were $7.
Re: U.S. stocks in free fall
Great first week of the year!
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Re: U.S. stocks in free fall
My domestic equity funds were losers on the week.
International were close to break even.
Maybe 2022 is the year of international outperformance. (Bout time)
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
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- Location: US in NL
Re: U.S. stocks in free fall
Got it, thanks. The "70% cash" is what caught my attention -- that is an awful lot of powder.JoinTheLocalizer wrote: ↑Fri Jan 07, 2022 2:01 pmI doubt it'll take years for return to the mean to occur. In each bust cycle the leadup has been over just a couple of years at most. This one has been more stubborn but fortunately it seems to be unwinding now. What goes up must come down.sean.mcgrath wrote: ↑Fri Jan 07, 2022 1:48 pmGot it, thanks. So you are patient enough to keep dry powder for years if necessary, I suppose. Have you been doing it long enough to benchmark vs. buy and hold?JoinTheLocalizer wrote: ↑Fri Jan 07, 2022 6:43 amCan't speak for that person, but as the S&P rose to over 30 PE, I started selling off into cash. About 70% cash now. That's just in the 401k since I'm limited to mostly index funds or some rather obscure high expense ratio distractor investments.sean.mcgrath wrote: ↑Thu Jan 06, 2022 10:52 pmBut it has to be meaningful. You kept 30% of your portfolio in cash for the last ten years, just hungering for a dip? :-p
As it lowers to 20-25 PE I will buy back in. I don't care what the nominal value is. This is especially true with a monetary tightening cycle when things are forced back to rational levels.
The Schiller PE is nearly concentric with peaks and resulting valleys as it pertains to economic booms and busts (1987, 1929, 2000, 2008). A couple of other drops in the mid 70s aligned with the removal of the Nixon price controls/OPEC oil embargo for added measure.
To me it's not rocket science. Denying the value aspect is the "this time it's different" fools' gold I personally prefer avoiding.
Additionally, it didn't take having to wait years if you look outside just index funds. In mid-2020, when oil went negative, it was obvious we were in an odd territory and energy was become WAY oversold, along with shipping and base metal mining plays. It was as if the market priced in a lockdown lifestyle in perpetuity, which we all know is laughable. Some of that is still held, some was sold off as we got to much higher valuations.
Then when ESG became huge and coal shunned, plays like BTU at $5/share were a no-brainer, as well as shippers like DAC when they were $7.
Best,
Sean