Down goes the Dow

Ghost of Igloi wrote:

I guess the question one should ask is whether you think the next ten years will be anything like the last. Perhaps the next ten years will be closer to 3/2000 through 3/2010 where the S&P 500 lost 3% per year.

We've been reading your "Perhap's" for the last 3 years. They've been wrong!

I haven't posted here for three years, but you can never get that thru your thick skull. In the end it really doesn't matter if the market drops 50%, but you can't seem to understand that as well.

mellon wrote:

Ghost of Igloi wrote:

I guess the question one should ask is whether you think the next ten years will be anything like the last. Perhaps the next ten years will be closer to 3/2000 through 3/2010 where the S&P 500 lost 3% per year.

We've been reading your "Perhap's" for the last 3 years. They've been wrong!

Statman Carothers wrote:

original idiot investor wrote:

I can't tell whether that answers my question about average P/E...?

It doesn’t. Igy thinks median and average are the same thing. They are not.

Median, I did not say average.

Ghost of Igloi wrote:

I guess the question one should ask is whether you think the next ten years will be anything like the last. Perhaps the next ten years will be closer to 3/2000 through 3/2010 where the S&P 500 lost 3% per year.

given these high valuations I would expect a bit worse over the next 10 years yeah - I'd guess 4-6%. depending on inflation.

all time highs across the board today in the US Small, medium, large.

The powers that be are hoping to see every last drop of money poured into the market. Now, the meltup frenzy has everyone putting their milk money into the market. Only a matter of time until the big bust.

professor Myhill wrote:

The powers that be are hoping to see every last drop of money poured into the market. Now, the meltup frenzy has everyone putting their milk money into the market. Only a matter of time until the big bust.

please name those powers

oh pleez oh pleez

Ghost of Igloi wrote:

Statman Carothers wrote:

It doesn’t. Igy thinks median and average are the same thing. They are not.

Median, I did not say average.

You replied to a question about an average by giving the median. You obviously do not understand the difference.

agip wrote:

professor Myhill wrote:

The powers that be are hoping to see every last drop of money poured into the market. Now, the meltup frenzy has everyone putting their milk money into the market. Only a matter of time until the big bust.

please name those powers

oh pleez oh pleez

Some guy named Jake that lives in the Bronx. ha ha.

agip wrote:

Ghost of Igloi wrote:

I guess the question one should ask is whether you think the next ten years will be anything like the last. Perhaps the next ten years will be closer to 3/2000 through 3/2010 where the S&P 500 lost 3% per year.

given these high valuations I would expect a bit worse over the next 10 years yeah - I'd guess 4-6%. depending on inflation.

I'm inclined to lean toward John Hussman's projection for 12 year returns in the negative.

Why would you lean towards projections based on nonsense? Hussman is a master of using smoke and mirrors to pull the wool over the eyes of his loyal followers. It’s pure effluvium.

Statman Carothers wrote:

Ghost of Igloi wrote:

Median, I did not say average.

You replied to a question about an average by giving the median. You obviously do not understand the difference.

I was going to call him on this too, but median is also one measure of "average," which in many people's minds means the same thing as arithmetic mean, but can mean median, mode, geometric mean, etc etc depending on context.

Googling the US market's average PE over time, there are clearly relationships between the index values and average PE. But is it a leading indicator that tells us general path of the market over the next, say, 6-24 months, or is it reactive, responding to changes in the market? I ask because I don't know. And I really don't know very much at all about US markets, not being from there or owning any US equities.

A couple of points, you can take to create your own assumption:

1. The average historical PE is about 16, the highest about 44 and lowest about 4.

2. Today, there are more stocks at a higher PE than at another time (median number), as opposed to 2000 when the market had a very high average PE driven primarily by a much smaller number of highly valued technology and biotechnology stocks. At that same time value or dividend paying stocks had low to average PEs.

3. PEs by definition will be influenced by the price investors are willing to pay and the corporate earnings. Last Twelve Months S&P 500 EPS for 6/30/2017 is $104.01 or $1.95 below what was recorded 9/30/2014 when the index traded at 1,972. So clearly investors are willing to pay more for a unit of earnings.

4. CAPE 10, Tobin's Q, Buffett Indicator, or Market Cap/Gross Value Added are not market timing tools, but rather good at predicting long term returns.

5. Currently using Shiller's CAPE 10 the market has been higher on a valuation basis Black Tuesday 1929 and last months of the Technology Bubble 1999-2000. Adjusting for embedded profit margins, CAPE 10 has never been higher.

Igy

A couple of clarifications:

3. Investors are willing to pay more because EPS has risen steadily over the past three years and is projected to set record highs in the coming quarters.

4&5. Backward looking metrics with relatively short time frames typically do a poor job of predicting long term returns. The CAPE 10 is particularly poor in this area.

More interesting reading. For his own entertainment I guess!

Obviously, no one is paying attention to it given his accuracy over the past 3 years as it relates to market performance.

mellon,

Are you making a killing on your 10 shares of AMZN?

Igy

Robert Butrick wrote:

A couple of clarifications:

3. Investors are willing to pay more because EPS has risen steadily over the past three years and is projected to set record highs in the coming quarters.

4&5. Backward looking metrics with relatively short time frames typically do a poor job of predicting long term returns. The CAPE 10 is particularly poor in this area.

More clarifications:

#3. Since 9/30/2014 S&P 500 EPS has fallen 1.8% and the index has climbed 28%. Most of that rise has been since 11/4/2016 days before the election.

#4&5. CAPE 10 is a better predictor of future investment returns than retail investor behavior which typically sees them enthusiastically buy at the top and sell at the bottom in despair.

Ghost of Igloi wrote:

mellon,

Are you making a killing on your 10 shares of AMZN?

Igy

More than the cash you've had stuffed in your mattress for 3 years.

Oh, but my mattress is empty.