Down goes the Dow

ack I just paged back a couple pages and see that Maser is in fact back on the thread.

was I right to malign him? I'll see.

december marks the start of my review of predictions.

I'll start with a good one - A Morgan Stanley analyst predicted exactly what would happen in 2017

https://www.cnbc.com/2017/04/10/morgan-stanleys-new-strategist-says-2017-could-be-like-1999.html

Oh, but the same guy was negative in March of 2009.

CAPE 10 just below the high prior to Black Tuesday 1929. O one cares. It doesn’t matter.

Fake markets.

Oh well.

http://www.multpl.com/shiller-pe/

Ghost of Igloi wrote:

Oh, but the same guy was negative in March of 2009.

CAPE 10 just below the high prior to Black Tuesday 1929. O one cares. It doesn’t matter.

Fake markets.

Oh well.

http://www.multpl.com/shiller-pe/

The CAPE 10 is not a predictor.

Depends on what you mean.

Ghost of Igloi wrote:

Depends on what you mean.

I mean it was not created as a tool to predict what is going to happen to the market. It is simply a measure of valuation.

You may have your opinion of what those valuations mean, but that is solely your personal interpretation.

Ghost of Igloi wrote:

Oh, but the same guy was negative in March of 2009.

CAPE 10 just below the high prior to Black Tuesday 1929. O one cares. It doesn’t matter.

Fake markets.

Oh well.

http://www.multpl.com/shiller-pe/

So, what to do then since we can't predict sh!t?

Pretty simple really:

1) Become debt free but for house and LARGE student loans.

2) 15% minimum into stock mutual funds within retirement vehicles.

3) Pay off student loans and house.

4) Invest more...if limit is reached in 401k and IRAs, then do non-retirement vehicles.

5) Optional - invest in individual stocks with no more than ~20% in any on sector of the market, so you need 5 minimum stocks, all in different sectors.

It is super fun to have been in the market since before the big crash in 2008 and then since the Dow was at 6500...all the way up to now 24,000+. Too much is lost getting the timing wrong and then being out altogether for a stretch.

Get your financial house in order (get to zero debt) and then just keep money in the market...investing MORE if you can if there is a big drop, but ALWAYS stay at 15% minimum.

Really not that hard.

That is your view, many more believe at a CAPE of 32 the future 10 year expected market return is -2 % to +2%. There are other models, such as Market Cap/Gross Value Added or CAPE 10 Adjusted For Profit Margins that have a higher correlation to future market returns (92-93% or above the 82% of CAPE 10). Those valuations models give future 10-12 year market returns of -2%-0%. Any of these valuation models would gage interim market loses in excess of -50%. The worst valuation model for correlation to future market returns is the Fed Model or Dividend Discount Model (correlation of 10 Year Treasury to Dividend Yield of S&P 500). I believe it is in the range of 35% correlation, yet it is the valuation model most used to justify current market rise.

It is Robert Shiller's view.

Flagpole,

Generally agree. I disagree with one thing, the market is more complicated than that. A 60 year old that is 70% allocated to stocks has a high chance of financial plan failure at the current valuation. What was your comment when you were at the market low on a portfolio adjustments? And now it is smooth sailing? I think not. Respecting your own opinion of course.

Igy

Pfau wrote:

It is Robert Shiller's view.

And not Jim Cramer’s view.

I’ll cast my investment lot with Shiller.

Pfau wrote:

The CAPE 10 is not a predictor.

Ghost of Igloi wrote:

Oh, but the same guy was negative in March of 2009.

CAPE 10 just below the high prior to Black Tuesday 1929. O one cares. It doesn’t matter.

Fake markets.

Oh well.

http://www.multpl.com/shiller-pe/

well why should we care? 10 years ago the CAPE was at oh 27 and no doubt people were saying 'don't invest! 10 year returns will be awful!

We know now that 10 year returns are fine: 8.3% per year.

(but yeah, stocks feel 40% the next year after that 27 CAPE)

Happy Holidays Igy - hope all is well with you and your family.

I'm doing well - 100% healthy and training well. Hoping for some good indoor track races over the winter. But no good race reports to pass along.

agip,

Thanks, we are doing well here. Everyone healthy doing well in their professions. How is your son’s college going? Wish the best for you and your family.

I have dropped over 2:00 in the 5k and 5:00 in the 10k since the start of the year. The biggest race in Boise is the Turkey Day 5k, over 4,000 people. I finished 1st 65-69 age group in 22:57 official, 22:31 GPS (7:15, 7:11, 7:19).

The Boise State indoor track opened this week. I plan to transition indoor next week with four races alternating mile and 800m in January/February. You will race 3k indoor, correct?

Happy Holidays!

Igy

Ghost of Igloi wrote:

Pfau wrote:

It is Robert Shiller's view.

And not Jim Cramer’s view.

I’ll cast my investment lot with Shiller.

Exactly. Cramer is all about prognosticating. Shiller no so much. Shiller is no prognosticator.

agip wrote:

Ghost of Igloi wrote:

Oh, but the same guy was negative in March of 2009.

CAPE 10 just below the high prior to Black Tuesday 1929. O one cares. It doesn’t matter.

Fake markets.

Oh well.

http://www.multpl.com/shiller-pe/

well why should we care? 10 years ago the CAPE was at oh 27 and no doubt people were saying 'don't invest! 10 year returns will be awful!

We know now that 10 year returns are fine: 8.3% per year.

(but yeah, stocks feel 40% the next year after that 27 CAPE)

Bingo. Those who use the CAPE 10 as a proxy for future market movement are missing the point. It’s about valuations period. We'll leave it up to the unwashed to interpret this to their liking.

OK. Bottom line no cares until the market is down significantly. At that point the reaction is who would have known? I just disagree with that view. Nothing more, nothing less.

Igy

Which has nothing to do with Shiller's CAPE 10. That’s my point.