Well I stated the market was expensive in March 2015 (S&P 500 2,200). Interestingly it was back at that same level March 2020. The Fed and politicians took market to new highs by early 2022. What was the cost? $5 Trillion Fed QE and another $3 Trillion in government stimulus. Where is the market today? Back to where it was May 2021. So, all that money bought 2,000 S&P 500 points in a 13 months. More expensive today then when I first posted. Inflation is so strong it suddenly choked the “valuation doesn’t matter” argument.
2015 SP500 EPS: $100/share
2022 SP500 EPS: $225/share
Corporate profits have grown tremendously....betting that the increase in earnings is because of the government....is a difficult assertion to hang on to. I choose not to go with that one.
agip,
You neglect to factor how you arrived at that inflated EPS. That was not organic growth. Not just the government of course, but the Fed buying the bonds funded the deficit that allowed corporate tax cuts, or individual tax cuts, for example, the Republican tax cut following 2015 improved S&P 500 EPS by 10-15%. Furthermore, government stimulus supported consumer spending while people were not working, locked up in there houses. So, you had many companies with lower expenses, flush with cash, and buying back their stock. The government absorbed the losses of the travel industry. None of this occurs in a vacuum as you seem to believe. All that tailwind is in the rear view, with a government strapped for cash, a Fed painted into a corner, and a population wondering what happened.
One can look for yourself how corporate earnings were goosed first by the Republican tax cuts, then Covid relief, followed by Democratic individual tax cuts and stimulus. I like to use my analogy of parents propping up the lemonade stand. No organic growth, totally manufactured. Inflation has cornered the Fed and politicians that created a fake economy and bubble markets.
In comment to your hypothetical retiree, I was eligible for one of the first self-directed employer retirement accounts in 1982, some 40 years ago. Fortunately I can afford to be a bear— I worked until age 70.
:-)
You worked until 70 because you were up to your eyeballs in debt. I don’t understand how someone claiming to be a former financial advisor would borrow so much simply to provide a facade of unsubstantiated status. This is one area where you should have taken Flagpole’s advice.
Layoffs have started. And they're going to get worse. Recession and Housing Crash by Summer 2022?Netflix and Robinhood recently announced large layoffs. Both...
We picked up ours right out of the gate, first week of January. I guess that would mean we are locked into the lower 7.x % rate in that case?
no...you still get the same 0% fixed, but you will now get the new inflation adjustment for the next six months.
Your bond resets every 6 months from the issue date, so you will earn 7.12% til the first week in July, at which point the interest accrued in the previous 6 months will be added to the face value of the bond and the interest rate will reset to 9.62% for the next 6 months. So for the year your interest rate works out to 8.37%.
no...you still get the same 0% fixed, but you will now get the new inflation adjustment for the next six months.
Your bond resets every 6 months from the issue date, so you will earn 7.12% til the first week in July, at which point the interest accrued in the previous 6 months will be added to the face value of the bond and the interest rate will reset to 9.62% for the next 6 months. So for the year your interest rate works out to 8.37%.
thank you both.
I know that this was explained to me before. Maybe one of these days, it will actually sink in.
In comment to your hypothetical retiree, I was eligible for one of the first self-directed employer retirement accounts in 1982, some 40 years ago. Fortunately I can afford to be a bear— I worked until age 70.
:-)
You worked until 70 because you were up to your eyeballs in debt. I don’t understand how someone claiming to be a former financial advisor would borrow so much simply to provide a facade of unsubstantiated status. This is one area where you should have taken Flagpole’s advice.
One of many areas. I knew at age 14 when I had a paper route that I wouldn't be working until age 70 or even age 60. No thanks.
You worked until 70 because you were up to your eyeballs in debt. I don’t understand how someone claiming to be a former financial advisor would borrow so much simply to provide a facade of unsubstantiated status. This is one area where you should have taken Flagpole’s advice.
One of many areas. I knew at age 14 when I had a paper route that I wouldn't be working until age 70 or even age 60. No thanks.
Well, to be clear, I knew I didn't WANT to work that long. Initially out of college I thought I would have to work until at least age 67 because that's what people told me...no more pensions, they said, things getting too expensive, they said. Then, when I found out about investing, and I saw how the returns were doing, I changed over time my retirement age from 67 to 65 to 62 to 59.5, and now to the reality of 55 in June.
“There is essentially no realistic scenario in real life where the market would drop 30% three years in a row. Probability is essentially zero (unless the entire US financial system collapses, in which case cash and bonds will be worthless also).”
From 3/2000 to 10/2002 the NASDAQ collapsed 83% and did not reach a new durable high until spring 2015. Not 30% three years in a row, but significant drop. At the high point tech was about 30% of the market cap of the S&P 500, and dominated the index EPS. Most here discount the market risk using statistics that have little to do with market valuations and current to future economic conditions. The financial industry doesn’t help, encouraging excessive risk. IMHO.
I'm talking about the S&P 500 (or total market; they're practically the same at this point). Whatever the NASDAQ has done in the past is not relevant.
You worked until 70 because you were up to your eyeballs in debt. I don’t understand how someone claiming to be a former financial advisor would borrow so much simply to provide a facade of unsubstantiated status. This is one area where you should have taken Flagpole’s advice.
One of many areas. I knew at age 14 when I had a paper route that I wouldn't be working until age 70 or even age 60. No thanks.
I had very interesting jobs throughout my working years. Like you I had a paper route as a young man, in fact delivered papers the day JFK died. Worked under the Director of Marketing at Northrop Aircraft right out of college, while still competing as a national class marathoner (2:19:15 Boston 1974). At age 25 went back to college at USC to earn my masters while working part time painting apartments in L.A. Upon graduation began a successful career as a track coach starting at a junior college as an assistant and completing a 19 year career at a Division I school as a head coach. My last career was 24 years as a financial advisor saw me earn during my years the professional designations of CFP, CLU, ChFC, and Associate Vice President at Morgan Stanley.
Some people just live lives of achievement, others mindless harassment of others on social media. Of course this is not directed at you Flagpole.
If Musk is buying Twitter at $53 or $54 per share or whatever the offer is, why is Twitter still trading at < $50?
Why not buy it?
there's a chance the deal will not go through.
If the deal does not go through and no other deal materializes, TSLA stock will likely fall back quite a bit.
but if the deal goes through as advertised, you will make around 10%.
Some portion of the 49-54 gap is because of the time value of money.
Many people do nothing but bet on whether deals like this one will go through. So it's not just random behavior here - there is real reason to think there is a material chance the deal will blow up.