interesting thing is that the very high valuation is because of the tech giants. Take them out and the average SP500 stock has a totally normal PE of 17.
I have moved some money from the regular SP500 to the unweighted SP500...I lose some of that tech octane and quality but I get the best companies in the world in a surging economy for a normal valuation. Seems pretty good.
I moved money from...oh wait, no I didn't. Unless Trump takes my money (which is possible), I don't need to react to anything.
Palantir has been doing very well - up almost 50% since November 4. Good earnings call then combined with being a Trump-friendly stock.
The WSJ wrote about this a couple of weeks ago, but Trump-friendly industries will likely surge even more over the next 2 years. Tesla will certainly benefit a ton but I think other companies in industries Trump likes / with leadership friendly to Trump himself will do well as well.
As I have mentioned earlier, I've been putting data (Shiller's CAPE; S&P500 daily prices 1927-2024) on the rack, so to speak. Caveat, the problem with torture is the victim will give the answer his tormentor requires of him.
Anyway, you probably forgotten some years back I pointed out that a Robert Shiller before 1929, using only the data available, would have come to the exact opposite conclusion than he did 60 years later! A high CAPE was better (R^ was weak). Shiller now shows an Excess CAPE yield, he turns CAPE into a yield and subtracts the 10 yr note yield. It's R^ is better than the plain CAPE-Future10YR Real CAGR; .3381 to .258 for all the data. There is that anomaly that I pointed out and I have a hypothesis. There is a pivot around 1914, and what was special about 1914? The US finally has a Central Bank and it's mission isto combat deflation. Stocks usually did well before then when there was inflation and badly when there was deflation. After 1914 inflation will drive down CAPE (and the SP500) as the market believes the Fed will increase rates. A lower CAPE will increase it's yield and offset the rise of the 10yr yield. The excess CAPE yield will also rise.
As I said, using plain CAPE-Future 10yr real returns before 1914 showed a higher CAPE would have a high return, but the R^ was.0973. Using excess CAPE Yield (ECY) it has a .4904 R^. After 1914 the ECY has a R^ of .4842 vs plain CAPE R^ of .3561. Current ECY is about 1.20%; to get into the lowest 10% it must get to .82%. Lower 10% average Real CAGR is .33% and 1Std are +3.55% and -2.89%.
The Government has been subsidizing the Stock Market thru low corporate tax rates, low interest rates, and high deficit spending. It makes sense CAPE ratios are high.
I have been far too busy to have participated in the rally, and have also failed to add to my btc position.
Now that I have some time, I’m going to sit in cash for a bit, I feel out-of-touch with both the markets and my investing sense. I sold pretty much everything just before the election, with all but 1 equity up at least 30% this year. Wow. The other one is an old pink sheet dog, I hold only a few grand.
What a year. Am def now waiting for a buying opportunity. Speaking of which 20-yr yields are increasingly more juicy, now north of 4.7%...
The Government has been subsidizing the Stock Market thru low corporate tax rates, low interest rates, and high deficit spending. It makes sense CAPE ratios are high.
The Government has been subsidizing the Stock Market thru low corporate tax rates, low interest rates, and high deficit spending. It makes sense CAPE ratios are high.
Graph and download economic data for Moody's Seasoned Baa Corporate Bond Yield-Consumer Price Index for All Urban Consumers: All Items in U.S. City Average from Jan 1913 to Oct 2024 about Baa, bonds, yield, corporate, interes...
You actually had economic growth in the 1940s, and had to pay off the debt from WWII. Not manufactured growth to fund a Government that largely does things wasteful and unnecessary. The problem today is what do you do with the bureaucratic mess that has become in some sense a jobs program for lunatics.
For just a minute there I thought somebody was writing about Trump’s cabinet appointments…
Before the truth of this post is removed, remember Secretary of State Anthony Blinken lied while orchestrating the Hunter Biden Laptop Russian Disinformation Letter signed by 51 intelligence officers. And earlier this year Secretary Blinken played the electric guitar and sang rock n’ roll at a Kiev disco while hundreds of Russians and Ukranians were dying on the battlefield. More than one lunatic thought it was so cool.
