Down goes the Dow

[quote]Igy the CloWn wrote:

Question for Igy:

What has more of an influence on the price of stocks: your personal view that they are overvalued, or the objective reality that they aren't? Just wondering.

What is the "objective reality" of the value of stocks?

You guys are hilarious. Buy into every nonsensical throw away line the hucksters feed you.

Hoot wrote:

[quote]Igy the CloWn wrote:

Question for Igy:

What has more of an influence on the price of stocks: your personal view that they are overvalued, or the objective reality that they aren't? Just wondering.

What is the "objective reality" of the value of stocks?

You guys are hilarious. Buy into every nonsensical throw away line the hucksters feed you.

Next they will be telling is about the magic hand of the market. Or how the market will always rise over time.

Earnings Scorecard: For Q3 2017 (with 81% of the companies in the S&P 500 reporting actual results for the quarter), 74% of S&P 500 companies have reported positive EPS surprises and 66% have reported positive sales surprises.

It seems odd that the bulls here are using increased earnings to justify the ongoing bull market, but are unwilling to even look at the price to EARNINGS ratio.

paradoxical pete wrote:

It seems odd that the bulls here are using increased earnings to justify the ongoing bull market, but are unwilling to even look at the price to EARNINGS ratio.

Who would that be?

paradoxical pete wrote:

It seems odd that the bulls here are using increased earnings to justify the ongoing bull market, but are unwilling to even look at the price to EARNINGS ratio.

What’s really odd is the bears here have been focused on the high valuations and ignoring the record setting markets. They can’t see the forest for the trees.

Imagine that five years ago you invested $10,000 in the S&P 500. How much would it be worth today, with dividends reinvested but adjusted for inflation?

The purchasing power of your investment has increased to $19,092 for an annualized real return of 13.00%.

https://www.advisorperspectives.com/dshort/updates/2017/11/02/the-latest-look-at-the-total-return-roller-coaster

?

Ghost of Igloi wrote:

2. Wondering was wrong in that the close for 3/2/2015 was 18,288.

Igy

I said the close for that date was 18,288.63 and it was.

Suppose a corner store is for sale for $100,000. Would you buy the store if it turns a profit of $2,000 per year? Probably not. How about $15,000? Probably. Would you buy the same store if the price had increased from $100,000 to $200,000 over the course of a year, and the sole justification was that profit had increased from $15,000 to $16,000? Would you pay$200,000, assuming the value is going to keep going up, solely based upon the fact that the price had increased in the past? maybe, or maybe not. But, the profit does have something to do with it. Profit increase also has something to do with it, but in proportion to the price and increase of price. That is all Iggy is saying.

paradoxical pete wrote:

Suppose a corner store is for sale for $100,000. Would you buy the store if it turns a profit of $2,000 per year? Probably not. How about $15,000? Probably. Would you buy the same store if the price had increased from $100,000 to $200,000 over the course of a year, and the sole justification was that profit had increased from $15,000 to $16,000? Would you pay$200,000, assuming the value is going to keep going up, solely based upon the fact that the price had increased in the past? maybe, or maybe not. But, the profit does have something to do with it. Profit increase also has something to do with it, but in proportion to the price and increase of price. That is all Iggy is saying.

You miss the point. I bought the store for $100,000 when Igy said not to. It’s now worth $200,000. I’m not buying another store. I’m just deciding when to sell this one.

No the other poster gave the correct interpretation of what I have said. Your post is a misinterpretation, just part of your game. Oh, so boring. I’ll take another nap.

wondering wrote:

Ghost of Igloi wrote:

2. Wondering was wrong in that the close for 3/2/2015 was 18,288.

Igy

I said the close for that date was 18,288.63 and it was.

That’s right, my apologies. But the percentages you should be using were the correct ones in the same post.

Now back to my nap.

If you bought the store when it was $100,000 then it would have had a PE ratio of 6.67, which i did not. No, chances are, you bought the store at $300,000, and it is now valued at $400,000.

The price may go up or it may go down, but prices always normalize, and sooner or later, the store price will dip below 200k. The chance of it staying over valued while real growth catches up with the price is between slim and none.

paradoxical pete wrote:

The price may go up or it may go down, but prices always normalize, and sooner or later, the store price will dip below 200k. The chance of it staying over valued while real growth catches up with the price is between slim and none.

That’s exactly why I’m trying to decide when to sell. It’s up now (big time), but it will eventually go down. The good news is I ignored the advice not to invest and will likely make a tidy profit on this investment.

Ghost of Igloi wrote:

wondering wrote:

I said the close for that date was 18,288.63 and it was.

That’s right, my apologies. But the percentages you should be using were the correct ones in the same post.

Now back to my nap.

I don’t see anything wrong with my calculations. What were you referring to?

paradoxical pete wrote:

If you bought the store when it was $100,000 then it would have had a PE ratio of 6.67, which i did not. No, chances are, you bought the store at $300,000, and it is now valued at $400,000.

That’s still a $100,000 profit. The PE is irrelevant to the profit margin.

[quote]Portia wrote:

Imagine that five years ago you invested $10,000 in the S&P 500. How much would it be worth today, with dividends reinvested but adjusted for inflation?

The purchasing power of your investment has increased to $19,092 for an annualized real return of 13.00%.

Oops.

Left out the following from the same article:

Fun Runs of the Roller Coaster

Let's increase the time frame to 10 years.

The annualized return is considerably smaller than the 5-year time frame. As of the end of last month, your $10K invested 10 years ago has grown to about $17.61K adjusted for inflation, an annualized real return of 5.67%.

I never post the entire article, just the beginning to give the reader a sense of what it is about.

I always post the link and leave it up to the reader to do the rest.