No, that view is wrong.
No, that view is wrong.
Let’s take these one at a time wrote:
Ghost of Igloi wrote:
1. I first posted here 3/2/2015. I am not the original poster. At that time I said the risk in the markets were underappreciated, and that included bonds. Less than one week prior to the election on 11/4/2016 the market was at the same level as when I first posted.
What risk was under appreciated? That the market would stay relatively flat for a number of months before soaring to record high after record high? That doesn’t sound very risky.
Pretty ignorant view and one based on markets at record valuations. Market history can point to the ignorance of your comment.
Ghost of Igloi wrote:
3. The fall tax package passed by the Rebublican lead Congress fueled corporate welfare boosting the stock market and economy for one last sugar high. Not only was this ill timed but sets up the economy and the stock market for greater mean reversion down the road. It encouage more financial engineering at the peak of the economic cycle driving up the deficit to unsustainable levels.
The tax advantage is not a one time “sugar high.” It will be an annual advantage perhaps until the tax law is next changed.
Also, the mean is increasing, so a reversion will not be as deep as in the past. And how does the economy mean revert?
You are right that the deficit/debt will increase, but I think the real culprit there is the personal tax cut, not the corporate one.
Wrong view again. All the corporate tax cut accomplished is huge stock buybacks which does nothing for the long term growth of the economy or businesses.
Ghost of Igloi wrote:
4. Warren Buffett has abandoned his value oriented roots. He and Charlie Munger are more of the face “cheerleading” side of BRK, possibly setting up a revision of their reputations down the road. They are human, they bought IBM and sold all their positionearlier this year. BRK owns a fair share of cyclical businesses. AAPL charges a lot for thier products, has not come up with anything unique in years, and primarily buys back their stock. The stock will be unlikely to grow at the same rate as in the past and their technology will eventually be cloned by others. BRK made a good trade that they will eat later.
Last week BRK had their best day in almost 7 years. The stock has virtually doubled in 5 years. But I’m sure WB appreciates your advice.
Regarding AAPL, they provide services that many people are willing to pay a premium for. Of course their stock has only tripled in the last 5 years. Your assessment that it is unlikely to continue growing at that rate makes sense, but it should continue to grow based on historical evidence. It’s a very good company.
Gruntz wrote:
Ghost of Igloi wrote:
[quote]Life ain’t fair sometimes wrote:
[quote]seattle prattle wrote:
[quote]Ghost of Igloi wrote:
You have misinterpreted my message. I have never said to be out of the market. My arguments have all been based on market valuation, a common point of view. Nothing controversial at all in this. While most here havea clouded perspective, blinded by rising equity prices, believing that it represents something durable. We’ll see how well that works.
Where’s that irony guy?
So you claim someone has misinterpreted your message, then you put words into someone else’s mouth.
And that’s not even addressing your myopia surrounding valuations.
What is a "myopia surrounding valuation"?
Ghost of Igloi wrote:
5. The fact that FAANMG stocks are trading at multiples of where they were 3 1/2 years ago is not an endorsement in my view. As I pointed out recently MSFT had less revenue in 2017 than 2015 and the company’s debt is 2 1/2 times larger. So the only justification I can see in the purchase is for someone else to pay a higher price for the stock. Of course that willingness to pay up will change quicker than one thinks as we saw with FB last week.
Not an endorsement for what...buying them 3.5 yrs ago? MSFT is now 3-4 times where it was 5 years ago.
Regarding your “only justification,” isn’t that the point?
Ghost of Igloi wrote:
6. We have a divided electorate lead by politicians that avoid the most pressing national challenges. The population is oblivous to risks as they live large on an ever growing level of debt.
Your first sentence is accurate. The second is unfounded speculation.
Let’s take these one at a time wrote:
Ghost of Igloi wrote:
6. We have a divided electorate lead by politicians that avoid the most pressing national challenges. The population is oblivous to risks as they live large on an ever growing level of debt.
Your first sentence is accurate. The second is unfounded speculation.
Huh? Debt levels have never been higher. Stretch to buy cars, houses, vacations, restaurants, entertainment but don’t save two nickels for retirement. Oh throw in student loan debt.
idiot investor wrote:
Ghost of Igloi wrote:
I guess it wasn’t so easy money. Another DGTD Contrarian Bad Karma Indicator or in this case Dopes That Fund Zuck’s Lifestyle “Investment.”
Up 11% since you posted that FB quote 3 months ago. I’d say that’s easy money.
Down another 4% and your gains evaporating as we speak. Still say it’s easy money?
Ghost of Igloi wrote:
7. Optimism is good when balanced against reality. Unfortunately investors have been spoiled the last few years by fake market gains. Gains that can only be justified on the basis of selling a security to someone else at a higher price.
The gains have been real, not fake, for anyone who sold at a profit.
Your last sentence is not completely accurate since it excludes dividend gains.
Fake market gains are like the FB investor riding high until the stock drops 25% in a matter of days. And there are more fake valuations driven by unrealistic metrics. Sure someone can book gains but it is impossible for stock investors to collectively avoid the losses. FANG has lost $218 Billion in market cap in a couple of days and this is just a minor event. Wait for something big.
Ghost of Igloi wrote:
8. Greed and fear are common human emotions, but are often times fueled by poor decisions.
I take your point, but I will point out that greed is not an emotion.
I was thinking more in terms of investor behavior. The feeling of being left behind in a rising market for example.
Ghost of Igloi wrote:
Market history can point to the ignorance of your comment.
Still using Market History. Sad!
About due for another picture of Mellon stepping off the Dow at 17,000 cliff.
Although 3 years later, I'll have to be stepping off the Dow at 25,000 cliff.
Make sure you save room on your itinerary to dangle your toes over the Dow 9,000 cliff. Hopefully you will realize that it is too late to jump,
Ghost of Igloi wrote:
9. If you are a student of market history you would have been cautious 3 1/2 years ago. Nothing that has taken place in the last 3 1/2 years is durable. In fact the current investment environment is the worst in our lifetime. At least in 2000 and 2007 the 10 Year Treasury traded at a yields of 6% and 5% respectively.
The market is never durable. It is fluid.
Everything else you wrote here is opinion. You are entitled to your opinion, but you are not entitled to pass it off as fact.
Let’s take these one at a time wrote:
Ghost of Igloi wrote:
9. If you are a student of market history you would have been cautious 3 1/2 years ago. Nothing that has taken place in the last 3 1/2 years is durable. In fact the current investment environment is the worst in our lifetime. At least in 2000 and 2007 the 10 Year Treasury traded at a yields of 6% and 5% respectively.
The market is never durable. It is fluid.
Everything else you wrote here is opinion. You are entitled to your opinion, but you are not entitled to pass it off as fact.
Not so, everything in that statement is evidence based. Your free to characterize it any way you like.
Ghost of Igloi wrote:
10. I stand by my original statement, which does not argue for zero allocations to stocks or bonds. And it does not mean do not own FAAMNG. It does argue for one to balance the allocation to match liquidity needs and risk tolerance, something most investors are clearly not doing today.
In your original statement, you said the next big move would be down rather than up. You were clearly wrong.
Also, though you did not argue for zero stocks/bonds, you did claim that cash was the superior asset. That may have been true at the time for a very small percentage of investors, but history has proven it to be the losing play for the great majority.
Ghost of Igloi wrote:
I suppose being forced to sell assets because your company is drowning in debt is good news. Well then OK.
Let me make sure I understand your positions correctly.
1. Corporate debt is bad,
2. Paying down corporate debt is bad, and
3. Corporate cash is good as long as it’s not used for buybacks.
Is that correct?