No, you want to target a thing, when speculative behavior was the cause. Whether it is stock trading, stock buybacks, or a belief that the Fed had your back. It always works that way. You were sold a narrative that cannot stand scrutiny.
No, you want to target a thing, when speculative behavior was the cause. Whether it is stock trading, stock buybacks, or a belief that the Fed had your back. It always works that way. You were sold a narrative that cannot stand scrutiny.
[quote]Eliud "Armstrong" Kipchoge wrote:
This won't be another Great Depression, not even close.
This could be worse. Fed printing dough like crazy and buying the toxic assets for 100 cents on the dollar from the Big Banks...you remember all that shite that has been with the Banks since 2008.
Congressional approval no longer needed for Fed's doing this.
Reserves no longer required.
This is the end of American capitalism
https://www.zerohedge.com/s3/files/inline-images/everything%20bubble_1.jpg?itok=hAjXIVOQRacket wrote:
Ghost of Igloi wrote:
Ridiculous valuations made it inevitable.
Are you saying equity valuations spawned a virus that has led to a global pandemic?
Ghost of Igloi wrote:
No, you want to target a thing, when speculative behavior was the cause. Whether it is stock trading, stock buybacks, or a belief that the Fed had your back. It always works that way. You were sold a narrative that cannot stand scrutiny.
Igy, allow me to tell you my interpretation. Regardless of the level of valuation that the stock market was at before the pandemic hit, it would have lost about the same percentage as it has. Maybe a tiny bit less, but not much. And i say a tiny bit less in acknowledgement that many investors understand that some business who were a bit extended in debt may not be able to weather this coming recession. But in terms of debt, with these massive bailouts, it's just more business as usual in terms of markets being propped up.
The virus is largely responsible for the downturn. It is not something any of us mortals could have reasonably seen coming. If anyone were to live with that kind of cautionary stance, they probably would have missed out on the longest running bull market of our lifetime.
But that is all behind us, and i am more focused on what to do now and going forward.
Seattle,
Speaking of going forward I would look to earnings and PE multiples. Prior to the Republican tax cuts the S&P 500 GAAP previous 52 week high EPS was about $120, and after about $135. Historical average multiple over 140 years is 16. At the high then fair value was $135 x 16 = 2,160. Or pretty close to where we were at the lows of the day. I would say the corporate tax cuts are in jeopardy going forward, earning are sure to be cut, and a fear multiple under 16 should apply. Come to your own conclusions, but this should be at the front of your thought process of where we are going.
Feel free to pose any questions on the above.
Igy
Igy, thank you for the ideas, but i don't feel that using p/e averages based over a period of 140 years is applicable to our modern markets. Something like a 15 year or 20 year aqverage would be more appropriate to my mind. I don't think these are the same markets of our parents and grandparents, nor are business metrics.
Valuations have been high for years. In fact, they were higher a few years ago than they were in 2019. Yet the markets continued to set new highs. If valuations mattered much, that never would have happened.
This crash has been caused almost entirely by the pandemic. Anyone suggesting otherwise is simply clueless.
Johannes wrote:
Valuations have been high for years. In fact, they were higher a few years ago than they were in 2019. Yet the markets continued to set new highs. If valuations mattered much, that never would have happened.
This crash has been caused almost entirely by the pandemic. Anyone suggesting otherwise is simply clueless.
You’ll learn the hard way. Most people do.
Ghost of Igloi wrote:
Johannes wrote:
Valuations have been high for years. In fact, they were higher a few years ago than they were in 2019. Yet the markets continued to set new highs. If valuations mattered much, that never would have happened.
This crash has been caused almost entirely by the pandemic. Anyone suggesting otherwise is simply clueless.
You’ll learn the hard way. Most people do.
My brokerage portfolio was up today. And i have no short positions. Maybe i'm just a fast learner.
Ghost of Igloi wrote:
https://twitter.com/DavidBCollum/status/1241918624606101508
?
Johannes wrote:
Valuations have been high for years. In fact, they were higher a few years ago than they were in 2019. Yet the markets continued to set new highs. If valuations mattered much, that never would have happened.
This crash has been caused almost entirely by the pandemic. Anyone suggesting otherwise is simply clueless.
Throw in oil prices too. That was a non-trivial kicker
Ghost of Igloi wrote:
No, you want to target a thing, when speculative behavior was the cause.
Right, so, speculative behavior literally spawned the virus that is causing businesses to shut down then?
The Fed raising the rate and everyone realizing companies with sh!t loads of debt are going to have to pump more money into servicing it and less into profit making is an example of a bubble you claim existed bursting. A recession in China and the sudden realization that aggressive expansion there isn't going to play out like everyone thought and now profits will be sunk by a shrinking customer base would another example.
I would never have predicted that you’re so stupid that you’d still be apologizing for trump.
jesseriley wrote:
I would never have predicted that you’re so stupid that you’d still be apologizing for trump.
Don’t mind the Russian troll. He’s just sad because he misses Stalin and Pol Pot.
No one could have predicted that trump would be a traitor aligned with putin.
Then give him a virus to deal with...
jesseriley wrote:
No one could have predicted that trump would be a traitor aligned with putin.
Then give him a virus to deal with...
Let me interpret the Commie’s meaning:
traitor == someone who lives and fights for America
He had bone spurs...
OK, just keep doing your thing.
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