“Our best valuation measures are singularly at the highest levels in history, exceeding both 1929 and 2000. In contrast, the CAPE is only in the top 3% of historical levels. That’s because the profit margin embedded into the CAPE (the denominator of the CAPE, divided by S&P 500 revenues) is easily at the highest level in history. Indeed, it’s over 40% above its historical median. We don’t need to assume anywhere near a full reversion to the median. Even a return to the highest embedded margin ever observed prior to 2015 would cut that difference roughly in half. So despite the fact that the CAPE is above 97% of all readings in history, one should consider even this reading to be understated – unless one is also willing to rely on the assumption that the profit margin embedded into the CAPE will remain at the most extreme level in history, forever.
Again, I can’t say this enough: I am a great admirer of Robert Shiller. But I am also deeply concerned by the fiction – increasingly bordering on propaganda – that depressed interest rates somehow “justify” what are now easily the most extreme stock market valuations in history, based on the measures that we find best correlated with actual subsequent market returns.”
John Hussman, December Market Commentary
Down goes the Dow
Report Thread
-
-
Hussman is an idiot.
-
Hey, Igy, futures are up pretty solidly and a heck of a lot of the uncertainty just a couple of months ago has been pulled out of the market angst.
Seriously, valuations are out of wack, and I get that. That is certainly something to keep in mind. But with the Fed being as accommodating as they have proven to be, and the horizon looking better in terms of opening back up and multiple vaccines rolling out already, and more stable leadership going forward, wouldn't think that it makes just a little bit of sense to stay the course at this point. And add to that the lack of viable alternatives of where to invest and be able to expect a reasonable ROI.
I mean, esp. since this return to the mean for valuations has been heralded for a very long time and those that have heeded it have lost out on some of the best bull markets of our lifetime.
And even if it isn't for some particularly risk averse investors, can't you see that it isn't entirely foolish to stay the course in this case? -
Seattle,
Futures are up based upon Janet Yellen testimony as part of her confirmation hearing. Futures moves are manipulated by institutions during non-market hours. This has been a regular routine since the spring. I believe we are more likely to see a 10-20% drop over the next couple of weeks as it becomes apparent that there are no easy solutions to the large number of unemployed and structural damage to the economy. Over the intermediate term the excessive valuation just tell you where the market eventually goes, in my view wiping out a decade or more of investor returns.
Igy -
Ghost of Igloi wrote:
I believe we are more likely to see a 10-20% drop over the next couple of weeks as it becomes apparent that there are no easy solutions to the large number of unemployed and structural damage to the economy.
lol challenge 100% accepted.
Your first mistake is thinking that Wall Street cares about poor unemployment people (lol). Regardless of that though, those unemployed people are not only about to get another check worth $1400, but they're also getting unemployment benefits boosted again!
As for the "structural damage to the economy," none of that turned out to be true. Americans basically had all their sh!tty spending habits curbed for them when the government shut down their ability to spend it on a bunch of dumb unnecessary sh!t for several months. Bank deposits are legendarily high now and the vaccine is rolling out harder everyday. Businesses that cut office space and move people to permanent wfh are about to save so much money that it could fuel Wall Street's revenue demands for the whole year.
I mean the list just goes on and on. There is really not a single good practical bearish case to be made other than "sToCks tOo hIgH." Your boomer metrics are a thing of the past -
“ And add to that the lack of viable alternatives of where to invest and be able to expect a reasonable ROI.
I mean, esp. since this return to the mean for valuations has been heralded for a very long time and those that have heeded it have lost out on some of the best bull markets of our lifetime.
And even if it isn't for some particularly risk averse investors, can't you see that it isn't entirely foolish to stay the course in this case?”
Seattle,
Fewer investment alternatives are indicative of a speculative climate created by the Fed. Low interest rates point to poor future returns in all assets, and in stocks the speculation is noted as the market PE rises to reCord levels. It simply turns a long duration asset into a longer duration asset. So the passive investor that buys the market today gets a return of principal 10-15 years down the road. That is what happens when a bubble drive the market PE from 16 to 32. If the market behaves anywhere close to past bubbles, there will be no consequences to those that believe valuations matter, in fact they will be far better off.
Igy -
Dr. Racket wrote:
Ghost of Igloi wrote:
I believe we are more likely to see a 10-20% drop over the next couple of weeks as it becomes apparent that there are no easy solutions to the large number of unemployed and structural damage to the economy.
lol challenge 100% accepted.
Your first mistake is thinking that Wall Street cares about poor unemployment people (lol). Regardless of that though, those unemployed people are not only about to get another check worth $1400, but they're also getting unemployment benefits boosted again!
As for the "structural damage to the economy," none of that turned out to be true. Americans basically had all their sh!tty spending habits curbed for them when the government shut down their ability to spend it on a bunch of dumb unnecessary sh!t for several months. Bank deposits are legendarily high now and the vaccine is rolling out harder everyday. Businesses that cut office space and move people to permanent wfh are about to save so much money that it could fuel Wall Street's revenue demands for the whole year.
I mean the list just goes on and on. There is really not a single good practical bearish case to be made other than "sToCks tOo hIgH." Your boomer metrics are a thing of the past
I suppose in the world of your millennial mind the productivity of the nation is positively measured by money printing, increased unemployment, vacant offices, and tens of thousands of closed or zombie businesses. I’ll stick with metrics that actually have a basis in fact, and certainly common sense. -
Amazingly stupid.
-
Amazingly obsessed.🤡
-
Igy, don't fight the trend. That outlook just hasn't been panning out I think we are amidst a new normal.
-
Dr. Racket wrote:
agip wrote:
And this is just one reason not to buy or sell options. There are many others.
https://twitter.com/chriscamillo/status/1350958011871879169?s=21
That's like saying "stocks are a bad idea" when you hear about idiots who buy the wrong ticker
Racketini what does this guy stand to lose at the open?
I study options to pass tests and forget everything 48 hours later. -
agip wrote:
Dr. Racket wrote:
agip wrote:
And this is just one reason not to buy or sell options. There are many others.
https://twitter.com/chriscamillo/status/1350958011871879169?s=21
That's like saying "stocks are a bad idea" when you hear about idiots who buy the wrong ticker
Racketini what does this guy stand to lose at the open?
I study options to pass tests and forget everything 48 hours later.
Not really sure. He's basically just showing us a small screenshot with a margin call notice. His statement doesn't make sense either and it's kind of vague. Did he buy/sell calls/puts? What expiration date was he going for? Did he get assigned shares?
I usually just assume things like this are fraudulent and just made up for re-tweets and popularity -
seattle prattle wrote:
Igy, don't fight the trend. That outlook just hasn't been panning out I think we are amidst a new normal.
Glad it is working for you Seattle. -
Dr. Racket wrote:
agip wrote:
Dr. Racket wrote:
agip wrote:
And this is just one reason not to buy or sell options. There are many others.
https://twitter.com/chriscamillo/status/1350958011871879169?s=21
That's like saying "stocks are a bad idea" when you hear about idiots who buy the wrong ticker
Racketini what does this guy stand to lose at the open?
I study options to pass tests and forget everything 48 hours later.
Not really sure. He's basically just showing us a small screenshot with a margin call notice. His statement doesn't make sense either and it's kind of vague. Did he buy/sell calls/puts? What expiration date was he going for? Did he get assigned shares?
I usually just assume things like this are fraudulent and just made up for re-tweets and popularity
So my guess is that he sold puts, a lot of them, and they went deep enough into the money on Friday to get auto-exercised and so he got assigned a bunch of shares.
The reason I think it's fake is because a) he's a YouTube trader apparently, and b) unless he has the dumbest broker of all time, they would have sold this position way before it could get exercised against him for that much money. Yeah, I'm pretty sure this is either fake or a paper trading account -
Ghost of Igloi wrote:
Seattle,
Futures are up based upon Janet Yellen testimony as part of her confirmation hearing. Futures moves are manipulated by institutions during non-market hours. This has been a regular routine since the spring. I believe we are more likely to see a 10-20% drop over the next couple of weeks as it becomes apparent that there are no easy solutions to the large number of unemployed and structural damage to the economy. Over the intermediate term the excessive valuation just tell you where the market eventually goes, in my view wiping out a decade or more of investor returns.
Igy
What structural damage is there to the economy? It's all reduced demand, from the pandemic closings.
Come check out NYC or a medium-sized mall in PA like I have. There's plenty of people out shopping. People are buying used/new cars at highest rate, it seems like. Everybody has money from not spending as much on stupid azz sht like alcohol, going out.
In Summer 2021 demand is gonna be nuts.
Some small restaurants having to close doors, while sad, will just allow new restaurants to open up in a few months with cheaper fixed costs.
Also, how can stock valuation work the same way as in the past? We have a huge deflationary force of technology that's starting to compound on itself. Plus basically free money. The marginal cost of production will approach 0. The game is completely different.
Also, Igy what are your returns over the past 15 years? Prob lower than most of the guys here who are cautiously optimistic about the market usually, and have more nuanced views than just "BUBBLE. STOCKS GONNA GO DOWN." -
Well I hope it's fake. Hate to see that kind of loss from a mistake.
Meanwhile, emerging markets taking off - generically up 2% today and China up 3%. -
dude says he lost a Ferrari-unit
https://twitter.com/ChrisCamillo/status/1351524568016576513?s=20 -
agip wrote:
dude says he lost a Ferrari-unit
https://twitter.com/ChrisCamillo/status/1351524568016576513?s=20
He sold all 115k shares, at once, in 25 minutes?
This is 100% fake or the guy is the dumbest person alive. -
Swaglord_the_real_one_1_one_1 wrote:
Ghost of Igloi wrote:
Seattle,
Futures are up based upon Janet Yellen testimony as part of her confirmation hearing. Futures moves are manipulated by institutions during non-market hours. This has been a regular routine since the spring. I believe we are more likely to see a 10-20% drop over the next couple of weeks as it becomes apparent that there are no easy solutions to the large number of unemployed and structural damage to the economy. Over the intermediate term the excessive valuation just tell you where the market eventually goes, in my view wiping out a decade or more of investor returns.
Igy
What structural damage is there to the economy? It's all reduced demand, from the pandemic closings.
Come check out NYC or a medium-sized mall in PA like I have. There's plenty of people out shopping. People are buying used/new cars at highest rate, it seems like. Everybody has money from not spending as much on stupid azz sht like alcohol, going out.
In Summer 2021 demand is gonna be nuts.
Some small restaurants having to close doors, while sad, will just allow new restaurants to open up in a few months with cheaper fixed costs.
Also, how can stock valuation work the same way as in the past? We have a huge deflationary force of technology that's starting to compound on itself. Plus basically free money. The marginal cost of production will approach 0. The game is completely different.
Also, Igy what are your returns over the past 15 years? Prob lower than most of the guys here who are cautiously optimistic about the market usually, and have more nuanced views than just "BUBBLE. STOCKS GONNA GO DOWN."
Swag,
To claim there is no structural damage to the economy would appear to be blind to reality. I would suggest you listen to the Yellen confirmation hearing. Technology, which you claim to be some miracle, also puts more people out of a job.
In regards to some metric of performance, at the lows of March I was far above the average investor. Fortunately for the average investor the Fed instituted policies that were interpreted by the market as saving the day. The difference between you and me, you think that makes your returns durable, I simply disagree.
Igy -
Ghost of Igloi wrote:...at the lows of March I was far above the average investor. ...
That's about as irrelevant a statement as I've read in this thread.
I don't care to know how your investments are doing or have done, but what your portfolio may have done on some particular day in the past means exactly nothing, on its own.
Now I get it why others call you out for cherry picking dates some of the time.
