Down goes the Dow

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  • Ghost of Igloi
    registered
    3 years ago 12/11/2016 7:48pm CST
    re: Testcaf
    Forum Index
    Testcaf,

    Talk about an incomplete picture! Why don't you actually try looking at the data itself? Estimates have continually been marked down and forward operating earnings are wildly optimistic and resemble more fantasy than fact. Positive EPS guidance after already lowering their number? It's a game in a house of mirrors.

    Link here:

    https://us.spindices.com/documents/additional-material/sp-500-eps-est.xlsx
    Testcaf wrote:

    Ghost of Igloi wrote:

    Ryan, Maserati, and agip:

    Good comments. My view has always been that investing in stocks and bonds, or anything really, should be based on some measure of cash flow. The historical average GAAP PE of the S&P 500 is about 15. Current GAAP EPS is around $90 per share. Fair value calculation would be 15 x 90 = 1,350. At a 2.4% Yield the 10 Year Treasury is trading on a cash flow basis slightly ahead of inflation.


    You paint an incomplete picture. The market is forward looking. Earnings have been growing and are expected to continue that trend. An above-average number of companies have issued positive EPS guidance. So it's only natural that valuations are above average.

    By the way, you also fail to acknowledge that you're talking about a moving average.

    Your point is a good one, but you do a disservice to the readers by ignoring this important information.
  • Ghost of Igloi
    registered
    3 years ago 12/11/2016 8:01pm CST
    re: agip
    Forum Index
    agip,

    Good job, I was wondering how the race went. It is rewarding to dedicate oneself and see what can be accomplished. I hit my best masters form at ages 54-57. More of the limitations lie between the ears.

    Wife and I went to the company Christmas party on Friday so I missed the Saturday hard session. I have had a good three weeks, so used the day off to get a few things done round the house. I am considering a race this Saturday, a two miler. The temperatures are expected to be in single digits, so I will have to chew on that. I believe racing may be a better choice over a treadmill.

    In regards to expectations of future returns, even pension trustees are being forced to lower their assumptions. Ben Inker of GMO has an interesting piece on the subject in their 3rd quarter newsletter, well worth the read.

    Igy
  • Ghost of Igloi
    registered
    3 years ago 12/11/2016 8:16pm CST
    re: ryan foreman
    Forum Index
    Ryan,

    In the second half of the 12/12 John Hussman's Weekly Commentary he examines the economic hopes of the Trump Rally against the backdrop of economic reality. I thorough piece as usual, which blows a giant hole in the rather poor research coming from the main stream financial media.

    https://www.hussmanfunds.com/wmc/wmc161212.htm

    Igy
  • Testcaf
    3 years ago 12/11/2016 8:21pm CST
    re: Ghost of Igloi
    Forum Index
    Ghost of Igloi wrote:

    Testcaf,

    Talk about an incomplete picture! Why don't you actually try looking at the data itself? Estimates have continually been marked down and forward operating earnings are wildly optimistic and resemble more fantasy than fact. Positive EPS guidance after already lowering their number? It's a game in a house of mirrors.

    Link here:

    https://us.spindices.com/documents/additional-material/sp-500-eps-est.xlsx
    Testcaf wrote:

    Ghost of Igloi wrote:

    Ryan, Maserati, and agip:

    Good comments. My view has always been that investing in stocks and bonds, or anything really, should be based on some measure of cash flow. The historical average GAAP PE of the S&P 500 is about 15. Current GAAP EPS is around $90 per share. Fair value calculation would be 15 x 90 = 1,350. At a 2.4% Yield the 10 Year Treasury is trading on a cash flow basis slightly ahead of inflation.


    You paint an incomplete picture. The market is forward looking. Earnings have been growing and are expected to continue that trend. An above-average number of companies have issued positive EPS guidance. So it's only natural that valuations are above average.

    By the way, you also fail to acknowledge that you're talking about a moving average.

    Your point is a good one, but you do a disservice to the readers by ignoring this important information.


    No need to be condescending, but I do understand your defensiveness.

    The nature of estimates is that they adjust as you get closer to zero hour. You should not be surprised by this. Yet this does not take away from the main point that the market is forward looking. Thus the gap in your analysis.
  • Ghost of Igloi
    registered
    3 years ago 12/11/2016 8:40pm CST
    re: Testcaf
    Forum Index
    Testcaf,

    Simple response and not condescending. Then, was the market forward looking 10/2007 or 3/2009 for that matter?

    Igy

    Testcaf wrote:

    Ghost of Igloi wrote:

    Testcaf,

    Talk about an incomplete picture! Why don't you actually try looking at the data itself? Estimates have continually been marked down and forward operating earnings are wildly optimistic and resemble more fantasy than fact. Positive EPS guidance after already lowering their number? It's a game in a house of mirrors.

    Link here:

    https://us.spindices.com/documents/additional-material/sp-500-eps-est.xlsx
    Testcaf wrote:

    Ghost of Igloi wrote:

    Ryan, Maserati, and agip:

    Good comments. My view has always been that investing in stocks and bonds, or anything really, should be based on some measure of cash flow. The historical average GAAP PE of the S&P 500 is about 15. Current GAAP EPS is around $90 per share. Fair value calculation would be 15 x 90 = 1,350. At a 2.4% Yield the 10 Year Treasury is trading on a cash flow basis slightly ahead of inflation.


    You paint an incomplete picture. The market is forward looking. Earnings have been growing and are expected to continue that trend. An above-average number of companies have issued positive EPS guidance. So it's only natural that valuations are above average.

    By the way, you also fail to acknowledge that you're talking about a moving average.

    Your point is a good one, but you do a disservice to the readers by ignoring this important information.


    No need to be condescending, but I do understand your defensiveness.

    The nature of estimates is that they adjust as you get closer to zero hour. You should not be surprised by this. Yet this does not take away from the main point that the market is forward looking. Thus the gap in your analysis.
  • Testcaf
    3 years ago 12/11/2016 8:49pm CST
    re: Ghost of Igloi
    Forum Index
    You suggested I hadn't viewed the data. Obviously I had. Your response was condescending.

    The market is always forward looking. I suspect you already knew that.
  • Ghost of Igloi
    registered
    3 years ago 12/11/2016 9:03pm CST
    re: Testcaf
    Forum Index
    Same Troll, different handle, same responses, nothing to add but nonsense.
  • Testcaf
    3 years ago 12/11/2016 9:09pm CST
    re: Ghost of Igloi
    Forum Index
    I assume that means you've decided I'm right. Good move.
  • agip
    registered
    3 years ago 12/11/2016 9:16pm CST
    re: Testcaf
    Forum Index
    we'll hit 16,000 posts tomorrow - what an institution.
  • Ryan Foreman
    registered
    3 years ago 12/11/2016 10:15pm CST
    re: Ghost of Igloi
    Forum Index
    GoI,

    Hussman says that free trade is a boon to productivity and Trump is going to damage that. I'm actually doubtful Trump is going to hinder global trade. More likely he is going to try and devalue the dollar through budget deficits. In other words just do what China has been doing to make themselves more competitive. Its a big IF that he can do that. He has to get by Congress to approve deficits. Then the Fed has to go along and not raise rates too much in response to greater deficits.

    My argument is different than Hussman. Its that investors are buying into this rally as if Obama's policies was from the radical wing of the Green Party. Its totally absurd.

    I gave examples in a prior post. I forgot to mention energy policy. Under the Obama administration domestic oil production has exploded and oil independence has already been achieved. Approving a pipeline and some offshore drilling is not going to make things much better than they already were under Obama.





    Ghost of Igloi wrote:

    Ryan,

    In the second half of the 12/12 John Hussman's Weekly Commentary he examines the economic hopes of the Trump Rally against the backdrop of economic reality. I thorough piece as usual, which blows a giant hole in the rather poor research coming from the main stream financial media.

    https://www.hussmanfunds.com/wmc/wmc161212.htm

    Igy
  • MarketWatch
    3 years ago 12/12/2016 6:51am CST
    re: ryan foreman
    Forum Index
    The 20,000 milestone for the Dow industrials appeared tantalizingly close on Monday, though U.S. stock futures hinted at a struggle ahead as investors focused on this week's U.S. Federal Reserve meeting.

    A rally by oil appeared to have little effect on stock futures, as investors turned their focus to the Fed gathering. The U.S. dollar was trading at levels against the Japanese yen not seen since early 2016.

    Dow Jones Industrial Average futures rose 15 points to 19,726, while S&P 500 futures slipped 0.5 points to 2,254.50. More weakness was seen for technology stocks, with Nasdaq-100 futures futures off 20.50 points, or 0.4%, to 4,873.

    The key stock markets closed at a record high on Friday, with the S&P 500 posting its longest winning streak since June 2014. The index finished at a record 2,259.53. The Nasdaq Composite closed at a high of 5,444.50.

    Much investor attention is now focused on whether the Dow industrials will make it to an all-time high of 20,000 as soon as Monday. The index closed at a record 19,756.85 on Friday, in a run for stocks that has left many analysts surprised. All three indexes, including the Nasdaq Composite gained over 3% for the week.

    But some concerns about the Federal Reserve two-day meeting, which ends Wednesday, were leaking into sentiment.

    "The looming risk is Wednesday's FOMC meeting--not so much the fact that we'll see a quarter-point rate hike, as this is fully priced in anyway, but the idea that if we see a hawkish tone over the rate outlook for 2017, then this could be the catalyst that leaves traders reaching for the sell button," Jamieson Blake, retail sales manager at ADS Securities, told clients in a note.
  • Joe Beets
    3 years ago 12/12/2016 8:04am CST
    re: Ghost of Igloi
    Forum Index
    Ghost of Igloi wrote:

    Ryan,

    In the second half of the 12/12 John Hussman's Weekly Commentary he examines the economic hopes of the Trump Rally against the backdrop of economic reality. I thorough piece as usual, which blows a giant hole in the rather poor research coming from the main stream financial media.

    https://www.hussmanfunds.com/wmc/wmc161212.htm

    Igy

    I'm betting that you're so myopic that don't even see your hypocrisy with this post.
  • Ghost of Igloi
    registered
    3 years ago 12/12/2016 10:27am CST
    re: Joe Beets
    Forum Index
    Joe,

    I'm so myopic, that all your responses to my posts read the same.

    Igy
  • agip
    registered
    3 years ago 12/12/2016 10:58am CST
    re: Ghost of Igloi
    Forum Index
    I am as anti-trump as anyone in the country. I believe the best case is that he is impeached after a year. More likely case is that the world spins into chaos as his lack of moderation and brains and common sense and decency destroy what will appear in retrospect as a fragile global peace.

    But the market is up a lot this year and I and my clients have had good years. I'm up 10%, moderate investors are up maybe 8.

    I'm seriously considering selling a lot of stock. I think what we are seeing these weeks is utter chaos just starting, that is hard to put back in the bottle.

    I'm thinking about selling a lot of stock and throwing it at my mortgage instead - get a risk free 3% and call it a day until things clear up a little.

    Probably I'll wait til a 200 day moving average violation, but maybe I'll start pruning now. I am a terrible market timer, but but this not normal.
  • wicker baskets
    3 years ago 12/12/2016 11:07am CST
    re: agip
    Forum Index
    extraordinarily good short piece on how misunderstood US income data are. The idea of decline and lowering living standards is incorrect - people are wildly off target. Read every word with an open mind.

    gist is that since food and other necessities have become much cheaper, we have much more disposable income now than generations past. So measuring well being by just 'wages' is inaccurate.

    http://www.pragcap.com/the-myth-of-declining-american-living-standards/
  • Joe Beets
    3 years ago 12/12/2016 11:27am CST
    re: Ghost of Igloi
    Forum Index
    Ghost of Igloi wrote:

    Joe,

    I'm so myopic, that all your responses to my posts read the same.

    Igy

    That's because they basically are all the same. They're just slightly different forms of, "You're an idiot."
  • Ghost of Igloi
    registered
    3 years ago 12/12/2016 11:44am CST
    re: agip
    Forum Index
    agip,

    The market hasn't been normal for some time now. Crossed the normal back 2013.

    Igy
  • Say wha?
    3 years ago 12/12/2016 11:49am CST
    re: Ghost of Igloi
    Forum Index
    So it's different this time?
  • Ghost of Igloi
    registered
    3 years ago 12/12/2016 11:55am CST
    re: Say wha?
    Forum Index
    No, Muppets are lined up to buy the market.
  • Chin up and Pull up champ
    3 years ago 12/12/2016 11:59am CST
    re: Say wha?
    Forum Index
    Say wha? wrote:

    So it's different this time?

    Never different. Highs and lows but in the end you get 10 to 12% (even more with reinvested dividends) on average. Best investment going over the long haul.