How to avoid getting caught up in the malinvestment, stock market bubble
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With rates still at 0%, there's a lot of malinvestment going on. The S&P 500 is trading at a frothy 19x multiple (historically 14x is the norm).
For anyone with a mortgage looking to park some cash in a risk-free interest-bearing vehicle, put extra cash in your mortgage escrow account. It earns as much as 2% in some states (check with your bank). Your bank will refund you the excess when they re-evaluate your escrow account, but you can start reloading again after the refund.
Don't get caught up in this bubble. We're all hostages to ZIRP & QE policies...basically forcing people to buy stocks to get any sort of yield. Enough already. If you know of other tactics like this, please share them.
You need to correct the P/E ratio for changes in GAAP that have occurred in recent decades:
You guys are a stubborn herd. I like it. Okay Okay, I'll buy your Intel & Microsoft shares. Please don't inflate my dollars.
All this inflation is supposedly happening, yet my dollars buy 2 barrels of oil today vs. 1 barrel at this time last year.
Sure I'll sell you some MSFT shares... we get some every year for free (employment compensation perk)...
You think you're so slick for cherry picking the one commodity that has gone down (which I've heard is a manifestation of a political game the US is playing with Russia.. so I've heard...).. what about housing?, milk?, tuition? dining out? piano lessons? coffee?...etc..etc...
Don't get caught up in this bubble. We're all hostages to ZIRP & QE policies...basically forcing people to buy stocks to get any sort of yield.
No. We're not hostages to QE and ZIRP and flight of money from overseas to the US. We're BENEFITING! It has never been easier to make money!
You think stocks are going to crash? OK. Have you ever heard of diversification into bonds????? Have you ever heard the phrase "when stocks fall, money runs to the safety of bonds"????? Have fun sitting on the sidelines. You need to study how a diversified bond ETF /stock ETF portfolio keeps going up through thick and thin....
Sure I'll sell you some MSFT shares... we get some every year for free (employment compensation perk)...
You think you're so slick for cherry picking the one commodity that has gone down (which I've heard is a manifestation of a political game the US is playing with Russia.. so I've heard...).. what about housing?, milk?, tuition? dining out? piano lessons? coffee?...etc..etc...
Only one commodity has gone down? I don't know what markets you're looking at. They're almost all down significantly - grains, metals, energy. Not only that, currencies vs. the dollar. the USD can buy 25% more Canadian dollars, Euros, AUDs than it could in 2013. More than double the amount of Rubles. And of course, tech & electronics are always getting cheaper.
Housing is a biggie but you're overlooking the cost to borrow. Borrowing $250,000 today at 3.75% will cost the same in interest over 30 yrs as it did to borrow $110,000 @ 7.5% cost in 1999.
If oil stays down here for awhile, it will ripple through all sectors and lower prices on almost everything.
No. We're not hostages to QE and ZIRP and flight of money from overseas to the US. We're BENEFITING! It has never been easier to make money!
You think stocks are going to crash? OK. Have you ever heard of diversification into bonds????? Have you ever heard the phrase "when stocks fall, money runs to the safety of bonds"????? Have fun sitting on the sidelines. You need to study how a diversified bond ETF /stock ETF portfolio keeps going up through thick and thin....
sure, that worked nicely in the past. However, I could see a scenario where that portfolio could still get slaughtered. Severe prolonged stagflation, or a bond market meltdown where the FED loses control, or what happened to Russia in 2014..maybe not likely to happen anytime soon, but any of those scenarios could crush you.
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