The S&P 500 is trading at just 14.5 times next year's expected earnings. 16 is the historical average (dividend, invest)
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
no one knows . if markets are flat for 10 or 20 years adjusted for inflation , it ain't no bargain , right ?
This is correct,
Past performance is no guarantee of future results.
I've been saying for a long time we were due for a correction. Well, now it is happening. I've taken some losses along with everyone else (thanks mainly to AT&T but there are few others down as well - got burned on latest FB trade, and RTN is also down big) and unfortunately I closed down my SDOW position recently at a small profit instead of a larger one had I held on. But bottom line is I have had half of my overall account in treasuries/cash for more than a year. Therefore this correction is an annoyance and not a life altering event. There was no reason to be 100% invested in stocks considering Trump's unpredictability and the huge runup over the past 2 years. Take chips off the table - play it safe. There are now actually some stocks that are on sale. Amen!
PE ratios tend to shrivel up right before a change in the economy. When the growth macroeconomic story chokes on the headwinds of govt budget and general chaos, tariffs and rising interest rates wise companies right now are silently delaying Capex and major hire decisions. Until the smoke clears, their main method of hitting future profit marks is going to change to cost cutting. Cost cutting will mean job elimination.
PE ratios become meaningless because the whole landscape appears to be changing. Now is when you need to know industry and balance sheets.
The market can stay flat for years and people still build wealth by buying dividend-paying stocks and reinvesting those dividends. Their money (the company's) buys you more shares which increases your ownership without adding any more of your money. That is compounding. Lower prices means more shares for a given dividend reinvestment. If the company does not issue new shares, then your percentage ownership increases as others sell their shares to you during dividend reinvestment.
To me it seems like just the beginning. The smart money is dumping and clearly telegraphing a message. Hopefully there is not a Black Swan event around the corner. Doesn't feel like a run of the mill correction any longer.
It will be a short week tomorrow, but I will be watching the market like a hawk. I think there is a good chance my trailing stop will get triggered or I will end up covering my short and going long the market because of an oversold rally. Whether it will lead to the continuation of the uptrend or not is anyone's guess as of now though, but I expect we are getting close to a rebound because we are so extended to the down-side.
What I'll be looking for is a hammer type candlestick or even just a hollow candlestick, but I'd love to see a long hammer the most. I'd like to see the market gap down followed by strong buying pressure going into the close. If that happens, I will cover my short regardless if my trigger is hit and buy SPY. These relief rallies often move very fast when they happen.
The market can stay flat for years and people still build wealth by buying dividend-paying stocks and reinvesting those dividends. Their money (the company's) buys you more shares which increases your ownership without adding any more of your money. That is compounding. Lower prices means more shares for a given dividend reinvestment. If the company does not issue new shares, then your percentage ownership increases as others sell their shares to you during dividend reinvestment.
no they can't . unless the stock appreciates at least as much as the dividend then you have zero return .
having a 100k in a stock and getting a 5k dividend has you left with 95k invested and 5k in pocket . no different than taking 5k out of your equities in a portfolio .
if you reinvest the 5k in either case you have the same 100k invested . in both cases you need appreciation to be a head and have more than 100k invested . .
there is no magic money when reinvesting a dividend . it acts like a stock split . you have the same dollars invested reinvesting the div as you had pre div .
you end up with more shares at a lower price equaling just what you started with , in this case the same 100k . it is a wash ....... do the math if you don't believe it .
no they can't . unless the stock appreciates at least as much as the dividend then you have zero return .
If the stock stays flat while I earn dividends, then I still get more stock, thus increasing my value. I'd rather make something than lose on all these "growth" stocks.
no they can't . unless the stock appreciates at least as much as the dividend then you have zero return .
having a 100k in a stock and getting a 5k dividend has you left with 95k invested and 5k in pocket . no different than taking 5k out of your equities in a portfolio .
if you reinvest the 5k in either case you have the same 100k invested . in both cases you need appreciation to be a head and have more than 100k invested . .
there is no magic money when reinvesting a dividend . it acts like a stock split . you have the same dollars invested reinvesting the div as you had pre div .
you end up with more shares at a lower price equaling just what you started with , in this case the same 100k . it is a wash ....... do the math if you don't believe it .
a flat market means no appreciation -period .
There is one flaw in your dividends theory. If the dividend is re-invested - which should always be done unless you need it to put food on the table - YES the stock price drops when the dividend is paid out but i'll bet you 9.5 times out of 10 it goes right back to where it had been trading at. Leaving you ahead of the game with your dividend. I see your point about not re-investing the dividends but that is a different story. I'd rather have a good company paying out dividends rather than blowing the money on some stupid purchase (Diworisification according to Peter Lynch).
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
