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Haha, I remember she also said with definity that the FED is going to lower interest next.
I don't think I said this, but if I said "definity' anything, I want to retract that. I don't know anything more than anyone else, in terms of predicting the future. Much of what we say on this forum is pure speculation.. If everybody could accurately predict the stock market, there would be no market.
High really should be relative to earnings, or P/E. Shiller PE is now at 31. That is high. However, during internet bubble back in the 90's, it went further to 45 until the burst. That event shows, with new technology revolution, the traditional understanding of PE may not be accurate.
With all that said, it seems dangerously high but this is a special time of new technologies. So, it can go either way.
Small and mid cap stocks have outperformed large caps over the long run. The large caps tend to do better when the US dollar is rising, typically during times when the Bank of Japan takes up QE to boost US demand for their goods. You just happened to pick a period where the US dollar has risen 20 percent due in large part to the offshore QE by Japan and Europe. The Yen has fallen about 40 percent against the dollar. If Trump was really serious about trade, QE would be the first thing to be eliminated. Of course, he is now trying to rig the Federal Reserve board with pizza delivery boys so he can get zero interest rates and QE, not long after he and the Republicans attacked the Fed for launching QE during the last administration. Bernanke took it a step too far in 2013 with QE3/4 and getting the foreign central banks to buy up US equities. The system is now hooked on the morphine drips. MMT is probably coming down the pike. It is just a matter of whether it's QE for the rich and the defense industry or QE for the masses.
High really should be relative to earnings, or P/E. Shiller PE is now at 31. That is high. However, during internet bubble back in the 90's, it went further to 45 until the burst. That event shows, with new technology revolution, the traditional understanding of PE may not be accurate.
With all that said, it seems dangerously high but this is a special time of new technologies. So, it can go either way.
Numerous studies and analysis have shown the PE is very poor for any sort of short term prediction. If doesn't do much better either intermediate or long term either.
Maybe but the effect is very small since index funds are a very small portion of all investments. Do a google search before you jump to conclusions or just make up facts.
indexing accounts for about 20% of all the money in the markets globally which is about 76 trillion ...but then that is not the whole story either .
only about 50 stocks in the s&p 500 really carry much weight . when you add a dollar to the s&p 500 it is dispersed with much of it going in to very few of those 500 stocks ... you may want to do some googling lol....
there are the actively managed funds where they too are mostly indexers or own most of the heavy weight stocks in the s&p 500 ... there are also quite a few long short funds and hedge funds that while technically are not index funds they buy the index then short the weak stocks in it . they are not categorized as index funds but they own the index's . just about every mutual fund holds the same stocks that are in these indexes too , especially the same heavy weights , adding to all the money in the same issues .
then we have the s&p futures contracts as well ...so there is more in these indexes then you realize.
not only that but even if you bought a total market fund it is still dominated by more than 80% by the s&p 500 .... in fact the other segments of a total market fund that is not in the s&p 500 tends to have even a smaller effect because it is split between value and growth in the small and midcaps and they tend to run opposite more times then not with value leading . so the effect of the other component on the leading one diminishes the effect of small and medium caps on the return ... the 3300 stocks out there add little to the party when the s&p 500 is part of that index.
the s&p 500 has a market cap of 22 trillion dollars ..... the wilshire 5000 which is the 3000 plus issues in our market has a cap of 26 trillion .
the entire world markets are worth about 76 trillion ...so the s&p index and the wilshire are just shy of half the worlds market dollars ...... but it really is only a handful of stocks in the s&p 500 that get all those dollars .
so yeah i do call that significant in those indexes .
Last edited by mathjak107; 04-06-2019 at 01:58 PM..
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