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This market is not tired, it's right where it should be given the near zero interest rate environment we are in. Warren Buffett has been telling us for a decade that stocks are ridiculously cheap if the 30 year bond is at 3%. We're currently at what, about 1.85%?? So the big question for this market, the ONLY question for this market is when will the Fed start raising rates?? The Fed won't begin raising rates until some time in 2022 or even 2023, and even then, there's a long way to go to even get back to 3%, never mind what you and I think of as a normal rate environment. We may not ever see a "normal" interest rate environment again in our lifetimes, given the huge amount of Federal spending going on over the last year, and likely into the near future, right? The US Government needs rates to stay historically low, and that's where I believe rates will stay for a very long time. Stocks that appear to be vastly overvalued by traditional metrics are actually cheap given the current environment. Traditional metrics for measuring valuations are out the window, so forget them and learn that we are in a different world now valuation wise. The market just hasn't fully realized this yet. And this is coming from a very traditional value/gaarp investor.
“I think stocks are ridiculously cheap if you believe that 3% on the 30-year bonds makes sense.”
- Warren Buffett, May 2019
I hope you are right about when the fed will begin raising interest rates.
If prices begin returning to normal in the next few months, I think everything will be fine. If not, the fed is going to have to begin looking at dealing with the inflation.
I don't think the market is getting tired. I do think the market is blind. It's running without knowing where it's going. In other words, the trillions the fed pumped into the market, super-inflated equity prices that were already inflated. The market seems unaware and unwilling to correct itself. People are piling on instead of sitting on the sidelines. Like lemmings investors are each marching toward a cliff.
Government love kicking cans. We're past kicking cans. We're kicking barrels now. Pretty soon, the government is going to end up with a bruised foot and that barrel will start to roll in the opposite direction.
I don't think the market is getting tired. I do think the market is blind. It's running without knowing where it's going. In other words, the trillions the fed pumped into the market, super-inflated equity prices that were already inflated. ..
In 2000-2009, the market was savaged by losses that were among the most brutal in history, second only to the Great Depression. What we've seen in the most recent dozen years, is a return to the mean. Plot the progress of stocks on log-linear coordinates, and do a least-squares linear fit. You'll see that now we're back to oscillating around said line.
In 2000-2009, the market was savaged by losses that were among the most brutal in history, second only to the Great Depression. What we've seen in the most recent dozen years, is a return to the mean. Plot the progress of stocks on log-linear coordinates, and do a least-squares linear fit. You'll see that now we're back to oscillating around said line.
Perhaps you're questioning the mean itself?
We may have returned to a mean. But are you saying that the government printing trillions last year didn't cause over-valuation in the stock market? There are a lot more retail investors today than there were in 2008-2009. Also, there was way more stimulus and unemployment last year than in 2008 and 2009. And NO evictions. If I know I'm not going to get evicted, and I'm already behind in my mortgage, where is my mortgage payment going to go? I'm going to try my hand in the stock market since it's going up, up, up anyway. Make some cash on the side before the gravy train ends.
The stock market got an influx of tons of cash. It's as bloated as the housing market was in 2007. I would argue that a lot of stocks aren't trading nearly close to their actual values right now. How long can equities trade so far detached from reality?
The world economy was literally stopped for months. The market had a V-Shaped recovery in less than 30 days and is now at ATH just after an economic heart attack? People are still unemployed. Small businesses are still shuttered. Student loan moratorium ends next month. Eviction resume soon after that. Unemployment benefits end.
There's going to be a great sucking sound from Wall Street as people have to sell their positions to eat and keep shelter.
Good luck.
Last edited by adelphi_sky; 08-07-2021 at 01:28 PM..
We may have returned to a mean. But are you saying that the government printing trillions last year didn't cause over-valuation in the stock market? There are a lot more retail investors today than there were in 2008-2009. Also, there was way more stimulus and unemployment. And NO evictions. If I know I'm not going to get evicted, and I'm already behind in my mortgage, where is my mortgage payment going to go? I'm going to try my hand in the stock market since it's going up, up, up anyway. Make some cash on the side before the gravy train ends.
The stock market got an influx of tons of cash. It's as bloated as the housing market was in 2007. I would argue that a lot of stocks are trading nearly close to their actual values right now. How long can equities trade so far detached from reality?
The world economy was literally stopped for months. The market had a V-Shaped recovery in less than 30 days and is now at ATH just after an economic heart attack? People are still unemployed. Small businesses are still shuttered. Student loan moratorium ends next month. Eviction resume soon after that. Unemployment benefits end.
There's going to be a great sucking sound from Wall Street as people have to sell their positions to eat and keep shelter.
Good luck.
People who can’t afford basic needs like food and shelter in the near future aren’t are usually ones that are heavily invested in the stock market to begin with.
People who can’t afford basic needs like food and shelter in the near future aren’t are usually ones that are heavily invested in the stock market to begin with.
We have many new comers who have not seen a bear market.
And if these newcomers pull their money out, so what?? It’s a relatively small aggregate dollar amount I’m sure. GameStop, AMC and crypto may get hit hard though lol.
They dabble in others as well,BB,HOOD,PBI,NOK.
thats true,average dollar amount of HOOD account is $220.
Come Aught 28-29th,the Fed will be using yesterday employment figures to review their policy-cut back on buying agncies IOU ,raise rate ?
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