Investing General Discussion

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Pops

Pops

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Blazin said:
Obviously higher rates means more choices (competition) for what investors do with a dollar, and if the 10yr rate climbs to be more competitive with the earnings yield of the S&P it absolutely could be a headwind to equities. But if we see strong economic growth powering earnings higher that could be sufficient tailwind to offset the downward pressure and still see further gains in the market. Central banks tightening in the next few years is absolutely something to watch, but not while putting blinders on to potential gains in fundamentals. There is a monstrous crowd of investors at this point all waiting for a downturn, just have to be careful that you don't misinterpret a short term correction as a change in long term trend. We are high enough above the mean that we can easily correct 5-10% without endangering the bull trend.
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Oh I agree, BTFD has ruled. But don't confuse brains with a bull market.
 
Blazin

Blazin

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Pops said:
Oh I agree, BTFD has ruled. But don't confuse brains with a bull market.
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Are you trying to say we didnt all become genius investors in the last 8 years?

This is the way of the markets over the long periods, extensive bull run expansions make everyone a genius, until they aren't, then we enter long and sometimes painful periods of consolidation that makes everyone write off equities so we can bottom and start the process over again. This is why I do believe some timing of the market is possible for the wary investor by watching the 20 month moving average, it is far better for the average person saving for retirement to ride it out to ensure they continue buying during down turns and use diversification for protection instead.
 
Pops

Pops

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You were the one thinking of buying a dip in those overpriced momentum names is a lock. I was just pointing out the risk. None of those names are trading on fundamentals.

Anecdotally, a college friend worked at Lucent, his plan allowed him to invest in Lucent or a GIC. He used to ask me my opinion, LU or an 8% GIC in his plan. I always said take the GIC, his LU doubled, he'd go see, what do you know. Every fucking year. Got to a million bucks in 1999/2000. Was worth 16,000 in 2001.

I hope you know when to get off.
 
Blazin

Blazin

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Pops said:
You were the one thinking of buying a dip in those overpriced momentum names is a lock. I was just pointing out the risk. None of those names are trading on fundamentals.
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No idea where you are getting that from. I hold none of those names, I had no intention of implying that I did in my response I specifically avoid high beta names.
 
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Pops

Pops

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Look I'm in the same boat. I need to put a chunk of money to work. The multiples of everything are too high. Yields are too low. I've lived through several market crashes and recessions. They hurt. Everything declines.
 
Khane

Khane

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I pulled all my money out of the market at 18.5k on DJIA. It's sitting in a settlement fund.

I thought it had hit its peak back then and was clearly wrong. But I'm happily sitting on that liquidity for now so I can be greedy when the downturn happens.
 
Blazin

Blazin

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This thread is no where near no fear stage, with a good many very heavy cash and cautious . Which is what we see in the market, and that is why this run is not likely over.

I say that not because I'm bullish but from experience. This is not euphoria . That doesn't mean jump in but it does mean pullbacks are opportunities.

Also pops I'm in the same boat the market has been rotating and there is opportunity to nibble. In 2017 I have bought energy , some utilities, telecoms and financials all on sector rotations and no where near their highs.

Of those I'm only slightly red on energy is at jumped in a little early. This week I took a bite of a reit on a pullback and it's already bounced so not likely to get more .
 
sadris

sadris

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So thoughts on this, I did it about 4 years ago...

You can sell put contracts on "stable" stocks with 2 year horizons and the margin requirements are extremely low, so you can sell for example, puts in the money at $15/share when the current price is at $25/share with a 2 year put contract. The margin requirement is so low you can sell a whole lot of them with limited required cash on hand. The total capital at risk, however, is tremendous.

Think I was getting 27% return on cash required when I did it. Did it with Cisco and Oracle. I have a spreadsheet with the numbers if anyone is interested at the math. The return on capital at risk, however, was like 2%.
 
Pops

Pops

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sadris said:
So thoughts on this, I did it about 4 years ago...

You can sell put contracts on "stable" stocks with 2 year horizons and the margin requirements are extremely low, so you can sell for example, puts in the money at $15/share when the current price is at $25/share with a 2 year put contract. The margin requirement is so low you can sell a whole lot of them with limited required cash on hand. The total capital at risk, however, is tremendous.

Think I was getting 27% return on cash required when I did it. Did it with Cisco and Oracle. I have a spreadsheet with the numbers if anyone is interested at the math. The return on capital at risk, however, was like 2%.
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It always works til it doesn't. Then you are completely wiped out, perhaps owing the house money.
 
Gravel

Gravel

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Pops said:
Robert Shiller: With stock valuations high, it’s time to reduce your holdings

I just gather the general tone of this thread is at the no fear stage.
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The thing is, people have been saying that valuations are high and we're due for another massive drop every year since 2011.

I'm not sure Shiller is the best person to listen here, because he's got a vested interest in his P/E ratio looking "right." GAAC changes in the early 2000's really fucked up that whole thing though. On top of that, I believe it's a 10 year moving average and as soon as 2009 drops off, the P/E ratio looks a lot more reasonable. And on top of that, if we just have a single flat year, the P/E ratio comes WAY back down.

Interestingly, the market is up almost 4% since February when he said that. I know of people that have been sitting out in cash, waiting for the market to drop since 2015. Meanwhile even a 15% pullback and they'll come out behind now. It all ends up being market timing.
 
Blazin

Blazin

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I am not saying "it's different this time", but looking at historical PEs for current valuation is a losing game. The market doesn't price on past earnings but looking forward, and if you look at valuations for the last 40 years we are not at ridiculous levels, certainly not bargains that's for damn sure, but markets don't price cheap during bull run expansions, you'll miss the whole damn thing waiting for cheap PEs which only exist in retracting markets
 
Pops

Pops

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Haha, who's calling a top? I lived through multiple expansions greater than this. But still.

Shiller PE Ratio

"Those who cannot remember the past are condemned to repeat."
Either way, good luck.
 
Gravel

Gravel

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Not sure who/what you're responding to there. But if you want a really in depth read on why I don't give too much of a shit about CAPE, go here: Fixing the Shiller CAPE: Accounting, Dividends, and the Permanently High Plateau

I pointed out GAAP before:

The metric is calculated by dividing an index’s inflation-adjusted price by the average of its inflation-adjusted annual earnings over the last 10 years.

But how does one define “earnings”? As far as the metric is concerned, the answer doesn’t matter, as long as the definition is consistent across time. If the definition is consistent across time, then apples-to-apples comparisons can be made between the metric’s present value and its prior values. The comparisons will give an accurate indication of how cheap or expensive the index is relative to its history, or to what is “normal” for it.

Unfortunately, the earnings data on Dr. Shiller’s website, which are used to build the Shiller CAPE, are not based on a consistent definition of “earnings” across time. The data are taken from S&P “reported” earnings, which are formulated in accordance with Generally Accepted Accounting Principles (GAAP). But the standards of GAAP have changed significantly over the last few decades.
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So a "high" CAPE is meaningless because it's using a definition that doesn't fit anymore.

Further, as I mentioned, once 2008-2009 fall off the 10 year average, the CAPE will fall dramatically. We've got an average that is based on 10 data points that gets heavily skewed. That's not good statistics. And even STILL with that, a flat year would bring it back in line with the shitty historical.
 
Blazin

Blazin

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Sold some positions today. (This is non retirement money, that's still in index) In the last week I sold Utilities ETF, Small Cap ETF, and Financial ETF. All relatively short term trades (5-10% gain in last few months) runs may not be over but I hit the targets I had when I entered them, will reload over next few months if an opportunity represents itself. We are entering what is usually a weaker time for the market. I'm still holding Energy trying to be patient for a rebound on Oil back into high 40s. I'm going to give a little longer yet, just barely green on the position.

Earnings season off to a strong start and it does feel like the market wants to make a run at S&P 2500. Will likely sell my non retirement S&P index etf at that point. Timing market is a losing game in the long run but have a chunk of money that I want to make some return on but overall I'm very conservative with, if I can swipe 5-8% in total a year on it while minimizing risk that's what I try to do, happy to sit in short term bonds waiting for next opportunity.
 
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Picasso3

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On a macro level I'm kinda worried about qe ending and boomers piling into retirement causing a long-term bed shitting. Any intelligence to this?
 
Jysin

Jysin

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Buddy of mine bought a huge position in AMD at $8 a share. I have been telling him to sell for months. He held... I am clearly the fool.

Dem gains!!
 
Pops

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