Author Topic: The top is NOT in?  (Read 2539 times)

Kroaler

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The top is NOT in?
« on: December 22, 2021, 08:04:50 AM »
Obviously we can't call the top...  We've done a really bad job.

But as a group do we possess the collective knowledge to decide if certain markets are at least over valued?

There's much talk of stuff being over priced and about to collapse.  But is there?

It seems most manufacturers have more demand than product atm.  I don't see that changing in the near future. Additionally labor rates are going up and so is inflation.   It seems the S&P and at a larger level total market funds are the top place to park cash atm?   At least until there is an absurd valuation like the one Tesla has atm.

Maybe I'm too optimistic.... "Be fearful when others are greedy, and greedy when others are fearful". 

I feel like people are trending towards fearful.

RobertFromTX

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Re: The top is NOT in?
« Reply #1 on: December 22, 2021, 08:32:52 AM »
The bottom is in.

frugalnacho

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Re: The top is NOT in?
« Reply #2 on: December 22, 2021, 09:03:05 AM »
There's much talk of stuff being over priced and about to collapse.  But is there?

...maybe.  But what are you going to do about it?  Where else are you going to put your money that's a better long term option?

boarder42

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Re: The top is NOT in?
« Reply #3 on: December 22, 2021, 09:04:02 AM »
I think it's the perfect time to re evaluate your cap weight asset allocation and explore the history of different market sectors and diversify. There are lots of options beyond VTSAX that if stuck to long term greatly outperform. Large growth is actually the worst long term performing equity asset class and it just had the best run it's ever had.

Kroaler

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Re: The top is NOT in?
« Reply #4 on: December 22, 2021, 09:23:35 AM »
The bottom is in.

I feel like we can accurately call this 66% of the time?

Malossi792

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Re: The top is NOT in?
« Reply #5 on: December 22, 2021, 11:34:06 PM »
Seeing how accurate the opposite thread is, seems like it would be time to sell, no?

102

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Re: The top is NOT in?
« Reply #6 on: December 23, 2021, 12:46:53 AM »
I saw a similar discussion on reddit. Because there is no alternative for investors, people are noticing that the market continues to be overpriced. Crash cannot happen because there is no other place to move money to. As soon as bitcoin was noticed to be a potential alternative, it was bought up rapidly.

https://www.reddit.com/r/stocks/comments/rchsvk/the_stock_market_will_always_rebound_and_stay/?utm_source=share&utm_medium=web2x&context=3
« Last Edit: December 23, 2021, 12:53:41 AM by loz »

JoePublic3.14

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Re: The top is NOT in?
« Reply #7 on: December 23, 2021, 08:26:13 AM »
The bottom is in.

I feel like we can accurately call this 66% of the time?

Yes, and the other two thirds of the time we accurately call the top…

Kroaler

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Re: The top is NOT in?
« Reply #8 on: December 23, 2021, 01:36:07 PM »
I think it's backwards.   We accurately call the bottom 2/3 of the time and the top 1/3 of the time since on average it's always moving up.

Telecaster

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Re: The top is NOT in?
« Reply #9 on: December 23, 2021, 02:04:23 PM »
Obviously we can't call the top...  We've done a really bad job.

But as a group do we possess the collective knowledge to decide if certain markets are at least over valued?

There's much talk of stuff being over priced and about to collapse.  But is there?

It seems most manufacturers have more demand than product atm.  I don't see that changing in the near future. Additionally labor rates are going up and so is inflation.   It seems the S&P and at a larger level total market funds are the top place to park cash atm?   At least until there is an absurd valuation like the one Tesla has atm.

Maybe I'm too optimistic.... "Be fearful when others are greedy, and greedy when others are fearful". 

I feel like people are trending towards fearful.

There is a larger question lurking in there, namely "What does overvalued mean?"  And the answer to that question is that higher than typical valuations imply lower than typical future rates of return.   BFD.  We all already knew the stock market can go sideways for long periods of time. 

Higher than typical valuations do not imply a crash is around the corner.  To be sure, I can say with 100% certainty a crash is coming, but I don't now when or how big, and neither does anybody else.   But even that doesn't matter.  All of us here have investing horizons of many decades.  Even if you are in your 60s, you likely will live until late 80s or 90s.   During that time there will be many corrections and many recoveries.     If you are in your 40s, then your horizon might easily be half a century.   A market crash now won't matter one whit over that period of time. 

Time for a couple quotes:

“Far more money has been lost by investors trying to anticipate corrections, than lost in the corrections themselves.”

--Peter Lynch

 “The idea that a bell rings to signal when to get into or out of the stock market is simply not credible. After nearly fifty years in this business, I don’t know anybody who has done it successfully and consistently. I don’t even know anybody who knows anybody who has.”

--Jack Bogle


Telecaster

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Re: The top is NOT in?
« Reply #10 on: December 23, 2021, 02:21:01 PM »
I saw a similar discussion on reddit. Because there is no alternative for investors, people are noticing that the market continues to be overpriced. Crash cannot happen because there is no other place to move money to. As soon as bitcoin was noticed to be a potential alternative, it was bought up rapidly.

https://www.reddit.com/r/stocks/comments/rchsvk/the_stock_market_will_always_rebound_and_stay/?utm_source=share&utm_medium=web2x&context=3

There were some...interesting opinions in that thread.  Thing is, markets don't crash because lack of alternative, markets crash because lack of confidence.  If people get nervous they will go to cash. 

ChpBstrd

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Re: The top is NOT in?
« Reply #11 on: January 07, 2022, 08:30:22 PM »
The bottom is in.

I feel like we can accurately call this 66% of the time?

If you can call the bottom, just buy an at-the-money options spread that will either double or go to zero. Pick the timeframe in which you want to earn 100% returns.

hodedofome

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Re: The top is NOT in?
« Reply #12 on: January 09, 2022, 02:34:48 PM »
The top has been in for smaller cap growth stocks since November. Most of them are down 50%+

boarder42

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Re: The top is NOT in?
« Reply #13 on: January 10, 2022, 05:32:56 AM »
The top has been in for smaller cap growth stocks since November. Most of them are down 50%+

not sure where you're getting that data i just reviewed a few small growth index funds and they are down less than 20% from their peaks.

MustacheAndaHalf

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Re: The top is NOT in?
« Reply #14 on: January 11, 2022, 06:36:29 AM »
The top has been in for smaller cap growth stocks since November. Most of them are down 50%+
not sure where you're getting that data i just reviewed a few small growth index funds and they are down less than 20% from their peaks.
Peek at hodedofome's post history of cloud stocks for a sample.  The worst hit quarter of my aggressive growth stocks are down -35% to -45% in a few months, suggesting I'm investing more aggressively than ETFs like WCLD (-27% since Nov 16).

I expect the Fed surprise last week is not the end of losses for aggressive growth stocks, so I'm half on the sidelines with those.  Top is still in for cloud stocks.

goodmoneygoodlife

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Re: The top is NOT in?
« Reply #15 on: January 11, 2022, 07:45:24 AM »
Yeah I mean by all means the market's overpriced. But the market's irrational, and it's impossible to know for how long. Ergo, it's pretty much impossible to know the 'top' or 'bottom'. If we knew how to do market-timing for >50%, that means we'd all be billionaires already due to having an infinite money glitch of knowing the unknowable (i.e. the future).

Just keep calm and DCA.

GuitarStv

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Re: The top is NOT in?
« Reply #16 on: January 11, 2022, 09:14:19 AM »
I kinda feel like the huge amount of money that's been given out, coupled with a lot of people in enforced savings situations probably means that we're in for a few pretty good years for stocks once Covid dies down.  But the opposite could also be true.  That's why I stick to my AA and largely ignore the markets.

PDXTabs

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Re: The top is NOT in?
« Reply #17 on: January 11, 2022, 09:49:33 AM »
I kinda feel like the huge amount of money that's been given out, coupled with a lot of people in enforced savings situations probably means that we're in for a few pretty good years for stocks once Covid dies down.  But the opposite could also be true.  That's why I stick to my AA and largely ignore the markets.

I'm neutral on the whole thing, but the US savings rate is back to normal.

dividendman

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Re: The top is NOT in?
« Reply #18 on: January 11, 2022, 03:14:46 PM »
S&P500 will be at 6000 by the end of the year.

Telecaster

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Re: The top is NOT in?
« Reply #19 on: January 11, 2022, 04:24:23 PM »
I have no idea what the S&P will be in one year. 

djadziadax

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Re: The top is NOT in?
« Reply #20 on: January 12, 2022, 06:32:02 AM »
S&P500 will be at 6000 by the end of the year.

From what I am reading at other sites, some are saying S&P at 5800...so you must be reading the same people.

What I have also gathered from my reading is that the FED is basically the market, because of QE. The market is basically on a sugar high from QE (starting in 2020 with Covid). So if the FED starts to taper (withdraw from the market slowly) AND start to raise rates market wll come down. This is going to be a tough situation as crashing the market is bad for politics, and bad for banks/tech (who are the institution who "direct" the FED in a sense). But we also have very high inflation, which can only be tamed with rising rates.

So from what I gather, FED is probably going to sacrifice inflation for keeping the market up. Raise rates but very slowly and taper slowly, which will not help inflation.

Thoughts?

MustacheAndaHalf

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Re: The top is NOT in?
« Reply #21 on: January 12, 2022, 06:59:27 AM »
I kinda feel like the huge amount of money that's been given out, coupled with a lot of people in enforced savings situations probably means that we're in for a few pretty good years for stocks once Covid dies down.  But the opposite could also be true.  That's why I stick to my AA and largely ignore the markets.
The Fed will act before then.  The recent Jan meeting revealed 4 expected rate hikes this year, faster ending of help in the bond market... and a plan to remove liquidity.  With 3.9% employment, their only mandate is controlling inflation.

I've sold my "beat the market" investments, but my passive investments will be doing what they do best: sit there.

MustacheAndaHalf

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Re: The top is NOT in?
« Reply #22 on: January 12, 2022, 07:05:49 AM »
S&P500 will be at 6000 by the end of the year.

From what I am reading at other sites, some are saying S&P at 5800...so you must be reading the same people.

What I have also gathered from my reading is that the FED is basically the market, because of QE. The market is basically on a sugar high from QE (starting in 2020 with Covid). So if the FED starts to taper (withdraw from the market slowly) AND start to raise rates market wll come down. This is going to be a tough situation as crashing the market is bad for politics, and bad for banks/tech (who are the institution who "direct" the FED in a sense). But we also have very high inflation, which can only be tamed with rising rates.

So from what I gather, FED is probably going to sacrifice inflation for keeping the market up. Raise rates but very slowly and taper slowly, which will not help inflation.
They are doing the opposite of what you claim.  They have added 2 more expected rate hikes in the past 2 months, are tapering their bond market help, and may start dumping bonds on the bond market.

Their two objectives are controlling inflation and maximum employment.  They have no responsibility for the stock market at all.  So even without knowing what the Fed has done lately, it makes no sense for them to "sacrifice inflation" when the opposite is a core part of their purpose.

frugalnacho

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Re: The top is NOT in?
« Reply #23 on: January 12, 2022, 07:58:14 AM »
....so top is in?

waltworks

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Re: The top is NOT in?
« Reply #24 on: January 12, 2022, 08:18:47 AM »
Demographics says deflation is much more likely after supply chain crap gets sorted. If there were plenty of computer chips for making cars and lumber for making houses do you think we'd have an inflation issue?

For reference:
https://en.wikipedia.org/wiki/Demographics_of_the_United_States#/media/File:USA2020dec1.png

We'll be almost all old people in a decade.

-W

GuitarStv

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Re: The top is NOT in?
« Reply #25 on: January 12, 2022, 08:46:15 AM »
We'll be almost all old people in a decade.

Speak for yourself.  Many people get old and then die . . . but I've been doing some careful analysis of trends in my own life, and I think that you'll see based on line of best fit to historical data that I will never die:


So extrapolating from that conclusion, it seems like a fair assumption that I'll also never get old.

That's just like . . . science man.

waltworks

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Re: The top is NOT in?
« Reply #26 on: January 12, 2022, 08:51:04 AM »
By that time the world will have run out of steel from all the extra blades on razors, though. Everyone knows how to extrapolate out that curve.

So you'll be immortal but living in a hellish world of elderly boomers fighting for dwindling metals to build Gillette Mach2000k.

-W

GuitarStv

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Re: The top is NOT in?
« Reply #27 on: January 12, 2022, 08:52:14 AM »
By that time the world will have run out of steel from all the extra blades on razors, though. Everyone knows how to extrapolate out that curve.

So you'll be immortal but living in a hellish world of elderly boomers fighting for dwindling metals to build Gillette Mach2000k.

-W

An immortal person doesn't need razors . . . just tweezers and an iron constitution.

dividendman

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Re: The top is NOT in?
« Reply #28 on: January 12, 2022, 09:59:13 AM »
S&P500 will be at 6000 by the end of the year.

From what I am reading at other sites, some are saying S&P at 5800...so you must be reading the same people.

What I have also gathered from my reading is that the FED is basically the market, because of QE. The market is basically on a sugar high from QE (starting in 2020 with Covid). So if the FED starts to taper (withdraw from the market slowly) AND start to raise rates market wll come down. This is going to be a tough situation as crashing the market is bad for politics, and bad for banks/tech (who are the institution who "direct" the FED in a sense). But we also have very high inflation, which can only be tamed with rising rates.

So from what I gather, FED is probably going to sacrifice inflation for keeping the market up. Raise rates but very slowly and taper slowly, which will not help inflation.

Thoughts?

Oh.... I was just putting a random number out there to be funny. Whenever there is a thread like this I just add a thousand or so to the S&P500 and say that's where it'll end up.

Obviously if any of us knew what was going to happen we'd be billionaires instead of posting on MMM forums.

2KidFIRE

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Re: The top is NOT in?
« Reply #29 on: January 12, 2022, 10:05:21 AM »
By that time the world will have run out of steel from all the extra blades on razors, though. Everyone knows how to extrapolate out that curve.

So you'll be immortal but living in a hellish world of elderly boomers fighting for dwindling metals to build Gillette Mach2000k.

-W

Did someone say razors?  (apologies for the salty language if that's not your thing)

https://www.theonion.com/fuck-everything-were-doing-five-blades-1819584036

GuitarStv

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Re: The top is NOT in?
« Reply #30 on: January 12, 2022, 10:08:56 AM »
I switched to this style of safety razor:

years ago when I couldn't find a modern razor with less than three blades to shave with.  The shave is closer, and the blades are 5-10 cents each.  I don't understand why the hell anyone would pay for one of those gigantic multi-blade plastic monstrosities.

The world is crazy.

waltworks

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Re: The top is NOT in?
« Reply #31 on: January 12, 2022, 10:26:23 AM »

Did someone say razors?  (apologies for the salty language if that's not your thing)

https://www.theonion.com/fuck-everything-were-doing-five-blades-1819584036

That's a good one but I was referring to this classic:
https://www.economist.com/science-and-technology/2006/03/16/the-cutting-edge

-W

djadziadax

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Re: The top is NOT in?
« Reply #32 on: January 12, 2022, 12:26:23 PM »
S&P500 will be at 6000 by the end of the year.

From what I am reading at other sites, some are saying S&P at 5800...so you must be reading the same people.

What I have also gathered from my reading is that the FED is basically the market, because of QE. The market is basically on a sugar high from QE (starting in 2020 with Covid). So if the FED starts to taper (withdraw from the market slowly) AND start to raise rates market wll come down. This is going to be a tough situation as crashing the market is bad for politics, and bad for banks/tech (who are the institution who "direct" the FED in a sense). But we also have very high inflation, which can only be tamed with rising rates.

So from what I gather, FED is probably going to sacrifice inflation for keeping the market up. Raise rates but very slowly and taper slowly, which will not help inflation.
They are doing the opposite of what you claim.  They have added 2 more expected rate hikes in the past 2 months, are tapering their bond market help, and may start dumping bonds on the bond market.

Their two objectives are controlling inflation and maximum employment.  They have no responsibility for the stock market at all.  So even without knowing what the Fed has done lately, it makes no sense for them to "sacrifice inflation" when the opposite is a core part of their purpose.

I agree with you that the FED has announced future hikes. Is the market reacting appropriately? Or is it still in disbelieve mode? I also agree that they will taper but at what speed.

I agree that their mandate is inflation, yet, here we are sitting on a 7% y/o/y, with them just now accepting that inflation is not transitory. It is in their mandate yet not much was done. Raising rates 1 bp in 1 yr won't affect inflation as much as we want and it will be suicide to raise faster.

I in general agree with you but recent behavior is inconsistent with mandates. I am just wondering if there is political will for all this.

I am speculating and repeating what I have read elsewhere, none of this is my firm believe or opinion as I am not qualified to make these assessments.