Author Topic: Does anyone think we are in a bubble?  (Read 33220 times)

Retireatee1

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Re: Does anyone think we are in a bubble?
« Reply #100 on: January 26, 2021, 06:16:59 AM »
18% return for the S&P500 in 2020?  It's hard to imagine this is mostly organic growth.  So if it is not organic growth, it is either a bubble or it is being propped up.

vand

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Re: Does anyone think we are in a bubble?
« Reply #101 on: January 26, 2021, 06:45:45 AM »
18% return for the S&P500 in 2020?  It's hard to imagine this is mostly organic growth.  So if it is not organic growth, it is either a bubble or it is being propped up.

as during dotcom, it's really in the Nasdaq where tech and speculative stocks dominate where the real bubble is forming.

Nasdaq is now stretched further above its 200wma than it has been since dotcom. As with all great trends it can go further, but there will be payback at some point.

waltworks

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Re: Does anyone think we are in a bubble?
« Reply #102 on: January 26, 2021, 07:30:20 AM »
Based on all the stock picking threads we're suddenly seeing, I'd say yes.

I mean, that's not actionable for me, so whatever. But I expect some kind of at least decent correction... sometime.

I mean, the thread is from 2017. I bet we don't crash back down to those valuations (ie 35%+/2500) so if OP sold everything, they are doing pretty terribly even without considering dividends.

-W
« Last Edit: January 26, 2021, 07:35:42 AM by waltworks »

GuitarStv

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Re: Does anyone think we are in a bubble?
« Reply #103 on: January 26, 2021, 07:38:06 AM »
I suspect that we're in a bubble right now.  The key is . . . continue to follow asset allocations and don't pretend you'll be able to successfully time the market.  Same behaviour you should take when you think stocks are undervalued.

MustacheAndaHalf

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Re: Does anyone think we are in a bubble?
« Reply #104 on: January 26, 2021, 07:44:05 AM »
18% return for the S&P500 in 2020?  It's hard to imagine this is mostly organic growth.  So if it is not organic growth, it is either a bubble or it is being propped up.
I think that +18% comes from a smaller group of companies than you'd expect.  Apple gained +81% in the past 12 months, ending at 6.7% of the S&P 500.
Here's the full list of big tech, which is 22% of the S&P 500 by weight:
AAPL +81% / AMZN +77% / MSFT +40% / GOOG +30% / FB +28%
Those 5 stocks account for most of the S&P 500 gains in 2020.

CAPE 35! According to my completely made up rule of thumb we are in a bubble watch! When thread was young I sort of expected us to get here within a year, but here we are! I bet we can make it all the way to bubble warning though, that would be exciting.
I think you can make an even stronger case than calling it a made up rule.  A Vanguard research paper from many years ago found a 0.43 correlation between a high 10-year CAPE and lower equity returns going forward.
http://fairwaywealth.com/wp-content/uploads/Vanguard-Research-11-30-2014.pdf#page=7

When you combine that with the 2nd highest CAPE of all time, it's a concern.  But keep in mind a 0.43 correlation is not a guarantee - and you have to ask yourself, what do you invest in, instead?  Lower returning stocks might still beat bonds and cash.
https://www.multpl.com/shiller-pe

Radagast

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Re: Does anyone think we are in a bubble?
« Reply #105 on: January 26, 2021, 09:47:00 PM »
CAPE 35! According to my completely made up rule of thumb we are in a bubble watch! When thread was young I sort of expected us to get here within a year, but here we are! I bet we can make it all the way to bubble warning though, that would be exciting.
I think you can make an even stronger case than calling it a made up rule.  A Vanguard research paper from many years ago found a 0.43 correlation between a high 10-year CAPE and lower equity returns going forward.
http://fairwaywealth.com/wp-content/uploads/Vanguard-Research-11-30-2014.pdf#page=7

When you combine that with the 2nd highest CAPE of all time, it's a concern.  But keep in mind a 0.43 correlation is not a guarantee - and you have to ask yourself, what do you invest in, instead?  Lower returning stocks might still beat bonds and cash.
https://www.multpl.com/shiller-pe
That's not what you said in 2017 :D !
I changed from "arbitrary method" to "completely made up rule of thumb" because of your comment!!!
I just made this handy "Radagast's Guide to Bubbles" what I was thinking about posting sometime, now is as good a time as any. It is an arbitrary method ...
An arbitrary method with no track record isn't a good start to providing investing advice.

Anyhow 4 years later and I still like it.
« Last Edit: January 26, 2021, 09:48:31 PM by Radagast »

vand

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Re: Does anyone think we are in a bubble?
« Reply #106 on: January 27, 2021, 07:31:05 AM »
Based on all the stock picking threads we're suddenly seeing, I'd say yes.

I mean, that's not actionable for me, so whatever. But I expect some kind of at least decent correction... sometime.

I mean, the thread is from 2017. I bet we don't crash back down to those valuations (ie 35%+/2500) so if OP sold everything, they are doing pretty terribly even without considering dividends.

-W

Time will tell.. but I'd wouldn't be surprised if we crashed back down to those levels at some point in the next several years. We've already had one revisit last March.  I think a severe bear market probably takes us right back to around the 2100-2300 level where there is a lot of natural support.

A lot of faith has been placed in the Fed and government institutions that they can keep the market propped up in the event of it going south, but if something happens that ties their hands then that faith may prove misplaced. Inflation or a politically unacceptable weakness in the currency can do that.

waltworks

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Re: Does anyone think we are in a bubble?
« Reply #107 on: January 27, 2021, 07:55:30 AM »
February 2017 to now, S&P with dividends reinvested is up 73%. To lose your entire gains we'd need a 45% crash, give or take.

I would not be surprised if that happened. I also wouldn't be surprised if in 2024 we looked back and laughed at this thread because the S&P is up another 100%, either. If you'd asked me in 2017 if I thought US stocks were overvalued I'd have said yes. Good thing I didn't take myself seriously.

Like I said, not actionable so why worry?

-W

vand

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Re: Does anyone think we are in a bubble?
« Reply #108 on: January 27, 2021, 08:18:56 AM »
February 2017 to now, S&P with dividends reinvested is up 73%. To lose your entire gains we'd need a 45% crash, give or take.

I would not be surprised if that happened. I also wouldn't be surprised if in 2024 we looked back and laughed at this thread because the S&P is up another 100%, either. If you'd asked me in 2017 if I thought US stocks were overvalued I'd have said yes. Good thing I didn't take myself seriously.

Like I said, not actionable so why worry?

-W

You wouldn't be surprised if the market went to a valuation that it has never reached before?

I mean, I suppose its possible... anything is possible. But in the range of outcomes this sits so many standard deviations above the expected midpoint that it's just a doolaly throwaway figure of speech.Yes, it can happen. Little green martians landing can also happen...but it would definitely be a "surprise".   

By contrast a 45% crash occurs every decade or so. Hell I remember the last 2.

And I don't agree that it's not actionable. The extension is that you should be fully invested all of the time. Investing is not about black and white decisions. There are many shares of grey.. investing is the art of balancing risk with expected reward.

waltworks

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Re: Does anyone think we are in a bubble?
« Reply #109 on: January 27, 2021, 08:24:33 AM »
Ok, going to go to cash? Short? What actions are you personally taking? Why didn't you do any of that stuff in 2017 when the market was also overvalued?

-W

vand

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Re: Does anyone think we are in a bubble?
« Reply #110 on: January 27, 2021, 08:40:55 AM »
Ok, going to go to cash? Short? What actions are you personally taking? Why didn't you do any of that stuff in 2017 when the market was also overvalued?

-W

sure. You can divert to cash, treasuries, t-bills, gold, TIPS, international equities, emerging markets equities, emerging market bonds, REITs, commodities, private equity. or fine wines. or art.

Or you could keep all your eggs in one basket and continue to view the world in monochrome.

waltworks

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Re: Does anyone think we are in a bubble?
« Reply #111 on: January 27, 2021, 08:42:59 AM »
No, no - did you do that stuff 3 years ago? If not, why not?

Again, we're in agreement that things are super overvalued. But unless you've successfully acted on that in the past, why would you assume you can now? I've invested through several big downturns and doing nothing always worked out pretty well in the long run, which is all I care about.

For what it's worth, I've not bought any US stocks in at least 6 months now, because to keep my international/US balance where I decided it should be, I'm just buying non-US. So if that counts as actively doing something, I suppose I am, but it's a purely AA driven decision.

-W
« Last Edit: January 27, 2021, 08:44:35 AM by waltworks »

ChpBstrd

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Re: Does anyone think we are in a bubble?
« Reply #112 on: January 27, 2021, 08:43:31 AM »
18% return for the S&P500 in 2020?  It's hard to imagine this is mostly organic growth.  So if it is not organic growth, it is either a bubble or it is being propped up.
I think that +18% comes from a smaller group of companies than you'd expect.  Apple gained +81% in the past 12 months, ending at 6.7% of the S&P 500.
Here's the full list of big tech, which is 22% of the S&P 500 by weight:
AAPL +81% / AMZN +77% / MSFT +40% / GOOG +30% / FB +28%
Those 5 stocks account for most of the S&P 500 gains in 2020.

CAPE 35! According to my completely made up rule of thumb we are in a bubble watch! When thread was young I sort of expected us to get here within a year, but here we are! I bet we can make it all the way to bubble warning though, that would be exciting.
I think you can make an even stronger case than calling it a made up rule.  A Vanguard research paper from many years ago found a 0.43 correlation between a high 10-year CAPE and lower equity returns going forward.
http://fairwaywealth.com/wp-content/uploads/Vanguard-Research-11-30-2014.pdf#page=7

When you combine that with the 2nd highest CAPE of all time, it's a concern.  But keep in mind a 0.43 correlation is not a guarantee - and you have to ask yourself, what do you invest in, instead?  Lower returning stocks might still beat bonds and cash.
https://www.multpl.com/shiller-pe

My takeaway from the vanguard study was that they found zero instances of 10 year returns over 5% when CAPE was greater than 30, and an equal number of slightly positive and slightly negative returns. Regardless of how low the coefficient of determination is, this result stands out. We should expect somewhere around 0% returns for the next 10 years.

What to invest in instead?

-I have several preferreds yielding ~6%
-Non-bubble real estate can yield about a 6% return on cash that grows with inflation.
-Sell OTM put options, exposing only a small portion of your portfolio at any given time.
-Calls and cash
-Bear spreads
-One’s mortgage
-Foreign assets with better valuations, although these are becoming scarce

vand

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Re: Does anyone think we are in a bubble?
« Reply #113 on: January 28, 2021, 04:51:58 AM »
No, no - did you do that stuff 3 years ago? If not, why not?

Again, we're in agreement that things are super overvalued. But unless you've successfully acted on that in the past, why would you assume you can now? I've invested through several big downturns and doing nothing always worked out pretty well in the long run, which is all I care about.

For what it's worth, I've not bought any US stocks in at least 6 months now, because to keep my international/US balance where I decided it should be, I'm just buying non-US. So if that counts as actively doing something, I suppose I am, but it's a purely AA driven decision.

-W

Buying non-US definitely counts as an "doing something".
Personally I cut down my equities exposure from around 60% down to 45% since the market started its meltup since the vaccine announcements, and most of that is in non-US, with spread the rest around in other asset classes. That's my version of doing something.

blue_green_sparks

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Re: Does anyone think we are in a bubble?
« Reply #114 on: January 28, 2021, 06:02:47 AM »
What to invest in instead?
If I was 20 years younger and still working I would do nothing. With a NW ~$2M, my risk tolerance is much lower being in between career income and entitlement income. I picked up several brokered CDs when they were 3.25% and some of those dreaded immediate annuities as well. Some preferred stocks, some dividend stocks and some defined outcome index ETFs. Use 'MINT' to hold some cash. Bought a rental property as well. I have less than 10% allocation into the total stock fund. Barring some huge inflation pressure we can draw -1 to +1 % and live comfortably. This low interest era makes it rough for savers. On a daily basis, I fight with my risker self and the "Fear Of Missing Out".

tooqk4u22

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Re: Does anyone think we are in a bubble?
« Reply #115 on: January 28, 2021, 06:03:23 AM »
Ok, going to go to cash? Short? What actions are you personally taking? Why didn't you do any of that stuff in 2017 when the market was also overvalued?

-W

Definitely don't go short given what's going on with short squeezes lately!

Accrual

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Re: Does anyone think we are in a bubble?
« Reply #116 on: January 28, 2021, 06:05:32 AM »
Yes. I think we are in a bubble. Stimulus has inflated equities in the short-term. Once people realize there is no basis for these valuations, there will be a sell-off and inflation will transfer from equities into cash.

tooqk4u22

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Re: Does anyone think we are in a bubble?
« Reply #117 on: January 28, 2021, 06:24:10 AM »
Yes. I think we are in a bubble. Stimulus has inflated equities in the short-term. Once people realize there is no basis for these valuations, there will be a sell-off and inflation will transfer from equities into cash.

Stimulus and fed policy has inflated everything and they reaffirm that still no end in sight.   Fed is irresponsible.    Even if one thinks inflation isn't coming back and that big deficit/debt load is no big deal because rates are low, know that the majority of US Debt is short term (not the 10 and 30 year thats available).   That's why the US Debt levels exploded last year but interest costs actually went down a bit - so think about the inverse of that when/if rates rise.  Big additions to the federal budget. 

Not to mention modern monetary policy doesn't work like it used to because we are a services society and not a manufacturing one.   The fed is directly, not entirely, responsible for inequality.   
« Last Edit: January 28, 2021, 06:26:02 AM by tooqk4u22 »

ChpBstrd

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Re: Does anyone think we are in a bubble?
« Reply #118 on: January 28, 2021, 09:10:15 AM »
This is a tough bubble. Back in 1999 one could definitely say "there is a bubble in tech stocks, so I'm going to rotate to bonds (yielding 7-8%) for the next few years." Now, the bubble is in bonds, entire stock indices, PM's, preferreds, coastal real estate, etc. The obvious signs of froth are forming among widely-shorted stocks, tech, etc. and in the rationales people give for paying these prices, like FOMO, TINA, and the perennial "this time is different so valuation doesn't matter". There are few places to re-allocate to, and there have been only a handful of periods since 1926 where valuations were anywhere near this high and the returns were positive a decade later - with several periods of negative 10y returns.

I'll be looking into a more defensive plan, such as selling risk-offsetting condors on the SPY and the VIX, local LCOL real estate, holding cash and call options, or simply selling way-low puts to eek by and try to earn 4-7% a year. These niches, with very careful risk management, may be key to retiring and staying retired for the next decade.

chasesfish

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Re: Does anyone think we are in a bubble?
« Reply #119 on: January 30, 2021, 10:20:20 AM »
Valuations are lofty.  They've been lofty and got worse.  I have no idea when / how they will come down and if I'll even be alive for them coming down.   I think the real estate market has been the best example of many people throwing their hands up and saying "f-it", I can't wait forever to buy my home.

A healthy allocation in treasury bonds, emerging markets, and value stocks are the best thing I can find for portfolio protection, but it's also created lagging returns and the need to battle FOMO.

Developing multiple sources for small consulting jobs is the best protection I have in case I have to wait out a portfolio melt down.

MustacheAndaHalf

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Re: Does anyone think we are in a bubble?
« Reply #120 on: January 30, 2021, 05:13:23 PM »
CAPE 35! According to my completely made up rule of thumb we are in a bubble watch! When thread was young I sort of expected us to get here within a year, but here we are! I bet we can make it all the way to bubble warning though, that would be exciting.
I think you can make an even stronger case than calling it a made up rule.  A Vanguard research paper from many years ago found a 0.43 correlation between a high 10-year CAPE and lower equity returns going forward.
http://fairwaywealth.com/wp-content/uploads/Vanguard-Research-11-30-2014.pdf#page=7

When you combine that with the 2nd highest CAPE of all time, it's a concern.  But keep in mind a 0.43 correlation is not a guarantee - and you have to ask yourself, what do you invest in, instead?  Lower returning stocks might still beat bonds and cash.
https://www.multpl.com/shiller-pe
That's not what you said in 2017 :D !
I changed from "arbitrary method" to "completely made up rule of thumb" because of your comment!!!
I just made this handy "Radagast's Guide to Bubbles" what I was thinking about posting sometime, now is as good a time as any. It is an arbitrary method ...
An arbitrary method with no track record isn't a good start to providing investing advice.
Anyhow 4 years later and I still like it.
An arbitrary rule means there's no data.  With a 0.43 correlation, there's data so it's not an arbitrary rule.  For an investment approach, I hope most investors use something much stronger than a 0.43 correlation.  Isn't that going to be wrong more than half the time?

ChpBstrd - I read some articles by Larry Swedroe explaining why today's CAPE is dramatically different from historical CAPE.  The rules for reporting earnings are very different, which makes it harder to compare to the past.  That said, that 0% average and 5% top earnings for current CAPE level is interesting to think about.

CAPE was co-created by Robert Schiller, who weighed in on it in December:
“The level of interest rates is an increasingly important element to consider when valuing equities,” writes Shiller.  The ECY indicator (inverse CAPE) “confirms the relative attractiveness of equities, particularly given a potentially protracted period of low interest rates.” 
https://www.thinkadvisor.com/2020/12/01/stocks-prices-not-as-absurd-as-some-think-shiller/

waltworks

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Re: Does anyone think we are in a bubble?
« Reply #121 on: January 30, 2021, 07:05:28 PM »
An arbitrary rule means there's no data.  With a 0.43 correlation, there's data so it's not an arbitrary rule.  For an investment approach, I hope most investors use something much stronger than a 0.43 correlation.  Isn't that going to be wrong more than half the time?

Um, no. It means that you can attribute 43% of the variation in thing X to what thing Y is doing (ie, 43% of the change in 10 year returns can be explained by the CAPE, using past data). This assumes you don't want to get into the Bayesian weeds, and the dataset has some problems, but there's not a "wrong" involved here. The future is not predictable, but if it follows the basic pattern of the past, we'd expect lower 10 yr returns with higher CAPE, with a pretty strong relationship, but far from perfect.

-W

ChpBstrd

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Re: Does anyone think we are in a bubble?
« Reply #122 on: January 31, 2021, 09:23:02 PM »
ChpBstrd - I read some articles by Larry Swedroe explaining why today's CAPE is dramatically different from historical CAPE.  The rules for reporting earnings are very different, which makes it harder to compare to the past.  That said, that 0% average and 5% top earnings for current CAPE level is interesting to think about.

CAPE was co-created by Robert Schiller, who weighed in on it in December:
“The level of interest rates is an increasingly important element to consider when valuing equities,” writes Shiller.  The ECY indicator (inverse CAPE) “confirms the relative attractiveness of equities, particularly given a potentially protracted period of low interest rates.” 
https://www.thinkadvisor.com/2020/12/01/stocks-prices-not-as-absurd-as-some-think-shiller/

@MustacheAndaHalf you've dug up some very good literature lately, so maybe you can refer me on a few questions. I tried googling Swedroe and CAPE and remain unsatisfied:
 
1) Exactly how much of a difference did the change in how GAAP accounts for goodwill and other intangibles affect earnings? Did companies really abuse the rules to cut their earnings 2%? 10%? 50%? PE ratios have doubled, so what percentage of that is changes in GAAP?

2) If paying dividends was so devastating to investor returns, why did companies pay such high dividends in the past? How did nobody for nearly a hundred years figure out that their firms would be more valuable if they just cut the dividend and invested in growth? Seems like if it was that simple, and low-payout-ratio = higher valuation, an activist investor could buy into a dividend paying company, force them to cut the dividend and reinvest proceeds, and sell out for huge profits. Why didn't that happen all the time from 1880-1980?

3) Yes, there was less liquidity in the late 1800s and early 20th century, but it is not clear why this would change investors' required rate of return. If TINA applies as an explanation for why today's investors are willing to accept low rates of return, then why wouldn't it apply as an explanation for why past investors were willing to accept low liquidity and high transaction costs? In either case, the alternative was not investing and in either case the cost was tangible. (this is actually a critique of the TINA rationale, I understand the deadweight losses caused by economic friction).

ChpBstrd

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Re: Does anyone think we are in a bubble?
« Reply #123 on: January 31, 2021, 09:50:40 PM »
In 2016 when CAPE was about 25, Swedroe suggested the following adjustments to make it comparable to previous years:

1) Add 4 full points for accounting changes.
2) Add 1 full point for lower dividend payout.
3) Assume the equity risk premium is lower due to liquidity, transaction costs, etc. (exact adjustment undefined)

This, he said, brought the CAPE closer to its average in recent decades of around 20.

I wonder what he's saying now that CAPE is 35 instead of 25? Would he say we are 40-50% overvalued, per his 2016 formula?

https://buckinghamadvisor.com/cape-10-signaling-the-market-is-vastly-overvalued/

MustacheAndaHalf

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Re: Does anyone think we are in a bubble?
« Reply #124 on: February 01, 2021, 03:00:43 AM »
An arbitrary rule means there's no data.  With a 0.43 correlation, there's data so it's not an arbitrary rule.  For an investment approach, I hope most investors use something much stronger than a 0.43 correlation.  Isn't that going to be wrong more than half the time?
Um, no. It means that you can attribute 43% of the variation in thing X to what thing Y is doing (ie, 43% of the change in 10 year returns can be explained by the CAPE, using past data). This assumes you don't want to get into the Bayesian weeds, and the dataset has some problems, but there's not a "wrong" involved here. The future is not predictable, but if it follows the basic pattern of the past, we'd expect lower 10 yr returns with higher CAPE, with a pretty strong relationship, but far from perfect.
I think that correlation refers to returns 10-20 years in the future.  I'm not aware of that being used to produce superior returns - but if it's an information advantage, it should provide a way to beat the market.  The only study I recall, which varied asset allocation by CAPE, did not beat buy & hold.  I think Swedroe mentioned it in one of his articles years ago, when discussing CAPE.

Robert Schiller, the co-creator of CAPE, has repeatedly said not to invest based on it.  I interpret his view as saying you learn something about the investment environment from CAPE - but it's not an all-in or all-out indicator.  In my view, it is not strong enough to base investment decisions on, and I think the co-creator of CAPE agrees with that.

MustacheAndaHalf

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Re: Does anyone think we are in a bubble?
« Reply #125 on: February 01, 2021, 03:14:15 AM »
@ChpBstrd - Bad news, your knowledge of CAPE and Swedroe passed mine - I can see you've read up from the information and questions, but I haven't kept up with Swedroe for awhile.  I don't recall those 4+1 adjustments to CAPE, for example.

Many years ago, I got annoyed at investors (partly here, partly elsewhere) who chased returns.  I used what I learned from Swedroe, that momentum has the highest return with the most consistency, and tilted towards that.  But as I've drifted away from small cap value tilts, I've spent less time keeping up with Mr Swedroe.

I think a large number of investors used to count on the dividend (retirees especially).  Maybe Amazon was the most successful champion of reinvesting in the company, instead of paying a dividend.  I don't know what changed, but now it's more common to avoid the tax impact of dividends - instead the company buys back it's own stock.

You could also read what Robert Schiller has to say about CAPE.  His recent article seems to suggest you invert the CAPE to get the yield.  So inverting 33.8 CAPE gives you 0.0296% yield, call that 3% yield.  Maybe that's a rough prediction of future returns, driven by earnings?  More importantly, that 3% beats the current 1% interest rate offered by bonds, so it might still be appealing.

RWD

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Re: Does anyone think we are in a bubble?
« Reply #126 on: February 01, 2021, 07:15:16 AM »
You could also read what Robert Schiller has to say about CAPE.  His recent article seems to suggest you invert the CAPE to get the yield.  So inverting 33.8 CAPE gives you 0.0296% yield, call that 3% yield.  Maybe that's a rough prediction of future returns, driven by earnings?  More importantly, that 3% beats the current 1% interest rate offered by bonds, so it might still be appealing.
This makes intuitive sense to me and is essentially what I am using for future return estimates. Though I think it general it must be either conservative or perhaps real returns because if you invert the historical median CAPE (15.8) you only get 6.3% instead of the 9-10% that the S&P 500 has actually returned.

ChpBstrd

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Re: Does anyone think we are in a bubble?
« Reply #127 on: February 01, 2021, 09:50:00 AM »
@ChpBstrd - Bad news, your knowledge of CAPE and Swedroe passed mine - I can see you've read up from the information and questions, but I haven't kept up with Swedroe for awhile.  I don't recall those 4+1 adjustments to CAPE, for example.

Many years ago, I got annoyed at investors (partly here, partly elsewhere) who chased returns.  I used what I learned from Swedroe, that momentum has the highest return with the most consistency, and tilted towards that.  But as I've drifted away from small cap value tilts, I've spent less time keeping up with Mr Swedroe.

I think a large number of investors used to count on the dividend (retirees especially).  Maybe Amazon was the most successful champion of reinvesting in the company, instead of paying a dividend.  I don't know what changed, but now it's more common to avoid the tax impact of dividends - instead the company buys back it's own stock.

You could also read what Robert Schiller has to say about CAPE.  His recent article seems to suggest you invert the CAPE to get the yield.  So inverting 33.8 CAPE gives you 0.0296% yield, call that 3% yield.  Maybe that's a rough prediction of future returns, driven by earnings?  More importantly, that 3% beats the current 1% interest rate offered by bonds, so it might still be appealing.

Some say dividends went out of style after Ronald Reagan (!) made them fully taxable. Given the choice between being double-taxed and doing buybacks, you know what happened. The minor miracle is that it took so long. 

https://www.suredividend.com/dividend-taxation/

I agree with Shiller inverting the CAPE is a rational way to forecast whether one's portfolio can support one's WR in perpetuity. It's the same as if one owned a laundromat or rental properties. One should also forecast about 2.6% earnings growth per year, the average since about 1980. If one has a $50k withdraw rate, expects inflation to be equal or less than the 2.6% long-term earnings growth rate, and the CAPE is 35, then one needs a (35 x 50,000 =) $1.75M portfolio. If a 2.9% WR seems ahistorical, bear in mind that the Trinity study was done on a time period when CAPE was closer to 17 (a CAPE yield of 5.9%, growing at 3.5%/year) and it only required not going broke after 30 years.

Maybe as you alluded to the market is forecasting long term corporate earnings growth to significantly exceed long term inflation. This growth function would reduce the failure rate and get the SWR closer to I'm guessing 3.5% (too lazy to enter into a simulator). 

An example of buying too high: buying the dip in Japanese stocks in the mid-1990s when their CAPE was still above 40. Corporate earnings went straight up from there, but investors were still overpaying, even on a "consolidated" basis where CAPE was closer to 30. Only a CAPE analysis could have warned investors their retirements were unsafe.

Japan CAPE history: https://siblisresearch.com/data/japan-shiller-pe-cape/
Japen Corporate Earnings growth: https://tradingeconomics.com/japan/corporate-profits

boarder42

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Re: Does anyone think we are in a bubble?
« Reply #128 on: May 23, 2021, 06:50:05 PM »
You could also read what Robert Schiller has to say about CAPE.  His recent article seems to suggest you invert the CAPE to get the yield.  So inverting 33.8 CAPE gives you 0.0296% yield, call that 3% yield.  Maybe that's a rough prediction of future returns, driven by earnings?  More importantly, that 3% beats the current 1% interest rate offered by bonds, so it might still be appealing.
This makes intuitive sense to me and is essentially what I am using for future return estimates. Though I think it general it must be either conservative or perhaps real returns because if you invert the historical median CAPE (15.8) you only get 6.3% instead of the 9-10% that the S&P 500 has actually returned.

The inversion of cape correlates with SWR more than expected return. Kitchen has a huge article on it and madfientist has a tracker. 6.3% is probably the avg swr where 4% is really worst case for 99% of cases

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Re: Does anyone think we are in a bubble?
« Reply #129 on: May 24, 2021, 08:13:58 AM »
You could also read what Robert Schiller has to say about CAPE.  His recent article seems to suggest you invert the CAPE to get the yield.  So inverting 33.8 CAPE gives you 0.0296% yield, call that 3% yield.  Maybe that's a rough prediction of future returns, driven by earnings?  More importantly, that 3% beats the current 1% interest rate offered by bonds, so it might still be appealing.
This makes intuitive sense to me and is essentially what I am using for future return estimates. Though I think it general it must be either conservative or perhaps real returns because if you invert the historical median CAPE (15.8) you only get 6.3% instead of the 9-10% that the S&P 500 has actually returned.
The inversion of cape correlates with SWR more than expected return. Kitchen has a huge article on it and madfientist has a tracker. 6.3% is probably the avg swr where 4% is really worst case for 99% of cases
I think expecting a 16 P/E ratio is dangerously outdated if you base your retirement on it, and there's no evidence of it for decades.  For almost three decades, the CAPE has only dropped below 20 P/E during the Great Financial Crisis.
https://www.multpl.com/shiller-pe

The "E" in P/E stands for earnings, which are calculated based on the accounting standards of that time period.  But those standards have changed dramatically over the past 30 years in a way that probably permanently inflates earnings.  Comparing earnings from 2019 with earnings from 1959 is very misleading, because of how they measure earnings differently.

MustacheAndaHalf

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Re: Does anyone think we are in a bubble?
« Reply #130 on: May 24, 2021, 08:16:32 AM »
A contributor on CNBC pointed to the past several months, and how each drop in the markets corresponded to a different type of bubble.  I can't recall the full list, but it suggests an interesting possibility: the market has numerous bubbles which are popping at different times.

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Re: Does anyone think we are in a bubble?
« Reply #131 on: May 24, 2021, 08:43:32 AM »
You could also read what Robert Schiller has to say about CAPE.  His recent article seems to suggest you invert the CAPE to get the yield.  So inverting 33.8 CAPE gives you 0.0296% yield, call that 3% yield.  Maybe that's a rough prediction of future returns, driven by earnings?  More importantly, that 3% beats the current 1% interest rate offered by bonds, so it might still be appealing.
This makes intuitive sense to me and is essentially what I am using for future return estimates. Though I think it general it must be either conservative or perhaps real returns because if you invert the historical median CAPE (15.8) you only get 6.3% instead of the 9-10% that the S&P 500 has actually returned.
The inversion of cape correlates with SWR more than expected return. Kitchen has a huge article on it and madfientist has a tracker. 6.3% is probably the avg swr where 4% is really worst case for 99% of cases
I think expecting a 16 P/E ratio is dangerously outdated if you base your retirement on it, and there's no evidence of it for decades.  For almost three decades, the CAPE has only dropped below 20 P/E during the Great Financial Crisis.
https://www.multpl.com/shiller-pe

The "E" in P/E stands for earnings, which are calculated based on the accounting standards of that time period.  But those standards have changed dramatically over the past 30 years in a way that probably permanently inflates earnings.  Comparing earnings from 2019 with earnings from 1959 is very misleading, because of how they measure earnings differently.

i dont plan to base any form of my retirement on it just that the better historical correlation was to long term SWR.  Agree GAAP changed in the last 20 years which in turn changes that history.  I'm not invested in the SP500 anymore and use a much more aggressive yet safer AA.

ChpBstrd

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Re: Does anyone think we are in a bubble?
« Reply #132 on: May 24, 2021, 08:55:00 AM »
You could also read what Robert Schiller has to say about CAPE.  His recent article seems to suggest you invert the CAPE to get the yield.  So inverting 33.8 CAPE gives you 0.0296% yield, call that 3% yield.  Maybe that's a rough prediction of future returns, driven by earnings?  More importantly, that 3% beats the current 1% interest rate offered by bonds, so it might still be appealing.
This makes intuitive sense to me and is essentially what I am using for future return estimates. Though I think it general it must be either conservative or perhaps real returns because if you invert the historical median CAPE (15.8) you only get 6.3% instead of the 9-10% that the S&P 500 has actually returned.
The inversion of cape correlates with SWR more than expected return. Kitchen has a huge article on it and madfientist has a tracker. 6.3% is probably the avg swr where 4% is really worst case for 99% of cases
I think expecting a 16 P/E ratio is dangerously outdated if you base your retirement on it, and there's no evidence of it for decades.  For almost three decades, the CAPE has only dropped below 20 P/E during the Great Financial Crisis.
https://www.multpl.com/shiller-pe

The "E" in P/E stands for earnings, which are calculated based on the accounting standards of that time period.  But those standards have changed dramatically over the past 30 years in a way that probably permanently inflates earnings.  Comparing earnings from 2019 with earnings from 1959 is very misleading, because of how they measure earnings differently.

I think differences in the type of businesses that comprised the indexes explain a few things. In 1959, the indices were dominated by smokestack industries with high variable costs. In 2019, they were dominated by information industries with low variable costs. If you owned a wildly successful steel mill in 1959, expanding may not be as attractive an option as returning earnings to shareholders through dividends. If you owned a restaurant delivery service or a self-driving sensor manufacturer in 2019, on the other hand, reinvesting in the business is the only decision that makes sense.

bigblock440

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Re: Does anyone think we are in a bubble?
« Reply #133 on: May 28, 2021, 07:45:26 PM »
You could also read what Robert Schiller has to say about CAPE.  His recent article seems to suggest you invert the CAPE to get the yield.  So inverting 33.8 CAPE gives you 0.0296% yield, call that 3% yield.  Maybe that's a rough prediction of future returns, driven by earnings?  More importantly, that 3% beats the current 1% interest rate offered by bonds, so it might still be appealing.
This makes intuitive sense to me and is essentially what I am using for future return estimates. Though I think it general it must be either conservative or perhaps real returns because if you invert the historical median CAPE (15.8) you only get 6.3% instead of the 9-10% that the S&P 500 has actually returned.
The inversion of cape correlates with SWR more than expected return. Kitchen has a huge article on it and madfientist has a tracker. 6.3% is probably the avg swr where 4% is really worst case for 99% of cases
I think expecting a 16 P/E ratio is dangerously outdated if you base your retirement on it, and there's no evidence of it for decades.  For almost three decades, the CAPE has only dropped below 20 P/E during the Great Financial Crisis.
https://www.multpl.com/shiller-pe

The "E" in P/E stands for earnings, which are calculated based on the accounting standards of that time period.  But those standards have changed dramatically over the past 30 years in a way that probably permanently inflates earnings.  Comparing earnings from 2019 with earnings from 1959 is very misleading, because of how they measure earnings differently.

I think you have that backwards, it deflates earnings (assuming due to various deductions and other carve-outs to reduce tax burden, but don't remember exactly).  The denominator needs to be smaller to have a larger ratio, or the numerator needs to be larger.  Clearly the price is higher, but if the earnings were inflated, the ratio would be closer to the golden 16.

MustacheAndaHalf

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Re: Does anyone think we are in a bubble?
« Reply #134 on: May 29, 2021, 01:08:50 AM »
You could also read what Robert Schiller has to say about CAPE.  His recent article seems to suggest you invert the CAPE to get the yield.  So inverting 33.8 CAPE gives you 0.0296% yield, call that 3% yield.  Maybe that's a rough prediction of future returns, driven by earnings?  More importantly, that 3% beats the current 1% interest rate offered by bonds, so it might still be appealing.
This makes intuitive sense to me and is essentially what I am using for future return estimates. Though I think it general it must be either conservative or perhaps real returns because if you invert the historical median CAPE (15.8) you only get 6.3% instead of the 9-10% that the S&P 500 has actually returned.
The inversion of cape correlates with SWR more than expected return. Kitchen has a huge article on it and madfientist has a tracker. 6.3% is probably the avg swr where 4% is really worst case for 99% of cases
I think expecting a 16 P/E ratio is dangerously outdated if you base your retirement on it, and there's no evidence of it for decades.  For almost three decades, the CAPE has only dropped below 20 P/E during the Great Financial Crisis.
https://www.multpl.com/shiller-pe

The "E" in P/E stands for earnings, which are calculated based on the accounting standards of that time period.  But those standards have changed dramatically over the past 30 years in a way that probably permanently inflates earnings.  Comparing earnings from 2019 with earnings from 1959 is very misleading, because of how they measure earnings differently.

i dont plan to base any form of my retirement on it just that the better historical correlation was to long term SWR.  Agree GAAP changed in the last 20 years which in turn changes that history.  I'm not invested in the SP500 anymore and use a much more aggressive yet safer AA.
I assumed your comment "6.3% is probably the avg swr" was based on the 16 CAPE that hasn't been true for 30 years.  Matching withdrawals to earnings would suggest that today's over 20 CAPE means an under 5% withdrawal rate.

MustacheAndaHalf

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Re: Does anyone think we are in a bubble?
« Reply #135 on: May 29, 2021, 01:11:11 AM »
You could also read what Robert Schiller has to say about CAPE.  His recent article seems to suggest you invert the CAPE to get the yield.  So inverting 33.8 CAPE gives you 0.0296% yield, call that 3% yield.  Maybe that's a rough prediction of future returns, driven by earnings?  More importantly, that 3% beats the current 1% interest rate offered by bonds, so it might still be appealing.
This makes intuitive sense to me and is essentially what I am using for future return estimates. Though I think it general it must be either conservative or perhaps real returns because if you invert the historical median CAPE (15.8) you only get 6.3% instead of the 9-10% that the S&P 500 has actually returned.
The inversion of cape correlates with SWR more than expected return. Kitchen has a huge article on it and madfientist has a tracker. 6.3% is probably the avg swr where 4% is really worst case for 99% of cases
I think expecting a 16 P/E ratio is dangerously outdated if you base your retirement on it, and there's no evidence of it for decades.  For almost three decades, the CAPE has only dropped below 20 P/E during the Great Financial Crisis.
https://www.multpl.com/shiller-pe

The "E" in P/E stands for earnings, which are calculated based on the accounting standards of that time period.  But those standards have changed dramatically over the past 30 years in a way that probably permanently inflates earnings.  Comparing earnings from 2019 with earnings from 1959 is very misleading, because of how they measure earnings differently.
I think you have that backwards, it deflates earnings (assuming due to various deductions and other carve-outs to reduce tax burden, but don't remember exactly).  The denominator needs to be smaller to have a larger ratio, or the numerator needs to be larger.  Clearly the price is higher, but if the earnings were inflated, the ratio would be closer to the golden 16.
Yes, my comment had it backwards - I meant that CAPE has been inflated, but accidentally said earnings.  My prior paragraph is my key point : historical CAPE of 16 is gone, with a CAPE above 20 being the norm for the past 30 years.

Telecaster

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Re: Does anyone think we are in a bubble?
« Reply #136 on: May 31, 2021, 01:54:29 PM »
The "E" in P/E stands for earnings, which are calculated based on the accounting standards of that time period.  But those standards have changed dramatically over the past 30 years in a way that probably permanently inflates earnings.  Comparing earnings from 2019 with earnings from 1959 is very misleading, because of how they measure earnings differently.

It is also quite possible that with the rise of individual participation in the stock market through 401(k)s and widespread indexing,  the risk premium for stocks has gone down.  In other words, people are more willing to buy expensive stocks. 

tooqk4u22

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Re: Does anyone think we are in a bubble?
« Reply #137 on: June 01, 2021, 10:14:47 AM »
The "E" in P/E stands for earnings, which are calculated based on the accounting standards of that time period.  But those standards have changed dramatically over the past 30 years in a way that probably permanently inflates earnings.  Comparing earnings from 2019 with earnings from 1959 is very misleading, because of how they measure earnings differently.

It is also quite possible that with the rise of individual participation in the stock market through 401(k)s and widespread indexing,  the risk premium for stocks has gone down.  In other words, people are more willing to buy expensive stocks.

More mainstream than ever combined with fewer alternatives, there are 40% fewer publicly traded companies than there was 25vyears ago

MustacheAndaHalf

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Re: Does anyone think we are in a bubble?
« Reply #138 on: June 01, 2021, 10:16:29 AM »
The "E" in P/E stands for earnings, which are calculated based on the accounting standards of that time period.  But those standards have changed dramatically over the past 30 years in a way that probably permanently inflates earnings.  Comparing earnings from 2019 with earnings from 1959 is very misleading, because of how they measure earnings differently.
It is also quite possible that with the rise of individual participation in the stock market through 401(k)s and widespread indexing,  the risk premium for stocks has gone down.  In other words, people are more willing to buy expensive stocks.
I think other factors could contribute to the explanation, too.  Decades ago stocks were quoted with fractions of a dollar, like "2 1/2" bid "2 3/4" ask.  Currently, stocks are quoted to the penny, which allows that $2.50 stock to have a "2.50" bid and "2.55" ask, greatly reducing the cost of trading stocks.  And with high frequency trading firms, stocks can be traded more precisely than even pennies, further reducing the cost to buy and sell stocks.

Mr Mark

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Re: Does anyone think we are in a bubble?
« Reply #139 on: January 28, 2023, 11:57:18 AM »
came across this past pearl clutching post on 'is the market at a peak?' worries.

Since then, Feb 2017, $10,000 invested in VTSAX Vanguard Total Stock Mkt Idx Adm   is now worth $18,397, for a CAGR of 10.69%


Does anyone think we are in a stock market bubble? Reason I am asking is that I have seen different headlines suggesting contradictory information. Just read an article that said Warren Buffett said we are not in a stock market bubble because things are cheap with interest rates. The same article seemed to suggest we could be in a bull market for another 6-8 years with DJIA hitting 4k. Other people say that in around March things are going to go towards a correction.

My main concern is that I just started investing in my 401k last October and about a month or so ago started my Roth IRA with vanguard total stock market index funds of 3k. I am concerned if I should move my investments over to some sort of "safe fund" where they could be protected from such a correction. Also, if we are headed towards a correction I was wondering if I should just stop investing and try to pay off my house in the meantime or just save the cash and invest when it comes time. The problem is that money from my check is going to my 401k and I can't invest after I get paid. And a Roth IRA the max is 5,500 a year. I owe around 32k on my house. I contribute 30% to my 401k now and the rest goes monthly to maxing out the Roth. I also have a second job to invest or pay off house. What are everyone's thoughts on this??

ATtiny85

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Re: Does anyone think we are in a bubble?
« Reply #140 on: January 28, 2023, 02:03:41 PM »
came across this past pearl clutching post on 'is the market at a peak?' worries.

Since then, Feb 2017, $10,000 invested in VTSAX Vanguard Total Stock Mkt Idx Adm   is now worth $18,397, for a CAGR of 10.69%


And some weird stuff happened in between. For those of us who bought VTSAX every single month since then, it’s a decent picture.

MustacheAndaHalf

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Re: Does anyone think we are in a bubble?
« Reply #141 on: January 28, 2023, 07:36:09 PM »
CAPE 35! According to my completely made up rule of thumb we are in a bubble watch! When thread was young I sort of expected us to get here within a year, but here we are! I bet we can make it all the way to bubble warning though, that would be exciting.
I think you can make an even stronger case than calling it a made up rule.  A Vanguard research paper from many years ago found a 0.43 correlation between a high 10-year CAPE and lower equity returns going forward.
http://fairwaywealth.com/wp-content/uploads/Vanguard-Research-11-30-2014.pdf#page=7

When you combine that with the 2nd highest CAPE of all time, it's a concern.  But keep in mind a 0.43 correlation is not a guarantee - and you have to ask yourself, what do you invest in, instead?  Lower returning stocks might still beat bonds and cash.
https://www.multpl.com/shiller-pe
That's not what you said in 2017 :D !
I changed from "arbitrary method" to "completely made up rule of thumb" because of your comment!!!
I just made this handy "Radagast's Guide to Bubbles" what I was thinking about posting sometime, now is as good a time as any. It is an arbitrary method ...
An arbitrary method with no track record isn't a good start to providing investing advice.
Anyhow 4 years later and I still like it.
Rather late reply, but I was talking about "CAPE 35" falling into the high range in a Vanguard paper that showed a correlation with lower future returns.

If you expect people remember your posts from 4 years ago, I think you're mistaken.  Here it is copied from the message you quoted:

"It is an arbitrary method completely made up rule of thumb based on multiples of 1.4"

Here is the first paragraph of "Understanding the P/E 10 Ratio" on Investopedia's page:

Quote
The ratio was popularized by Yale University professor Robert Shiller, author of the bestseller "Irrational Exuberance," who won the Nobel Prize in Economic Sciences in 2013.  Shiller attracted attention after he warned that the frenetic U.S. stock market rally of the late-1990s would turn out to be a bubble.
https://www.investopedia.com/terms/p/pe10ratio.asp

If the main reason people know about CAPE 10 is for predicting bubbles, and you decide to make up a scale for predicting bubbles from high CAPE 10 values ... how are you inventing something new?  It's the same thing, with 1.4 thrown in arbitrarily.

mistymoney

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Re: Does anyone think we are in a bubble?
« Reply #142 on: January 28, 2023, 09:08:48 PM »
@Lews Therin


bubbles of evil???


Must_ache

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Re: Does anyone think we are in a bubble?
« Reply #143 on: January 29, 2023, 12:35:06 AM »
came across this past pearl clutching post on 'is the market at a peak?' worries.
Since then, Feb 2017, $10,000 invested in VTSAX Vanguard Total Stock Mkt Idx Adm   is now worth $18,397, for a CAGR of 10.69%

Updated, at one point down in 2022 -19.5%, now just -8.2%

1-yr -9.8%
2-yr +0.0%
3-yr +7.6%
4-yr +10.1%
5-yr +7.6%
6-yr +9.5%

ChpBstrd

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Re: Does anyone think we are in a bubble?
« Reply #144 on: January 29, 2023, 07:09:09 PM »
Thanks for reviving this necro-thread! There's so much good information here about CAPE, etc. that I had forgotten we discussed. And it's particularly relevant now as we try to figure out what's a reasonable valuation when a recession is probably on the way.

Yes, performance since 2017 was above average even despite all the chaos of the pandemic correction. But the points we were making in 2021 about valuation seem to have foretold the current correction.

waltworks

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Re: Does anyone think we are in a bubble?
« Reply #145 on: January 29, 2023, 08:15:34 PM »
Foretelling something that ends up happening at a totally different time than you predicted isn't really foretelling, though.

-W

MustacheAndaHalf

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Re: Does anyone think we are in a bubble?
« Reply #146 on: January 29, 2023, 11:54:08 PM »
came across this past pearl clutching post on 'is the market at a peak?' worries.

Since then, Feb 2017, $10,000 invested in VTSAX Vanguard Total Stock Mkt Idx Adm   is now worth $18,397, for a CAGR of 10.69%
What I don't see is a claim that the market will have no returns over the following six years.  So you seem to be measuring something they never claimed.

You're also including 2019-2021, when the stock market doubled in 3 years.  Without Congress and the Fed, the economy should have collapsed, taking the market with it.  What happened instead is Fed and Government stimulus to save everything, which I argue could be considered a bubble from 2020-2021, and can be seen clearly in the Fed's balance sheet and size of spending by Congress.

MustacheAndaHalf

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Re: Does anyone think we are in a bubble?
« Reply #147 on: January 29, 2023, 11:57:18 PM »
But the points we were making in 2021 about valuation seem to have foretold the current correction.
I don't see anyone assigning odds or probabilities to a prediction.

I started investing against the market in April 2022, but I tried to keep comments about that to myself as others were experiencing losses.  I didn't predict it in this thread, even though I was convinced the market would drop.

ChpBstrd

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Re: Does anyone think we are in a bubble?
« Reply #148 on: January 30, 2023, 08:51:10 AM »
Foretelling something that ends up happening at a totally different time than you predicted isn't really foretelling, though.

-W
I tend to think equities are more sensitive to bad news when they are expensive rather than cheap. A person paying a PE of 40 for a stock is expecting significant growth. As earnings are reported that refute this premise, and instead paint a picture of slower than expected growth, the stock could be cut in half. However, it takes much worse news to cut in half a stock that starts with a PE of 14. For example, if Salesforce (PE=593) experienced a year of 0% sales growth, how far could it fall compared to if Citigroup (PE=7.3) reported the exact same news?

One could say C has the expectation of no growth already priced in, but CRM does not, and yet this is just another way of saying CRM is vulnerable in a way C is not.

Similarly, I stayed out of bonds in 2021 because bond convexity means there are larger losses when a bond yield rises +1% from near zero than when a bond yield rises +1% from a starting point of 5%. A long-duration bond yielding near zero is expensive in the sense it is highly sensitive to rising rates. A bond purchased after rates have already risen is a lot less risky. We can add some objectivity to our assessment that 10-year treasuries were expensive when they yielded 0.93% in early 2021, because they'd lose years of interest if rates went up even slightly.

So one way of thinking about whether an asset is expensive is by anchoring to an absolute percentage of yield or PEG and saying above that number is cheap and below is expensive. Another way of thinking about expensiveness is vulnerability to changes or bad news. An asset price bubble can exist for several years before the thing happens which pops the bubble. But the reason we can call the 1990's dot-com fad a bubble, or 2007 Las Vegas real estate a bubble is because they popped. Both inflated for years, seemed to be stable trends, and therefore sucked in investors based on their staying power.

In that sense, soap bubbles which exist for a matter of seconds before popping are a poor metaphor. When asset bubbles don't immediately pop, that is seen as evidence there cannot be a bubble. Actually, periods of high asset prices are sustainable for years, and this doesn't make them any less dangerous. Maybe instead of "bubble" we should call periods of high prices rumbling volcanoes or dry scrub brush in California? Maybe the burst of red ink happens this year or maybe it doesn't, but conditions are right. By extension, maybe periods of high asset prices should trigger us to hedge or reallocate rather than timing the market.

Radagast

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Re: Does anyone think we are in a bubble?
« Reply #149 on: January 31, 2023, 09:45:59 PM »
Two years ago the market passed my completely made up rule of thumb into "bubble watch." It continued even higher, reaching a CAPE10 of around 39, and then crashed 25% (now down about 20% from peak). Interestingly, the S&P500 is now notably higher than it was two years ago, and CAPE10 is actually about the same as when the thread was started. I find both of those pretty impressive, and a good lesson about market timing which a lot of people somehow never learn.

It now no longer seems bubbly, and is at most a little expensive.