Author Topic: Markets at all time highs: strategy?  (Read 8080 times)

torbisen

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Re: Markets at all time highs: strategy?
« Reply #50 on: January 18, 2017, 11:33:08 AM »
For someone that are many years away from FIRE i understand the decision is easy, just put in... But for someone like me that jus a few months ago found out how well i am situated, with all my debt payed off in three to five months including 500000,- house, 400000,- rental apartment and an relatiely new car, it matters a little. Because when i say all my debt payed off i mean debt minus my portifolios of funds and stocks. So i have debt, around 400000,- but in 3-5 months with todays savings rate of 6000$ a month+ my portifolios and cash equals my debts. What i say is it is a big desicion for me now i fully have understood the MMM way if i should stay in with all my stocks and even put in all my cash, because for me being relatively close to FIRE (5-10years depending on what budget we will land on and how the stock index behaves) it will make a big difference if i put all in and it crashes or if i lets say payed off all my debt now, and then started to put inn 6-7000$ a month in stocks. Do you understand what i mean?

Huskie87

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Re: Markets at all time highs: strategy?
« Reply #51 on: January 18, 2017, 01:57:38 PM »

I've read that study. I agree that changes in GAAP accounting have some effect on inflating the current Schiller PE ratio. However, even if you make adjustments for GAAP changes, the market is still expensive. See this WSJ making your point while still pointing out that markets are expensive: http://www.wsj.com/articles/powerful-market-indicator-flashes-sell-heres-why-it-can-be-ignored-1475687806.

Yup, very similar to Seigel's using operating earnings.  Market is slightly over-valued, but nothing like the late 90s.  However, when we understand the natural relationship between inflation, interest rates and valuations, we realize that valuations should be above average right now.  So, long story short, everything is pretty normal given market conditions.  Altering a portfolio away from equities because the market is 'over valued' would suggest otherwise.