Stock Market Update (Where's Eduardo?)

[bdgan]

Interesting article from Motley Fool. Highlights:

• Market has soared to record levels due to good earnings, optimism over AI, and excitement over a Trump presidency.
• Stock price to sales ratio hit an all time record of 3.18. The average in the past 24 years is 1.75.
• The S&P 500's Schiller PE ratio is 38.86. There have only been 6 times in the past 150 years that the ration has exceeded 30 and the other 5 times were all eventually followed by substantial selloffs.
• The S&P 500 price to book value is also at an all time high.

The S&P 500 index is up 30% YTD. The NASDAQ is up 37%. A year ago Kiplinger predicted a 7% gain for 2024. Is it time to lighten up on equities?

The Stock Market Is Making Dubious History, and It Appears to Foreshadow Trouble for Wall Street | The Motley Fool

Wall Street is making history in more ways than one.

www.fool.com

 

[LMTLION]

I have been dialing down my stock percentage in my ira from 70% to 60% and possibly further down as I worry about a bubble.

 

[GregInPitt]

Interesting article from Motley Fool. Highlights:

• Market has soared to record levels due to good earnings, optimism over AI, and excitement over a Trump presidency.
• Stock price to sales ratio hit an all time record of 3.18. The average in the past 24 years is 1.75.
• The S&P 500's Schiller PE ratio is 38.86. There have only been 6 times in the past 150 years that the ration has exceeded 30 and the other 5 times were all eventually followed by substantial selloffs.
• The S&P 500 price to book value is also at an all time high.

The S&P 500 index is up 30% YTD. The NASDAQ is up 37%. A year ago Kiplinger predicted a 7% gain for 2024. Is it time to lighten up on equities?

The Stock Market Is Making Dubious History, and It Appears to Foreshadow Trouble for Wall Street | The Motley Fool

Wall Street is making history in more ways than one.

www.fool.com

My brother and I keep significant positions in precious metal stocks and it helps to smooth out some of the bumps at times.

 

[NittanyLionRoar]

Edwardo incorrectly predicted the stock market would crash during the Biden presidency, so I just did the opposite of what he said every time and was rewarded significantly for it. I called it the "Edwardo Buy Signal." Every time he came here to complain about the stock indexes and claim Biden was going to cause a collapse, I knew it was time to go dip buying.

With the economic ingredients that Trump is mixing together for his next term, there surely will be turmoil in the markets. Don't expect trade wars to be good for your portfolios. And whatever you think about how illegal immigration is handled, just don't be surprised when grocery prices, construction, and trade services aren't what you hoped because the labor was all deported.

The only thing I feel pretty confident about the next four years is gold.

 

[tboyer]

There will be a healthy correction. There will probably be a bear market. The problem is, no one can tell you when it will happen. Stocks are overvalued by any reasonable historical standard, overdue for at least a 20-25 percent haircut. But it could happen tomorrow or 2 years from now or 4 years from now when valuations are even more ridiculous. The crashes have a way of happening at the very time people don't expect them; they usually predate a recession by 12 months or so.

If you want to try and time the market, I think anecdotal signs are probably as reliable as any quantitative prediction model. Before 1929, when your elevator operator was talking about his hot stock picks, that was a sign. Today, when the guy at Chipotle is talking about how he's getting rich in Bitcoin, that's a sign the end is near. When boomer squares like me finally surrender and buy Bitcoin, it's definitely the end. Crypto will be the canary -- and might actually be the agent of the next crash. You could see a trillion dollars in crypto disappear overnight, and a stock correction would follow. Fortunately, crypto won't threaten to bring down the world banking system the way credit default swaps did.

The only really solid plan of action is to stay invested for the long term but stay in cash for any money you want to spend in the next X years, with X being the time you expect the market to recover from the next downturn. Usually 2-3 years is plenty of time for the market to recover, but if you believe something really big is coming, you might want to have a longer X.

I use a 7 year rule which is very conservative. If I'm going to be spending the money in 7 years, I want it in something safe and stable. It costs a lot in returns to do that but I sleep better. There have been bear markets that lasted 10 years so that's what I'm prepared for.

 

[ryoder1]

There will be a healthy correction. There will probably be a bear market. The problem is, no one can tell you when it will happen. Stocks are overvalued by any reasonable historical standard, overdue for at least a 20-25 percent haircut. But it could happen tomorrow or 2 years from now or 4 years from now when valuations are even more ridiculous. The crashes have a way of happening at the very time people don't expect them; they usually predate a recession by 12 months or so.

If you want to try and time the market, I think anecdotal signs are probably as reliable as any quantitative prediction model. Before 1929, when your elevator operator was talking about his hot stock picks, that was a sign. Today, when the guy at Chipotle is talking about how he's getting rich in Bitcoin, that's a sign the end is near. When boomer squares like me finally surrender and buy Bitcoin, it's definitely the end. Crypto will be the canary -- and might actually be the agent of the next crash. You could see a trillion dollars in crypto disappear overnight, and a stock correction would follow. Fortunately, crypto won't threaten to bring down the world banking system the way credit default swaps did.

The only really solid plan of action is to stay invested for the long term but stay in cash for any money you want to spend in the next X years, with X being the time you expect the market to recover from the next downturn. Usually 2-3 years is plenty of time for the market to recover, but if you believe something really big is coming, you might want to have a longer X.

I use a 7 year rule which is very conservative. If I'm going to be spending the money in 7 years, I want it in something safe and stable. It costs a lot in returns to do that but I sleep better. There have been bear markets that lasted 10 years so that's what I'm prepared for.

There will be a correction but not 25%. I think that is at the 2008-09 level or close to it. Just don't see that. Maybe 15%. No one knows even the biggest analyst egg heads out there.

I don't know why you would put so much in cash. Move into more stable fixed equities and bonds. Yes you want cash for spending over a one to two year horizon but not 5 years. Even in a down market that money can be working for you. You never will time a down market well but a diversified portfolio that is not completely burdened with high volatile equities (tech, AI) will cushion the impact of a market down say 15 or 20 percent. One thing we do know is over the long haul you will make money and can't worry about the blips where it is rocky for a couple years.

 

[bdgan]

My brother and I keep significant positions in precious metal stocks and it helps to smooth out some of the bumps at times.

I'm not a big fan of gold because it's not like a company that makes a profit. Gold just exists. That said I'm a hypocrite because I did buy some gold back in 1999 due to inflation expectations. It's doubled since then.

I didn't buy Bitcoin for the same reason. To me it seems like buying limited edition collector plates. I was sure wrong about that at least for now.

I smooth out the bumps by buying treasuries and municipal bonds. I'm quite happy earning 5% on a portion of my portfolio,

 

[bdgan]

There will be a correction but not 25%. I think that is at the 2008-09 level or close to it. Just don't see that. Maybe 15%. No one knows even the biggest analyst egg heads out there.

I don't know why you would put so much in cash. Move into more stable fixed equities and bonds. Yes you want cash for spending over a one to two year horizon but not 5 years. Even in a down market that money can be working for you. You never will time a down market well but a diversified portfolio that is not completely burdened with high volatile equities (tech, AI) will cushion the impact of a market down say 15 or 20 percent. One thing we do know is over the long haul you will make money and can't worry about the blips where it is rocky for a couple years.

I don't see a negative event on the horizon that will derail the economy or stock market. The biggest concern seems to be historically high levels of consumer debt. That said I don't see people defaulting on (sub 3%) mortgages like in 2007. So I agree that a near term correction will be limited to 20% unless we have some sort of geo political event.

 

[bdgan]

Edwardo incorrectly predicted the stock market would crash during the Biden presidency, so I just did the opposite of what he said every time and was rewarded significantly for it. I called it the "Edwardo Buy Signal." Every time he came here to complain about the stock indexes and claim Biden was going to cause a collapse, I knew it was time to go dip buying.

With the economic ingredients that Trump is mixing together for his next term, there surely will be turmoil in the markets. Don't expect trade wars to be good for your portfolios. And whatever you think about how illegal immigration is handled, just don't be surprised when grocery prices, construction, and trade services aren't what you hoped because the labor was all deported.

The only thing I feel pretty confident about the next four years is gold.

Presidents definitely make a difference. Some are pro fossil fuels while others incentivize renewables. Some spend more on defense while others spend more on social issues. Some promote tax cuts while others promote tax hikes. These things definitely make a difference. Sometimes the impact takes several years. A lot of excess government spending has been a boost for the economy short term but what happens when that runs out?

That said companies like Amazon & NVIDIA march forward regardless of which party is in office.

 

[bdgan]

Edwardo incorrectly predicted the stock market would crash during the Biden presidency, so I just did the opposite of what he said every time and was rewarded significantly for it. I called it the "Edwardo Buy Signal." Every time he came here to complain about the stock indexes and claim Biden was going to cause a collapse, I knew it was time to go dip buying.

With the economic ingredients that Trump is mixing together for his next term, there surely will be turmoil in the markets. Don't expect trade wars to be good for your portfolios. And whatever you think about how illegal immigration is handled, just don't be surprised when grocery prices, construction, and trade services aren't what you hoped because the labor was all deported.

The only thing I feel pretty confident about the next four years is gold.

I don't expect 50% tariffs on everything. I don't expect a 15% corporate tax rate. I don't expect 100% of illegal aliens to be deported.

 

[ryoder1]

I don't see a negative event on the horizon that will derail the economy or stock market. The biggest concern seems to be historically high levels of consumer debt. That said I don't see people defaulting on (sub 3%) mortgages like in 2007. So I agree that a near term correction will be limited to 20% unless we have some sort of geo political event.

Trump is very pro corporations and business so that is going to help. We may see just a dip for one year to get PE ratios more in line then back to some growth. The S&P has almost doubled in 5 years and that included in 2022 it being down 18% (how could we forget Eduardo's whining). By 2029 I am confident it will be higher than today. I doubt almost 100% higher but could easily be 25-30% higher or more.

 

[ryoder1]

Presidents definitely make a difference. Some are pro fossil fuels while others incentivize renewables. Some spend more on defense while others spend more on social issues. Some promote tax cuts while others promote tax hikes. These things definitely make a difference. Sometimes the impact takes several years. A lot of excess government spending has been a boost for the economy short term but what happens when that runs out?

That said companies like Amazon & NVIDIA march forward regardless of which party is in office.

Many companies march forward regardless of the president. Consumer staples keep trucking along. People buy Tide and Crest whether there is a Dem or Republican in office.

 

[voltz99]

Thanks President Biden.

Are you admitting reaganomics and capitalism works?

 

[voltz99]

I don't expect 50% tariffs on everything. I don't expect a 15% corporate tax rate. I don't expect 100% of illegal aliens to be deported.

Too many to deport. Need to eliminate their perks and have them leave on their own

 

[Safety Blitz]

I continue to go more conservative as time marches on. Has nothing to do with politics and everything to do with my stage in life.
I’ve got a collection of dividend stocks, some bonds and invested some in CD’s a couple months ago. I’ll take the 5% on that portion and sleep well. Still holding my small slice of Nvidea, looking for one more run. And I’ve spent probably 40 years thinking I should invest in some gold. Still haven’t pulled that trigger.

 

[ryoder1]

I continue to go more conservative as time marches on. Has nothing to do with politics and everything to do with my stage in life.
I’ve got a collection of dividend stocks, some bonds and invested some in CD’s a couple months ago. I’ll take the 5% on that portion and sleep well. Still holding my small slice of Nvidea, looking for one more run. And I’ve spent probably 40 years thinking I should invest in some gold. Still haven’t pulled that trigger.

Makes sense although I have not contemplated gold. As we get older and at some point we all won't have a job we need to be more conservative. Don't want to be a Walmart greeter at 85 and I apologize in advance to anyone on this board who fits that profile.

 

[KnightWhoSaysNit]

There is so much I would like to say on this subject, but invariably one cannot explain a position about the stock market, now and going forward, without the topic becoming political.

One thing is an undeniable fact: The stock market sits atop a bifurcated economy. If you had assets -- stocks and real estate -- at the start of the government's Covid-era malfeasance, then you got a windfall at the expense of those who did not have assets. You have money to burn.

In short, the futures of workers were mortgaged so that you can have your comfort free of charge. Now that malfeasance is virtually unfixable as capital can easily flow to any corner of the world.

Feel good about that? It takes a special kind of person. A lot of them have positions of power in Washington DC.

 

[junior1]

Thanks President Biden.

soon to be former president

 

[voltz99]

Thanks President Biden.

Can students repay their loans?

 

[voltz99]

I don't see a negative event on the horizon that will derail the economy or stock market. The biggest concern seems to be historically high levels of consumer debt. That said I don't see people defaulting on (sub 3%) mortgages like in 2007. So I agree that a near term correction will be limited to 20% unless we have some sort of geo political event.

You don't see it but that does not stop them from happening.

The healthcare sector did not see a random kid shooting a CEO(actually a VP) and causing the sector to dive. UNH is down over 100pts since the shooting. Cvs, Cigna and many others are way down.

 

[voltz99]

There is so much I would like to say on this subject, but invariably one cannot explain a position about the stock market, now and going forward, without the topic becoming political.

One thing is an undeniable fact: The stock market sits atop a bifurcated economy. If you had assets -- stocks and real estate -- at the start of the government's Covid-era malfeasance, then you got a windfall at the expense of those who did not have assets. You have money to burn.

In short, the futures of workers were mortgaged so that you can have your comfort free of charge. Now that malfeasance is virtually unfixable as capital can easily flow to any corner of the world.

Feel good about that? It takes a special kind of person. A lot of them have positions of power in Washington DC.

I will look up bifuricated and get back to you.

 

[GregInPitt]

I'm not a big fan of gold because it's not like a company that makes a profit. Gold just exists. That said I'm a hypocrite because I did buy some gold back in 1999 due to inflation expectations. It's doubled since then.

I didn't buy Bitcoin for the same reason. To me it seems like buying limited edition collector plates. I was sure wrong about that at least for now.

I smooth out the bumps by buying treasuries and municipal bonds. I'm quite happy earning 5% on a portion of my portfolio,

Another reason to own gold stocks, not gold (I don't own any actual gold), is how much they tend to move with any significant moves in gold, which makes them great stocks to play as trading around a core position. But "significant" is not really significant as some would define it. For example, this past Monday CDE, one of our holdings, movedup 10% that day and provided a nice short term trading profit. I don't remember exactly, but I believe gold was up about $50. But that's $50 on around $2,650, under 2%. We only hold and trade a few companies that either have expansion projects in progress that will lower their overall cost per ounce of production and improve earnings, or seem to have superior management. CDE, EQX and AGI fall into that category. Sure there is risk, but the trading opportunities seem to make up for it and it gives me something to do during the days I'm not golfing, which will be many for the next few month as I recover from rotator cuff surgery...... We bought the CDE we sold on Monday back on Friday, but my core position was bought at prices a good bit less than the current price range.

I remember buying a gold stock (AUY which was taken over a while back) in the 3's, 4's and 5's, but gold went way down so I used it for a Roth Conversion when it was around $1.5/sh and then when gold recovered some I had only paid taxes on it at $1.5 with the profits tax free in my Roth. Lots of options for trading and strategies for stocks with high volitility like precious metals stocks.

 

[KnightWhoSaysNit]

I will look up bifuricated and get back to you.

Might want to spell it correctly before starting your search.

 

[joeaubie21]

LoL....

Biden shit himself meeting with the Pope.

What's that worth?

 

[joeaubie21]

Crotchio aka Commodeo aka mbe34 Pitiot.

 

[Vic Vaselino]

LoL....

Biden shit himself meeting with the Pope.

What's that worth?

You do the same with every post.

 

[joeaubie21]

The nic switch to Assholino. Gruntin' and groanin' pushin' and poopin' nic hijackin' peter whackin'

 

[NittanyLionRoar]

Another reason to own gold stocks, not gold (I don't own any actual gold), is how much they tend to move with any significant moves in gold, which makes them great stocks to play as trading around a core position. But "significant" is not really significant as some would define it. For example, this past Monday CDE, one of our holdings, movedup 10% that day and provided a nice short term trading profit. I don't remember exactly, but I believe gold was up about $50. But that's $50 on around $2,650, under 2%. We only hold and trade a few companies that either have expansion projects in progress that will lower their overall cost per ounce of production and improve earnings, or seem to have superior management. CDE, EQX and AGI fall into that category. Sure there is risk, but the trading opportunities seem to make up for it and it gives me something to do during the days I'm not golfing, which will be many for the next few month as I recover from rotator cuff surgery...... We bought the CDE we sold on Monday back on Friday, but my core position was bought at prices a good bit less than the current price range.

I remember buying a gold stock (AUY which was taken over a while back) in the 3's, 4's and 5's, but gold went way down so I used it for a Roth Conversion when it was around $1.5/sh and then when gold recovered some I had only paid taxes on it at $1.5 with the profits tax free in my Roth. Lots of options for trading and strategies for stocks with high volitility like precious metals stocks.

I own both gold and gold stocks and really only started taking profits from the tech/AI sector into them within the past few months. They serve different purposes. Gold is a great asset to own in a recession because it often increases in value while other assets decrease. Gold stocks are good in markets where both the market is increasing and gold is increasing. However, in a recession, gold stocks will drop with every other type of equity while actual gold should increase.

I think the two likeliest paths in the next two years are recession (from the yield curve uninverting and unwieldy debt among households) and/or a reigniting of inflation (due to tariffs, trade wars, and deportation). If both happen at the same time we’ll get stagflation. Either way, equities will suffer and gold may be the only asset that grows in value—maybe energy some too.

Crypto is also probably 60% of my portfolio right now, but that was not on purpose. I put some in it a while ago and that’s what it has grown to. In the next three months I’ll probably start taking profits on that too and moving it into gold. As much as people want to pretend crypto is more like precious metals, it is not…they have acted like a more volatile nasdaq, so in downturns they turn harder down while gold holds its value or even increases. Having said that—it has almost always been more worth it to hold crypto than gold, but times are about to change.