Posted on 02/24/2021 6:27:57 PM PST by Barnacle
The Dow hit 31,961 today, up 424 points. During the Trump era, I attributed this trend in part to his policies and recovery from the COVID economic impact. But, Biden's election and his undoing of Trump's policies don't appear to have a cooling effect. As Larry Kudlow said recently, the economy is "red hot". But, why is that, and what's driving the market even higher? The Current S&P 500 PE Ratio is 39.97, hardily a bargain.
One possibility is that it is a reflection of the real impact of the stimulus bills of trillions of dollars, whereby a tax payer is happy to get a check for $1,600 at the cost of about $20,000 per tax payer.
In any case, please share your thoughts on what is happening and ideas of how to best position ourselves in preparation for what might be a near term correction.
I’m thinking March 13.
So it’s ‘a Good Time?’
I’m normally nervous.
You make the mistake in thinking that “fundamentals” matter. They don’t - or at least certainly not in the short-medium term when we have a completely fiat, printed currency, that is created at will be the Federal Reserve or fractional reserve banking and a government running up debt at $1 trillion+ per year.
Copy that. But, I don't feel confident in anything with a PE ratio of 40 unless I had knew something which I don't know now. Hence, one of the inspirations for this thread. Perhaps I will be enlightened before it fades into obscurity.
(Of course, this is the Internet, so it will never truly fade into obscurity. I am bound to endure criticisms for typos and grammar for years to come.)
Simple. The system is flush with cash given all thats been printed. Interest rates are near zero, so stocks are the only place to go.
The Clinton years were great. Obama years were pretty good too. Stock market wise.
Perhaps I am mistaken. Finance/economics is not my game. You sound like you know the subject matter. Please expand on your perspective. And, share where do you think the best place to have 401K money parked for the time being?
Corporatism + Socialism = Fascism
That is our current form of government.
Fascism is economically successful for corporations. The current Chinese economy and the 1930s German economy are examples.
“pricing in the post-COVID re-opening”
I think there is a LOT of that going on. Plus low interest rates. Plus anticipation of inflation and maybe hyperinflation.
So more party room. Maybe I will buy back in.
Yep. It is pretty simple. A bit too simple. I don't want to be onboard when it gets so loaded it capsizes.
Federal Reserve pumping helicopter money into the economy
Pumping it up to say it wasn’t Trump and his policies making america great. It will not last but i’m long on it until it goes south.
Yup
1: The DJIA is a very (IMO) imperfect means of measuring the market. Far superior is the SP500 index. Generally they move sort of together, an SP500 point is worth 7-10 DJIA points. A minor point.
2: Yuge stimulus money is already injected, about to be injected, and anticipated as coming down the road.
3: But IMO the most TANGIBLE cause is the utter collapse of the bond market = int rates RISING. The drop in bonds since Feb 01 has been just STUNNING. Yes, int rates rising is generally/historically thought of as hurting the market but ehhh, maybe not so much going from .5% to 1.45% or so. This has been a once in ~3 year move. But the money scurrying out of bonds is massive; and it has to go somewhere.
4: If this bond move persists and continues, to me, this is screaming out that the market is expecting vicious inflation coming. Big. Like 70’s big. And IMHO, the perception is that one of only ways; but the MAIN, easiest-to-get-into way to keep up with inflation is stocks offering growth.
5: The banks LOOOVE higher rates because it boosts their lending profits. Couple that with the rise in oil which *ALSO* seem semi-relentless (and supportive of the price-inflation story) So even as tech (which has been uncharacteristically weak) goes a tad sideways, banks and oils are just screaming higher. Since Feb 01, the XLF, the bank etf is up a clean 15%. Since Feb 01, the XLE energy is up a stunning 30%.
All this could change in a hurry, I suppose.
As to your comment, "... the ONLY place to put $$ right now is in hard assets (physical real estate, precious metals, etc) or equities."
Land is beginning to sound good. Land in an remote location and off the grid.
>> Any ideas of how to financially position in this wacky era? <<
Some believe that the best thing to do is sell off any weak stocks, and hold cash on the sidelines. Then buy in after the crash.
No telling what the recovery curve looks like...
If the recovery is inflationary in nature, you might be better off in commodities; the thinking there is that they’re necessary and will rise with prices.
Good luck.
Best wishes. I'd be up a few percent now if I'd waited till now to bail out. You just never know. But, I enjoy hearing your perspective and the others.
Pay $20,000 to get $1,600 and be happy. And they think we’re dumb...
If They are publicly traded they can’t hide any PE. It gets reported on the annual reports. I cringed every time Trump ballyhooed the market because the markets would retaliate. now in hindsight, they need to keep pumping it up. Trumps market was production fed. This market is only media fed.
Really that difficult? When the federal reserve and federal government have each pumped more than $5 trillion into the system in the last year beyond the normal and continue to do or threaten the bazooka, the result is asset prices go up.
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