Posted on 06/12/2021 7:37:41 AM PDT by BenLurkin
1. Historically high valuations are bad news
To begin with, the widely followed S&P 500 is pricey...really pricey. As of the close on June 7, 2021, the Shiller price-to-earnings (P/E) ratio for the S&P 500 hit 37.5. The Shiller P/E, also known as the cyclically adjusted P/E (CAPE) ratio, is based on inflation-adjusted earnings from the previous 10 years. This reading of 37.5 is well over double the average Shiller P/E ratio of 16.8, which dates back 151 years.
2. History says we're in trouble
Looking back 61 years, there have been nine bear markets. In the previous eight bear markets...there were either one or two double-digit percentage declines within three years following the bottom. In aggregate, we're talking about 13 double-digit drops spanning the three years following these eight bear-market bottoms.
3. Crashes and corrections happen frequently
According the market analytics company Yardeni Research, there have been 38 separate instances since the beginning of 1950 in which the S&P 500 has retraced by at least 10%. Put another way, we observe an official correction or crash in the benchmark index, on average, every 1.87 years.
4. The Federal Reserve can't remain dovish forever
One reason equities have rallied so ferociously off of the March 2020 bottom is the amount of support they've received from the nation's central bank. The Federal Reserve has stood pat on historically low lending rates and continued with its monthly bond-buying program that's designed to weigh down long-term yields.
5. Margin debt is skyrocketing
Perhaps the most terrifying fact of all is the current level of margin debt. Margin is the debt that brokerage customers take on to buy equities. Consider it a way to leverage their gains, as well as their losses, if they're incorrect about which way a stock will move.
(Excerpt) Read more at fool.com ...
Thanks all!
Margin debt is skyrocketing
Biden spending like a meth head at a concert.
“Margin debt is skyrocketing”
Down 20% from 2009-2017 average!
Historically high valuations are bad news.
same for the hyper-inflated realty markets
Not all of them, since I move the proceeds into hi-yield funds.
I really do not need more profits at age 81. There is no way I could spend all of my current assets before reaching age 100. So I have become extremely risk averse.
Well inflation will wipe out the Middle Class and few will be able to afford to build a house with Lumber soaring out of sight...The shrinking inventory of pre built houses will dry up and making it a seller’s market. Inflation will undermine the US to the point it has to crash.
I made mine after 2008 (2010). I try to practice the attributes you espouse. Patience requires that I have cash available, and discipline requires I keep in mind that I'm too old to risk jumping into things that look too good to be true. I'm selling off real estate now, and only keeping precious metal funds. The rest will be in cash until I can find something my kids can use when I'm gone--maybe rentals in carefully selected areas. That worked for me post 2008.
“Historically high valuations are bad news.”
How is down 20% ‘historically high’?
“Not all of them, since I move the proceeds into hi-yield funds.”
If you move into ‘high yield bonds’ you missed most of the market bull runs.
“I really do not need more profits at age 81.”
We were discussing bond versus stocks past performance.
I don’t mind missing high risk profits. Like I said, after age 65, I did not want risk. There would be no time to recover. The best thing was I NEVER HAD A tax loss in my tax returns. So at age 81, I would have to live to 110 to spend my assets down to zero. I can’t complain 1 bit.
And I belonged to a really great private golf club (Royal Oaks country club in Vancouver WA) from age 61-75, and played 18 holes every week day. So my method of investing was such that I did not need to watch the markets.
Stock are way over priced price to return ratio stinks things have to make a draw back to normal.
It’s a yoyo marked unstable right now.
I’m more interested in the dividend a company pays. A company can publish a fraudulent earnings report, but it can’t fake a dividend that’s already been paid to me.
Dividends aren’t that plentiful now to much investing but you get more stock by most of them,
Now the guns out for the likes of Amazon and big tech looks like an up set about to happen and it may be for the better.
Bkmk
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