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https://finance.yahoo.com/news/bond-yields-sending-scary-signal-100003918.html...yields on 30-year government bonds started to decline on Jan. 2, anticipating the fallout from the budding coronavirus crisis that had taken hold in China. Yields fell from 2.34% on that day to 0.94% on March 9, as the price of the benchmark 30-year bond leaped 29%. Only on Feb. 19—seven weeks later—did the S&P 500 Index begin its 35% slide. Fast forward and 30-year yields have fallen from 1.66% on June 8 to a recent 1.19% as their prices climbed 9%. The question is whether stocks will follow again, and with a similar lag of about seven weeks. The fundamental economic scene favors a repeat.
Recall the craze for Socks the Puppet and his dot-com buddies in the late 1990s. When that bubble broke, the Nasdaq Composite Index plunged 78%. Also recall the so-called Nifty Fifty group of stocks in the early 1970s. When the only companies of interest to investors made gimmick cameras, ran amusement parks and built motor homes, it was clear the basic economy was in trouble. What followed was the severe 1973-1975 recession and deep bear market. I believe the bond rally signals a renewed drop in stocks, with the S&P 500 down 30% to 40% from here as the great depth and length of the recession hits home.
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Comments
blog.yardeni.com/2020/07/welcome-to-oz-where-mmt-enables.html
Note the "or": the definition does not say "the material and monetary worth of something".
The monetary worth of the stock market is going to be whatever the gamblers currently drive it to.
The material worth of the stock market will be established when the music stops.
(That's not to say that money can't be made here... just be very careful.)
1) what about value and growth beat it by so much
2) the market is expensive but it keeps going up
3) rates can only go up but they keep going down and why bond have been doing great
4) PE,PE10 are high, inverted yield signals the next meltdown and...stocks go up
5) diversification is great and it wasn't and I'm talking about wide indexes such as SC, MC, international. The SP500 had better performance with lower volatility.
6) Inflation will be higher and kill the economy and it's not high for years.
These "experts" missed the fact that the Fed is controlling these markets since 2009 and conventional ideas are not working.
Basically, I disregard all "experts" and articles, their job is to sell you something and/or can't predict the future and definitely can't predict what will happen in the next several months
As I said- it's certainly possible to make money in a bubble- just be very careful.
Under the circumstances I find I pay less attention to my portfolio than I have in years.
again, you should do it for a living
Reading through some of these comments reminds me of the total return formula Jack Boogle often discussed:
TOTAL RETURN = INITIAL DIVIDEND YIELD + EARNINGS GROWTH OVER THE TIME PERIOD + SPECULATIVE RETURN (CHANGE IN P/E RATIO OVER THE TIME PERIOD)
The stock market currently appears to be comfortable accepting an elevated level of Speculative Return when valuing stocks. But, we may well continue to experience very low interest rates for an extended period of time. And, monetary and fiscal policies may well continue to be very supportive. So, the risk per unit of anticipated speculative return being taken by market participants may not be unreasonably high. Anyway, thinking this way leaves me feeling more comfortable with the current stock market situation. (But, I do continue to keep more $'s than normal in a money market account....just in case.)
And thanks, I'm retired enjoying my free and happy time. I have given FREE advice to hundreds of posters who contacted me over the years. Correct, my portfolio just passed 35 times our annual expense, and we didn't start taking our SS. The results in the last 3 years were beyond anything I anticipated.