Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Aside from Trump the other structural instabilities in our economy...what happens when kids being forced back to school (public primary and secondary, college), get sick, come home and infect their parents/sibs, and our hospitial system gets overwhelmed again? Do people currently out of work get jobs? Do mortgage defaults rise? Does productivity grind to a halt?
Alas and alack, we humans are particularly stupid and times and us Americans are even worse. We had about 1% of our voters Tuesday that refused to wear a mask.
Everything you say is spot on, omitting perhaps, the bright orange elephant in the room. And recall that 1919 - the second wave - was much worse than 1918.
As for a market crash, I could envision it any day. I cannot for the life of me understand this divergence between the market and the real economy. But, when they have the money machine and the keys they simply cannot resist printing all needed dollars. Damn, they've been doing this for 1000's of years. Cripes, read the Frogs by Aristophanes.
You know what I often think: We treat our best men The way we treat our mint The silver and the golden We were proud to invent These unalloyed Genuine coins, no less, Ringing true and tested Both abroad and [in] Greece And now they're not employed As if we were disgusted And want to use instead These shoddy coppers minted Only yesterday Or the day before (as if that matters). (Aristophanes: The Complete Plays, trans. Paul Roche, New American Library, 2005, p. 573)
Every time the currency has imploded and inflation has gone nuts.
From my perspective ... stock market valuations are streached. When the FOMC stops buying ... well the fat lady has stopped singing. Party's over time to get. With this, I'm still at the stock market party, so to speak, but at a reduced level.
@rono -- if I "wear" the mask but it doesn't cover my nose or I wear it around my neck like a scarf, am I being a complete & selfish idiot who shows no understanding of the magnitude and potential of this crisis, and a lack of awareness of the impact my stupidity will have on countless others?
From my perspective ... stock market valuations are streached. When the FOMC stops buying ... well the fat lady has stopped singing. Party's over time to get. With this, I'm still at the stock market party, so to speak, but at a reduced level.
Like hanging around the hotel bar past midnight, waiting for one more round to be served before it closes?
Wearing a mask. I can appreciate the civil libertarian concerns and understand those that don't believe the science (even if I think they're cretins), but it's the economy stupid. Until people are wearing masks and being good doobies, a large percentage of thd population is not going to fully engage in the economy and we are not going to recover.
As @Old_Skeet put it, the problem may only arrive "When the FOMC stops buying." They've made clear that won't be for years. I've got no crystal ball and am hoping for a dip or even crash so I can out some dry powder to work, but free money is a pretty powerful fuel for the stock market.
@Old_Skeet, I know you've posted this elsewhere, so forgive me for asking you to repeat yourself, but does your method for calculating valuations take interest rates into account?
I’ve been holding just over 10% cash, which for someone who had always been fully invested when w*rking (now retired) has me edgy. I recall my father telling me when I was a boy with a few bucks to spend, that it was burning a hole in my pocket. Sheesh, but it’s getting warm in here. Best to all Brian
Pursuant to your question. " @Old_Skeet, I know you've posted this elsewhere, so forgive me for asking you to repeat yourself, but does your method for calculating valuations take interest rates into account?" The short answer is yes. Below is what I wrote back on July 3rd about yield being part of the baromerter.
I should explain a little about the yield metric. Years back investors did not have all the fancy dancy ways to measure the market. One metric that my late father used was he followed the yield on the stocks he owned. When the yields got thin it was usually that the stocks he owned were at, or towards, their 52 weeks highs ... if not setting new highs. With this, he would trim the position and await a pullback where the yield would again rise as the stock price fell usually through a seasonal trend pattern.
In looking back through my data that I keep on the S&P 500 Index the recent high yield on the Index took place on (week ending) March 20th at 2.53% with a reading of 2305 and the recent low on February 21st at 1.79% with a reading of 3338. With this week's close the yield on the Index is at 1.9% with a reading of 3130. With this, and from a yield perspective, the Index is becoming pricey. In addition, TTM earnings are reported to be falling ... not rising. Based upon the blended earnings approach that the barometer uses puts the P/E Ratio for the Index at around 24. With this, This the earnings yield computes to about 4.16%. In comparing the 4.16% earnings yield to the yield of some of my multi sector bond funds ... Well, the advantage is now with some of the multi sector income funds from this yield perspective. Take the widely held PONAX (Pimco Income) is producing an income yield of 5.67%. With this, the yield advantage now goes to some bond funds ... from, my perspective.
Should the Index reach a near term yield of 1.8% Old_Skeet will most likely trim his equity allocation back to it's baseline allocation of 40% equity from the current 45% equity. Not long ago, I trimmed from around 50% equity back to 45%. Remember, I bought the downdraft and when the updraft came this put me equity heavy from the upward price movement as the rebound progressed.
Take care ... and, again ... thanks for stopping by and making comment.
Comments
To quote Tweety Amin's bigly Axios interview from Monday, “That’s true. And it is what it is.”
¯\_(ツ)_/¯
Hope you're doing well.
Alas and alack, we humans are particularly stupid and times and us Americans are even worse. We had about 1% of our voters Tuesday that refused to wear a mask.
Everything you say is spot on, omitting perhaps, the bright orange elephant in the room.
And recall that 1919 - the second wave - was much worse than 1918.
As for a market crash, I could envision it any day. I cannot for the life of me understand this divergence between the market and the real economy. But, when they have the money machine and the keys they simply cannot resist printing all needed dollars. Damn, they've been doing this for 1000's of years. Cripes, read the Frogs by Aristophanes.
You know what I often think:
We treat our best men
The way we treat our mint
The silver and the golden
We were proud to invent
These unalloyed
Genuine coins, no less,
Ringing true and tested
Both abroad and [in] Greece
And now they're not employed
As if we were disgusted
And want to use instead
These shoddy coppers minted
Only yesterday
Or the day before
(as if that matters).
(Aristophanes: The Complete Plays, trans. Paul Roche, New American Library, 2005, p. 573)
Every time the currency has imploded and inflation has gone nuts.
Oh, it's different this time.
and so it goes,
peace and wear the damn mask,
rono
Wearing a mask. I can appreciate the civil libertarian concerns and understand those that don't believe the science (even if I think they're cretins), but it's the economy stupid. Until people are wearing masks and being good doobies, a large percentage of thd population is not going to fully engage in the economy and we are not going to recover.
And so it goes
Peace and wear the damn mask,
Rono
@Old_Skeet, I know you've posted this elsewhere, so forgive me for asking you to repeat yourself, but does your method for calculating valuations take interest rates into account?
Best to all
Brian
Pursuant to your question. " @Old_Skeet, I know you've posted this elsewhere, so forgive me for asking you to repeat yourself, but does your method for calculating valuations take interest rates into account?" The short answer is yes. Below is what I wrote back on July 3rd about yield being part of the baromerter.
I should explain a little about the yield metric. Years back investors did not have all the fancy dancy ways to measure the market. One metric that my late father used was he followed the yield on the stocks he owned. When the yields got thin it was usually that the stocks he owned were at, or towards, their 52 weeks highs ... if not setting new highs. With this, he would trim the position and await a pullback where the yield would again rise as the stock price fell usually through a seasonal trend pattern.
In looking back through my data that I keep on the S&P 500 Index the recent high yield on the Index took place on (week ending) March 20th at 2.53% with a reading of 2305 and the recent low on February 21st at 1.79% with a reading of 3338. With this week's close the yield on the Index is at 1.9% with a reading of 3130. With this, and from a yield perspective, the Index is becoming pricey. In addition, TTM earnings are reported to be falling ... not rising. Based upon the blended earnings approach that the barometer uses puts the P/E Ratio for the Index at around 24. With this, This the earnings yield computes to about 4.16%. In comparing the 4.16% earnings yield to the yield of some of my multi sector bond funds ... Well, the advantage is now with some of the multi sector income funds from this yield perspective. Take the widely held PONAX (Pimco Income) is producing an income yield of 5.67%. With this, the yield advantage now goes to some bond funds ... from, my perspective.
Should the Index reach a near term yield of 1.8% Old_Skeet will most likely trim his equity allocation back to it's baseline allocation of 40% equity from the current 45% equity. Not long ago, I trimmed from around 50% equity back to 45%. Remember, I bought the downdraft and when the updraft came this put me equity heavy from the upward price movement as the rebound progressed.
Take care ... and, again ... thanks for stopping by and making comment.
Old_Skeet
Best wishes to you.