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From which event in time is the average 12 month S&P return of 18% calculated? What is the date from which we are supposed to observe this gain? I had to ask because S&P 500 is already up 18% from its June low.
From which event in time is the average 12 month S&P return of 18% calculated? What is the date from which we are supposed to observe this gain? I had to ask because S&P 500 is already up 18% from its June low.
Thanks.
The 18% is from today. But many other such indicators kicked in long before today. For instance since 1946 we have had only 8 quarters where the S@P had a decline of 15% or greater. Average following 12 month return has been 26,1%. This past June quarter makes it a 9th occurrence. So we shall see. But so far so good. Study done by Ryan Detrick.
From which event in time is the average 12 month S&P return of 18% calculated? What is the date from which we are supposed to observe this gain? I had to ask because S&P 500 is already up 18% from its June low.
Thanks.
The 18% is from today. But many other such indicators kicked in long before today. For instance since 1946 we have had only 8 quarters where the S@P had a decline of 15% or greater. Average following 12 month return has been 26,1%. This past June quarter makes it a 9th occurrence. So we shall see. But so far so good.
18% from today would make it approx 40% from June bottom. That is huge. If so, I could end up being one of the losers because today I sold all that I bought in 2022 and sitting in more than 40% cash. Still YTD portfolio loss - there was so much institutional pessimism about the 2022 swoon that I was not aggressive in buying in June. I think it was just a day or two around June 15, BoA revised their prognosis and said they see S&P 500 bottoming at near 3,000 with the year end target of 3,400.
P.S.: My sell is not based on any technical analysis, except that we are still in a Fed tightening cycle. S&P 500 is only 11% below all time high while interest rates across the curve are much higher in a short period of time. It just felt right to sell. Of course, the back to school retail sales could prompt retailers to give good guidance next week, giving more reasons for the market to keep going up.
Thanks @yogibb and @junkster, Having a large cash position dampen the blow in down days and there were many in this year. We have been slowly adding since July, largely in value, dividend growth and defensive sector funds. So far it has worked out okay. We have been building positions in ICLN (alternate energy), FIW (water infrastructure) and few individual stocks. They are slowly trending upward. Will see if they pan out by year end. One year CD (new issues) appear to be in sweet spot to build a ladder.
Both Transports/ $TRAN & DJIA/ $INDU are now below mid-June lows, but other indexes held on above their mid-June lows (SP500/ $SPX, Nasdaq Comp/ $COMPQ, R2000/ IWM). So, in spite a BAD day, the low-testing held - for now.
Edit/Add: It was another 91% down-side volume day.
.....And STILL, I see "we're hiring" signs all over the place. Everywhere. What are they going to have to do in order to raise unemployment deliberately, to drive down demand?
I'm wondering if the employment/unemployment picture is becoming fragmented. There are many reports of large layoffs in businesses and financial operations which are large-scale operations. But, as Crash mentions, not so much in smaller local businesses, largely retail, restaurant, and other "service" type jobs.
I'm guessing that the overall employment picture may be more complex than is generally being reported. It may be that the reporting mechanisms were not designed to accurately reflect the situation that we have right now, and therefore don't give us sufficient granularity.
I'm wondering if the employment/unemployment picture is becoming fragmented. There are many reports of large layoffs in businesses and financial operations which are large-scale operations. But, as Crash mentions, not so much in smaller local businesses, largely retail, restaurant, and other "service" type jobs.
I'm guessing that the overall employment picture may be more complex than is generally being reported. It may be that the reporting mechanisms were not designed to accurately reflect the situation that we have right now, and therefore don't give us sufficient granularity.
I tend to think you're 100% correct. And so, the Fed's efforts to do anything at all based on data will be a muddled, sometimes counterproductive mess. But what else is there? The cavalry is not coming over the hill to rescue us. Portfolio down today YTD by -17.631%. Make it stop, someone. Please. I'm gonna have to locate my spare set of BRASS balls while I continue to buy shares at lower prices in small dribs and drabs, betting on the future.
.....And STILL, I see "we're hiring" signs all over the place. Everywhere. What are they going to have to do in order to raise unemployment deliberately, to drive down demand?
So, that is good news and music to Fed’s ears. Loss of white collar jobs which would also depress the froth in risky areas of the market, tamp down demand, and increase productivity is needed to accomplish Fed’s policy goal of price stability. People at the low end of the economic spectrum are not the ones impacting inflation, though they may suffer collateral consequences disproportionately.
Interesting article near the end of Barron’s print edition (September 26, 2022) credited to Rick Lear of Lear Investment Management.
Caption - “What Investors Got Wrong About Risk”
Basic premise seems to be that fixed income, particularly bonds is, and never was, a proper method for managing / quantifying risk in a portfolio.
Excerpt:
“Risk is one of the most widely discussed topics in the business. It is also one of the most misunderstood. The investment industry relies heavily on a statistical tool called standard deviation to gauge risk. In technical terms, standard deviation calculates the dispersion of a data set, relative to its mean. In other words, the more varied an investment strategy's returns are, relative to its average return, the riskier that strategy is thought to be. Strategies with low standard deviation, where returns are tightly bunched up near their historic average, are considered more predictable and therefore less risky. This view of risk emboldened investors to rebalance into bonds at a time of growing market turmoil, as the broad fixed-income market's standard deviation, over the past three years, has been around a fifth that of stocks, implying that bonds are expected to lose less than stocks in a down year.” -
Not well versed in modern “standard deviation” methodology - which Lear critiques. However, he suggests that rather than mitigating risk with bond exposure one needs to be selective in holding particular assets that have offsetting risk characteristics. Humm … For most of the twenty-five years I’ve followed markets bonds have indeed been good volatility hedges. I suppose we might conclude from our recent 2022 experience to date that this time “things really are different.”
Check-out the year to date performance of your favorite conservative allocation fund. VWINX (albeit more of an income fund) is the best of the lot IMHO. Off more than 13% year-to-date by Fido’s accounting - worse than some equity funds. But still it’s held up better than TRP’s “Retirement Balanced Fund” TRRIX by a percent or two. In its early days TRRIX was labeled “Retirement Income Fund.” Fortunate, perhaps, that Price elected to rename it more than a decade ago.
(Sorry - Not able to provide links to the Barron’s print edition I draw from.)
Evidently, a section of retail investors are protecting themselves well (far greater than at anytime before), notwithstanding the buy the dip behavior from others -
Inflation halt -slows late March 2023- spring 2023, feds may overshoot by next spring if severe crashes and unemployment rolled over clift
Housing + regress stagnation-slow down 3-9 months
Stocks bottom consolidation processes next few months (1-4 months) likely
Like ...said before market bottom 1/3 to 1/2 through recession but we don't know we are in recessions until 7 9 months later.
We are probably in one recession now
Spy chart past 12 months show severe low Rsi, Stochastic Oscillation at low points, Macd histogram near crosses over points (near oversold conditions).... Prob good entry if you are willing to wait few months. For long term maybe very good entry points also. Another friend bought 3millions $ spy last Fri expect bounces to sp500 3900s 4000s next few wks
Friend say 10 trading days from now look very bad but 10 yrs from appears extremely rosy
We may get many bumps next few months lots pundits say sp500 may go 3100-3450
Friend say 10 trading days from now look very bad but 10 yrs from appears extremely rosy
That's one helluva forecast.
What's he/she smok'in these days???
I can't back any of that forecast, because when I bought my magic 8 ball years ago, it had only a 30 year forecast calendar; and that ran out of time last week. I'm screwed, investing wise/related. ADD: that doesn't read properly.......screwed meaning; only relative to using an 8 ball for investing.
@carew388, during 2008 the Fed was cutting rates aggressively, but Fed is hiking rates instead. Think the YTD 13% loss of VWINX will worsen by year end. Remember, we still two rounds of rate hike this year.
Investment grade bond index Is down 15.7% YTD. Until it turns around, bonds are struggling this year, except for treasuries (not treasury funds/ETFs).
Start investing keep buying since 2007 did not back down and did not know what was buying keep buying mutual funds vanguard total market and vangard 2040... Total return 5.7% annually since, 9.5% returns annually before crash
Think saw sp500 chart returns of 12% annually right before recent carnage from 2010 -2021
Sp500 Price and P/E maybe good now Current Sp500 P:E ratio records low 17 18 past 20 yrs, and it is so hard to get ratio lower (dotcom crash and housing 2008 crash ratio was larger 22 or 26) w these current market conditions.
Have lots patience with long term investing, maybe good entry prices imho, but you are right may get 20% lowered in 6 9 months. long terms could be very good to slowly buy more every few months and don't empty your barrell now if have dry powder.
You maybe screwed now but in March 2024 you maybe laughing your ways to the banks ( or near break even points lol) .. Wifey says too late to sale now so we are staying the courses.
It's extremely difficult to invest without emotions and see recent carnage and losses.
Maybe don't even open acct or look at daily basis, turn off MSNBC market news and Bloomberg. Go play w wifey kiddos family every weekend w free time Don't open vanguard acct until winter 2024 lol
This has been a very difficult environment for the bond market. It is being called a bond crash and one has to go back to 1931 or 1949 to find similar times for bonds (see image link below from Twitter Link1). While equities are also suffering, there is nothing historic about this typical run-of-the-mill equity bear market (so far). https://pbs.twimg.com/media/FdbXoeMWQAEXAeh?format=png&name=small
But this is not the time to panic. It is the time to rationally analyze what you hold (OEFs, ETFs, CEFs), assess portfolio risks and your own risk tolerance, make appropriate portfolio adjustments and trade/invest wisely.
@Sven, FOMC meets 8x/year: odd-numbered months, plus June and December. Jan, Jul: 4th Tues/Weds Mar, Sep: 3rd Tues/Weds May, Nov: 1st Tues/Weds Jun, Dec: 2nd Tues/Weds
Edit: Info above, while it might be typical, is not correct, as 2023 meetings Jan31-Feb1 and Oct31-Nov1 and 2021 meeting Apr27-28 violate what I had noted some time ago. www.federalreserve.gov only indicates 8 scheduled meetings per year, about every 6 weeks, and possibility of additional unscheduled meetings. My apologies.
ADD: that doesn't read properly.......screwed meaning; only relative to using an 8 ball for investing forecasts. We're patient at this house and not short term traders.
It helps immensely to have a “magic 8-ball” as Catch references - or maybe a crystal ball (available on Amazon).
It also helps to have a long term perspective (if applicable to your situation). And it helps to think of what you own (or buy) as real companies spanning the compass from “highly promising” to “near hopeless”. And things like earnings / valuations are always important.
Of course, “buying down” has its appeal. On the other hand, you may run out of money much sooner than the markets cease tumbling. In that case (to use an impolite expression) you’re screwed - that’s unless you have a very long time horizon indeed.
Comments
Have a good weekend , Derf
From which event in time is the average 12 month S&P return of 18% calculated? What is the date from which we are supposed to observe this gain? I had to ask because S&P 500 is already up 18% from its June low.
Thanks.
P.S.: My sell is not based on any technical analysis, except that we are still in a Fed tightening cycle. S&P 500 is only 11% below all time high while interest rates across the curve are much higher in a short period of time. It just felt right to sell. Of course, the back to school retail sales could prompt retailers to give good guidance next week, giving more reasons for the market to keep going up.
half that would be something
Having a large cash position dampen the blow in down days and there were many in this year. We have been slowly adding since July, largely in value, dividend growth and defensive sector funds. So far it has worked out okay.
We have been building positions in ICLN (alternate energy), FIW (water infrastructure) and few individual stocks. They are slowly trending upward. Will see if they pan out by year end.
One year CD (new issues) appear to be in sweet spot to build a ladder.
https://stockcharts.com/h-perf/ui?s=$SPX&compare=$COMPQ,$INDU,$TRAN,IWM&id=p57120171090
Edit/Add: It was another 91% down-side volume day.
I'm guessing that the overall employment picture may be more complex than is generally being reported. It may be that the reporting mechanisms were not designed to accurately reflect the situation that we have right now, and therefore don't give us sufficient granularity.
Barron's Forsyth
YBB Summary Part 1
Caption - “What Investors Got Wrong About Risk”
Basic premise seems to be that fixed income, particularly bonds is, and never was, a proper method for managing / quantifying risk in a portfolio.
Excerpt:
“Risk is one of the most widely discussed topics in the business. It is also one of the most misunderstood. The investment industry relies heavily on a statistical tool called standard deviation to gauge risk. In technical terms, standard deviation calculates the dispersion of a data set, relative to its mean. In other words, the more varied an investment strategy's returns are, relative to its average return, the riskier that strategy is thought to be. Strategies with low standard deviation, where returns are tightly bunched up near their historic average, are considered more predictable and therefore less risky. This view of risk emboldened investors to rebalance into bonds at a time of growing market turmoil, as the broad fixed-income market's standard deviation, over the past three years, has been around a fifth that of stocks, implying that bonds are expected to lose less than stocks in a down year.”
-
Not well versed in modern “standard deviation” methodology - which Lear critiques. However, he suggests that rather than mitigating risk with bond exposure one needs to be selective in holding particular assets that have offsetting risk characteristics. Humm … For most of the twenty-five years I’ve followed markets bonds have indeed been good volatility hedges. I suppose we might conclude from our recent 2022 experience to date that this time “things really are different.”
Check-out the year to date performance of your favorite conservative allocation fund. VWINX (albeit more of an income fund) is the best of the lot IMHO. Off more than 13% year-to-date by Fido’s accounting - worse than some equity funds. But still it’s held up better than TRP’s “Retirement Balanced Fund” TRRIX by a percent or two. In its early days TRRIX was labeled “Retirement Income Fund.” Fortunate, perhaps, that Price elected to rename it more than a decade ago.
(Sorry - Not able to provide links to the Barron’s print edition I draw from.)
https://twitter.com/jasongoepfert/status/1573656248842698757/photo/1
This may also explain the high equity allocation (ICI), even though we are down 20+% YTD.
Inflation halt -slows late March 2023- spring 2023, feds may overshoot by next spring if severe crashes and unemployment rolled over clift
Housing + regress stagnation-slow down 3-9 months
Stocks bottom consolidation processes next few months (1-4 months) likely
Like ...said before market bottom 1/3 to 1/2 through recession but we don't know we are in recessions until 7 9 months later.
We are probably in one recession now
Spy chart past 12 months show severe low Rsi, Stochastic Oscillation at low points, Macd histogram near crosses over points (near oversold conditions).... Prob good entry if you are willing to wait few months. For long term maybe very good entry points also. Another friend bought 3millions $ spy last Fri expect bounces to sp500 3900s 4000s next few wks
Friend say 10 trading days from now look very bad but 10 yrs from appears extremely rosy
We may get many bumps next few months lots pundits say sp500 may go 3100-3450
What's he/she smok'in these days???
I can't back any of that forecast, because when I bought my magic 8 ball years ago, it had only a 30 year forecast calendar; and that ran out of time last week. I'm screwed, investing wise/related.
ADD: that doesn't read properly.......screwed meaning; only relative to using an 8 ball for investing.
Safe to say often in general
Investment grade bond index Is down 15.7% YTD. Until it turns around, bonds are struggling this year, except for treasuries (not treasury funds/ETFs).
Generally statement likely
Start investing keep buying since 2007 did not back down and did not know what was buying keep buying mutual funds vanguard total market and vangard 2040... Total return 5.7% annually since, 9.5% returns annually before crash
Think saw sp500 chart returns of 12% annually right before recent carnage from 2010 -2021
Sp500 Price and P/E maybe good now
Current Sp500 P:E ratio records low 17 18 past 20 yrs, and it is so hard to get ratio lower (dotcom crash and housing 2008 crash ratio was larger 22 or 26) w these current market conditions.
https://www.macrotrends.net/2577/sp-500-pe-ratio-price-to-earnings-chart
Have lots patience with long term investing, maybe good entry prices imho, but you are right may get 20% lowered in 6 9 months. long terms could be very good to slowly buy more every few months and don't empty your barrell now if have dry powder.
You maybe screwed now but in March 2024 you maybe laughing your ways to the banks ( or near break even points lol) .. Wifey says too late to sale now so we are staying the courses.
It's extremely difficult to invest without emotions and see recent carnage and losses.
Maybe don't even open acct or look at daily basis, turn off MSNBC market news and Bloomberg.
Go play w wifey kiddos family every weekend w free time
Don't open vanguard acct until winter 2024 lol
What is indeed unusual is that both stock and bond drawdowns are now happening simultaneously and this is seen in hybrid portfolios (see image link below from Twitter Link2).
https://pbs.twimg.com/media/FdbYT--WAAEJYUb?format=png&name=small
But this is not the time to panic. It is the time to rationally analyze what you hold (OEFs, ETFs, CEFs), assess portfolio risks and your own risk tolerance, make appropriate portfolio adjustments and trade/invest wisely.
Jan, Jul: 4th Tues/Weds
Mar, Sep: 3rd Tues/Weds
May, Nov: 1st Tues/Weds
Jun, Dec: 2nd Tues/Weds
Edit: Info above, while it might be typical, is not correct, as 2023 meetings Jan31-Feb1 and Oct31-Nov1 and 2021 meeting Apr27-28 violate what I had noted some time ago. www.federalreserve.gov only indicates 8 scheduled meetings per year, about every 6 weeks, and possibility of additional unscheduled meetings. My apologies.
ADD: that doesn't read properly.......screwed meaning; only relative to using an 8 ball for investing forecasts.
We're patient at this house and not short term traders.
It also helps to have a long term perspective (if applicable to your situation). And it helps to think of what you own (or buy) as real companies spanning the compass from “highly promising” to “near hopeless”. And things like earnings / valuations are always important.
Of course, “buying down” has its appeal. On the other hand, you may run out of money much sooner than the markets cease tumbling. In that case (to use an impolite expression) you’re screwed - that’s unless you have a very long time horizon indeed.