Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!

In this Discussion

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.

    Support MFO

  • Donate through PayPal

Is the Stock Market Cheap?

edited March 2015 in Fund Discussions
Cuurently, as of March 2, Doug Short computes the TTM P/E Ratio for the S&P 500 Index at 21.4 for the month ending Feburary 2015, which now places the Index at its peaking 2007 P/E vulation. One can read more about how Mr. Short comes by this finding through the link below.

http://www.advisorperspectives.com/dshort/updates/PE-Ratios-and-Market-Valuation.php

Comments

  • IMO, the S&P 500 is fully valued, but earnings forecasts are currently
    being revised downward.........so I am thinking the S&P 500 is ready
    for its usual 3 to 5 % re-tracement back to its 100 day moving average....

    Seems like the S&P 500 has been following this behavior since
    November of 2012 ........

    With the ECB and the BOJ printing the money, I think there is continued
    liquidity to support stock & govt bond prices for quarters to come.....
  • edited March 2015
    Hi JJM58,

    Thanks for your comments.

    I too am looking for a decline in the three to five percent range from its recent 52 week high of about 2115. However, I am not sure when this will come to pass but my thinking is by early summer. That would put the Index somewhere between 2050 and 2010 if this were to occur in the near term ... and, with this we would be back of where we started the year at about 2060.

    Old_Skeet
  • I don't buy indexes so really don't care about "market" valuations
    but have to admit bargain prices are harder to find...bought JNJ last week for $98.50,(today $103.00) More healthcare/consumer products but that's ok
    still able to find some stuff
  • edited March 2015
    Hi Tampabay,

    Thanks for stopping by.

    I too have bought since the first of the year mostly though in the energy and materials sectors that currently are out of favor and I also bought some foreign stuff as well. There are only a few sectors within the S&P 500 Index that are not currently overbought by my thinking.

    Old_Skeet
  • edited March 2015
    JJM58 said:

    IMO, the S&P 500 is fully valued, but earnings forecasts are currently
    being revised downward.........so I am thinking the S&P 500 is ready
    for its usual 3 to 5 % re-tracement back to its 100 day moving average....

    Seems like the S&P 500 has been following this behavior since
    November of 2012 ........

    With the ECB and the BOJ printing the money, I think there is continued
    liquidity to support stock & govt bond prices for quarters to come.....

    I hope you are right. Some of the sentiment indicators ala Investors Intelligence look real nasty for the bulls. As for U.S govt bond prices I think it is game, set, and match and the only direction is up for yields. But then I was dead wrong about that in 2014 so who knows. Fortunately in 2014 I traded what I saw and not what I thought. Doing the same in 2015 by being in junk corporates (with the usual tight leash) even though they look very pricey. What's it been now, something like a record setting 30 consecutive up trading days in the H0A0
  • Junkster

    Interesting to read your past moves.....however
    what are you planning to do in the future is the
    most important issue today.

    No offense to you, sir, but I tire of posters who
    provide us their "wisdom" of PAST maneuvers....
    most of it I would bet is "revised" to a certain
    extent...!

    May 1st profits are made by March 2 decisions.

    Best regards to you.......
  • JJM58 said:

    Junkster

    Interesting to read your past moves.....however
    what are you planning to do in the future is the
    most important issue today.

    No offense to you, sir, but I tire of posters who
    provide us their "wisdom" of PAST maneuvers....
    most of it I would bet is "revised" to a certain
    extent...!

    May 1st profits are made by March 2 decisions.

    Best regards to you.......

    Whoa! Bad morning? I posted numerous times last year beginning in January what my position was duruing 2014 which was primarily 100% in junk munis. Now I am 100% in junk corporates and posted this January as I was exiting the junk munis for the junk corporates. I trade in the present as I am unable to predict the future. Do you want me to send you my brokerage statements or something from last year?
  • The user and all related content has been deleted.
  • edited March 2015
    Hi Junkster,

    Thanks for stopping buy.

    I for one enjoy reading about what you got cooking, so to speak ... and, what your thoughts are. In addition, I enjoyed reading your book "How I Trade for a Living." Your post have been very insightful; and, I am sure if JJM58 had been on the board as long as the most of the rest of us he'd perhaps not have step of the Junkster's toes (so to speak).

    I mentioned your book not to bring notoriety to you but thought he might be interested in seeking a copy of your book out for his own reading. You have earned your stipes with me.

    Take care my friend, and, again ... Thanks for stopping by.

    Old_Skeet
  • edited March 2015
    Hi Maurice,

    Thanks for stopping by.

    There is no doubt in my mind that the S&P 500 Index is overvalued and overbought. But, currently it is the best house in the neighborhood and with that it now draws a premium price. It will not always be this way.

    I am not buying much ... but, I have a great deal of cash and its got to go somewhere. At least if I buy out of favor securities then I have a chance, in time, to make some profit. If I buy securities that are selling at a good premium ... well the chance of making good money off of them is a whole lot less. It would be a momentum type of position and I like my positions to be supported by good fundamentals.

    Just my thinking,

    Old_Skeet
  • edited March 2015
    @JJM58

    One finds that you have had a total of 7 visits to this site since joining in March of 2014.

    Now, it is possible to login and remain logged in, in order to read everything @Junkster has written at this site. Perhaps you have done this; but have not understood what he has written.

    Junkster explained that he is invested in junk bonds at this time and will remain so until his sell signals show him it is time to leave. This is a future investment, for as soon as the clock ticks one minute after the initial purchase of any investment, one's investing future with that holding, has begun.

    Otherwise, you are very much out of place with your comments.

    MFO is not Yahoo forums or some of the other dysfunctional investment web sites, where the screaming and fighting outweight the wisdom.

    You noted:

    "Interesting to read your past moves.....however
    what are you planning to do in the future is the
    most important issue today.

    No offense to you, sir, but I tire of posters who
    provide us their "wisdom" of PAST maneuvers....
    most of it I would bet is "revised" to a certain
    extent...!"


    The next several times that you are logged in here; you would serve your knowledge and apparent desire to learn (or you wouldn't be here) to review all of Junkster's posts.

    Catch


  • edited March 2015
    Maurice said:

    Let's assume that the S&P500 is overvalued. What's to say it couldn't become a lot more overvalued. You can lose a lot of cash by shorting. Shorting is a high risk and speculative activity. You can make more in the long run (decades) by taking good risks, rather than being big roller of the dice.

    If you went on things like valuation, you would have either sold a lot of things too early in the last few years or missed things that didn't seem appealing from a valuation standpoint. I can come up with quite a few examples of things that I thought seemed expensive that I didn't get into and they've only gotten more expensive. Church and Dwight (CHD) is one that definitely comes to mind, there are a number of others.

    Again, my view is to own the best ideas and just hold them long-term and reinvest dividends and there are things that I've tried to trade in the last few years, would have just been better off sitting and holding instead and that's really what I've decided to do. I have a great deal of respect for those who can sit and trade, I just find the route I've taken to be far less stressful and actually, much more enjoyable than micromanaging.


  • Scott, a person's methodology sometimes is a by product of their financial circumstances. When I was your age I had but $2200, a negative net worth and a part time job. So being long term and reinvesting dividends and the like was not an option with such a meager account.
  • The poster is correct in that this is a largely backward looking site. For looking for definitive answers what they should invest in going forward I'd refer them to the Magic 8 Ball website.
    http://game.urpartner.com/magic8ball/

    To try it out, I asked if I should invest in stocks now. The answer that came back is: "Very Doubtful."

    Take that for what it's worth.
  • edited March 2015
    The poster is correct in that this is a largely backward looking site. For those seeking definitive answers as to how they should invest going forward, I'd refer them to the Magic 8 Ball website.
    http://game.urpartner.com/magic8ball/

    To try it out, I asked if I should invest in stocks now. The answer that came back is: "Very Doubtful."

    Take that for what it's worth.
  • I like the "very" is that worse than "doubtful"?
    ....I think it is "almost" sure we will make money this year....my prediction going forward.....and you can bring it up at the end of year.....but pay me now
Sign In or Register to comment.