Re: Whither the markets?
In Aug 9 wsj, after the 3.5 pct drop from peak, there was a column stating no bargains to be found. Warren Buffet t for example is hoarding 56 billion in cash. Other value funds have gone to 45 pct cash.
Russia Napa and UK were considered inexpensive.
Re: Whither the markets?
Japan not Napa
Re: Whither the markets?
A very nice article on market today vs jan 1994. Except for one blatant error that #AlertReader](http://www.paklinks.com/gs/usertag.php?do=list&action=hash&hash=AlertReader) pointed out. Resulting in a New Math thread today.
In 1994, the Fed started raising rates. Resulting in a bond market crash. But stock mkt gave back 5 pct and then recovered. Today rates r at near all time lows. So matter of when not if fed raises rates.
But in 1994 us 10 yr Treasury was at 5.8 3.4 above inflation. Now at 2.4. Only .2 above inflation. Hence investors moved into higher yielding stocks driving prices up.
Re: Whither the markets?
The p to based on last 12 months is abt same as in 94. But looks like this us peak earnings for 2014. While 1994 earnings jumped 18 pct. (These r my words article had an error).
Also Schiller p to e at 26. So #DearReader](http://www.paklinks.com/gs/usertag.php?do=list&action=hash&hash=DearReader) , path of least resistance appears to be down. But don’t do anything drastic. Just #Rebalance](http://www.paklinks.com/gs/usertag.php?do=list&action=hash&hash=Rebalance)
You already knew that.
Re: Whither the markets?
The nice point the article made - high yielding assets like REITS and MLP's went out of their way to attract investors. Stock buybacks r also very high. Some stocks also raised their dividends to attract the erstwhile bond investors.
In other words, the stock market of today is doing for investors what the bonds did in early 1994. Give them some yield. (Though one can question if buybacks at these levels do investors any favors - another MEME- worthy topic).
Hence the article proposes that the stock market of today could tank like the bond market of early 94.
Re: Whither the markets?
have markets started using fairness cream to become whiter or its due to Zubeda aapa whitening soap? :sid:
Edit: Its not whiter it whither 
Re: Whither the markets?
To me, taking one data point from 94 and drawing conclusions is just short of good length. Keep it simple. Look at the increase in buybacks as price increases. That is a sign of madness. Look at investors chasing dividend stocks NOW. For the wrong reasons. Just because they yield more than bonds. Not because they are priced appropriately with good prospects.
Look at the 10 yr cyclically adjusted p to e ratio.
And then do nothing other than #Rebalance](http://www.paklinks.com/gs/usertag.php?do=list&action=hash&hash=Rebalance)
Rest is noise.
Re: Whither the markets?
Welcome to our neighborhood. You will find that #DearReader](http://www.paklinks.com/gs/usertag.php?do=list&action=hash&hash=DearReader) and #AlertReader](http://www.paklinks.com/gs/usertag.php?do=list&action=hash&hash=AlertReader) are very friendly, though a bit on the boring side.
Zubeda aapa sounds familiar. Please give her our regards. Yes, the Markets are doing whatever they can to appear attractive to new victims.
Re: Whither the markets?
matlab panchhi phansane ke liye daana daal diya gaya hai :hmmm:
off topic, but what does 100 index mean?
when they say market 100 point gir gaya… what does that mean?
Re: Whither the markets?
Barabar or Barobar (means correct). The dana here is borrowing money to increase dividends and do stock buybacks.
Nothing is off topic, #DearReader](http://www.paklinks.com/gs/usertag.php?do=list&action=hash&hash=DearReader) .
100 index and 100 points probably refer to different things. I have heard of S&P100 index for example. I believe that consist of 100 largest companies in the us (probably my market cap).
Market 100 points gir gaya. It fell down 100 points. For example Bombay Sensex is at 25000 approximately. If it falls by 100 points it will be at 24900. Maybe in Pakistan they call this even a 100 index fall? I don’t know.
The Snp500 is at 1953. A 100 point fall is abt 5.1 pct. While 100 pct fall for Sensex is only 0.4 pct.
Re: Whither the markets?
girne ka matlab value kam hogai stocks ki?
Re: Whither the markets?
Barobar . Correct.
If you bought Microsoft for 30 dollars a share and you bought 10 shares. You paid 300 dollars. If the price of each share drops to 20 dollars you now have 200 dollars. You lost 100 dollars.
If the stock has 2.5 pct dividend yield based on ur purchase price u get 2.5 pct of 300. Or 7.5 dollars.
If yield grows at 6 pct per year here will be the dividend each year
Year 1 7.5 dollars
Year 2 7.5 times 1.06
Year 3 7.5 times 1.06 times 1.06
And so on
Re: Whither the markets?
Once we get a giraik aka grahak aka customer, we don’t let go. So let me give some example of dana giving to pigeons.
Of late , issuing long term bonds is the rage. One company has issued a 100 yr bond. Some companies have issued 50 yr bonds.
Granted interest rates r low. So good to lock in long term rates. But u need to spend the money wisely. Companies are taking on debt to increase dividends. Or worse to buy back their own stock at these high levels.
That is dana giving.
Have some tea, #DearReader](http://www.paklinks.com/gs/usertag.php?do=list&action=hash&hash=DearReader)
Re: Whither the markets?
Over the last 4 days, continued rebalancing in bits. Started with shifting 0.5 pct from stock to money market. Then next day 0.2 pct shift. Last 2 days 0.1 pct shift. Mkt at all time highs.
Re: Whither the markets?
The Snp500 closed above 2000 for first time. Continued micro rebalncing.
Re: Whither the markets?
Burton Malkiel author of random walk on wall street had an op ed Aug 28 wsj. CAPE ratio 25.1 long term avg 15. So abt 60 pct overvalued?
He says well interest rates low. So discount rates for future earnings low. So NPV of future earnings higher. So can support higher p to e. Then he says interest rates expected to remain low for some time.
Crock I say. Overvalued means overvalued.
Then he says 10 yr returns expected to be low from these levels.
There u go. Isn't an investor supposed to care abt long term returns
Re: Whither the markets?
He said something useful. Munis have been beaten down due to Detroit and Puerto Rico etc. So opportunity.
Re: Whither the markets?
We have talked about earnings per share being pumped up due to buybacks. Today's WSJ uncovers another factor that has Pumped up earnings.
Re: Whither the markets?
Due to 2008 financial crisis companies have been allowed to depreciate half their cap ex in first year. So that decreased up front taxes. While also decreasing earnings. This expired 2013. So this quarter companies can no longer have such a boost to depreciation. Result? Their taxes increased. So did their bottom line.
The difference 334 billion in extra earnings.
Next year earnings will not explode as much.
Re: Whither the markets?
Per post 56 Prof Malkiel pons cape at 25. Per above chart it is 26.6 that is 6.4 pct difference.
Note that the highest cape was 2000 bubble. At 40. Next was prior to 1929 meltdown. When cape was at 30. Both times mkts collapsed. And provided terrible 10 yr returns. The 3rd highest CAPE ratio is what we have today