As the Fed started easing interest rates, by end of 2008 the short term rates hit close to 0. Say 0 25 pct. And they have stayed there. But then bond buying started by the Fed. That had the effect of pushing treasury yields lower. Some economists came with the following theory:
The decrease in long term yields made the effective yield go negative. As of now, this phantom yield is -3%.. (As is typical these days, no splanation given on how this was caliculated.
Now the fed bond buying is coming to an end. And the fed may start raising short term interest rates 2015 middle. Treasury yields expected to rise. This will be accompanied by rise in phantom yield. Expected to reach 0 by the time short term interest rates rise. So effective rise of 3 pct short term interest rates should be anticipated by investors. This might drag mkt down.
Why does S&P not compare well with NASDAQ Asian Stock Exchange? or are they similar????
I assume you meant NASDAQ and the Asian Stock Exchange. I don't think there is any such exchange as the Asian Stock Exchange. Each country has its own I believe.
What do you mean by "not compare well". And "are the similar"?
I will let slims handle that. But he is hard to find.
All.exchanges are country specific I believe. Size - I thing NASDAQ may have 1000 stocks. With cum matket cap north of 4 trillion dollars. Snp 500 has mkt cap north of maybe 10 trillion dollars
Market closed at 1840 when thread opened. Now at 1875. Or 1.9 pct gain in 8 months. Plus 1.4 pct dividends.
Rebalancing done at various levels
1915 pct 25 26
1980 to 2000. Post 55.
Assume rebalancing at little bit after thread opened - at say 1880.
Average rebalance price 1940. So 3.5 pct above today's close. So far so good.
Anyway objective not to beat mkt. objective simply to rebalance at lofty levels. Need to be disciplined. And tune out noise such as market p to es at permanently high plateau.
The market today went as low as 1821. And finished at 1862. The Technical Analysts are now all over TV- listing various resistance levels. Or is it support levels?
We are grateful to our diligent staff for being ahead of the curve on this issue. And also to the alert readers who mailed us suggestions and gave us pointers.
This Saturday Jason Zweig article was his interview of Shiller. Which probably occurred earlier last week. With snp 500 close to 2000.
Shiller, wishy washy as always, stated the following. And I paraphrase
Well, you know , the CAPE ratio has been above average at 21 last 20 yrs. So compared to that, cape ratio of 26 is not very overvalued. Also, you know, who is to say history is not different this time. Maybe we are in a new time. With higher cape ratios. The market will go where investors bid it. Who is to say it can't keep going higher. It certainly did after Dec 96. When cape ratio was higher. And if u got out, u missed the rally over next 3.5 years.
Of course he didn't add that by 2009, all those gains had vanished. And the mkt was significantly lower than Dec 96.
We don't call V's - referred to by an ardent reader. But our staff has been recognizing a valuation gap between Europe and the US. Last 3 days including today, we have been shifting some of the cash raised by selling the us market into European index fund.
Not sure what the Bollinger bands may feel about our strategy. But for good measure, we have stocked up on Head &Shoulders shampoo. One never knows.
well i guess some of the euro cash came back today morning. gee i wonder what fairytale the astrologe.. i mean tech. analyst will come up with for it from their "books".
Here is Prof. Shiller with an article on “secular stagnation” that may drive the mkt down.
With the mkt at 2010, Prof. Shiller lost confidence in his CAPE ratio. And said this time the cape ration may be at permanently high plateau. Now that last week it nosedived through Thursday he comes up with his gem.