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Is the market still inflated?

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  • #31
    Originally posted by burritos View Post
    Did people in Japan think their market was inflated in the 80's and how has the persistent Japan(if there are any) DCA'ers been fared since.
    I'm not well versed on the history or current market in Japan but the graphs from then as compared to now aren't looking too spiffy.

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    • #32
      There was a big market for put warrants on the Japanese market. Some people made a lot of money...

      Part of the debate about dividend yields requires noting that many companies have switched to stock buy backs rather than dividends. These are better for taxable investors since capital appreciation is taxed only when realized and at more favorable rates. As long as that remains the case there will be continuing pressure for low dividends even as bond yields increase

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      • #33
        I guess the intended question is "should I buy now" or is there a bigger discount for waiting some more time.

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        • #34
          Originally posted by HumbleInvestor View Post
          I guess the intended question is "should I buy now" or is there a bigger discount for waiting some more time.
          Who cares? Continue to invest when you’re able.

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          • #35
            Originally posted by HumbleInvestor View Post
            I guess the intended question is "should I buy now" or is there a bigger discount for waiting some more time.
            Have you heard about bob the market timer?

            https://awealthofcommonsense.com/201...-market-timer/

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            • #36
              Originally posted by HumbleInvestor View Post
              I guess the intended question is "should I buy now" or is there a bigger discount for waiting some more time.
              Actually that about sums it up. I worded it awkwardly in hopes of getting more than the usual superficial answers to continue to DCA, which I do, and not attempt to time the market which I don't mind doing a little with funds above and beyond my savings allocation. I understand there is no way I am going to buy at the lowest or sell at the highest point of anything but if things are looking one way or the other I don't think it is unreasonable to act. I'm appreciative of all the responses and different views.

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              • #37
                Originally posted by CM View Post

                The market return isn't magic, it's arithmetic. It's dividend payout plus growth adjusted for the change in multiple over the horizon of interest.

                Payouts (yields) are low relative to history. If one adds historical growth rates to current payouts, one arrives at a low estimate for future returns. Given that current multiples are around the historical 95th percentile, I'll go out on a limb and project lower LT future multiples rather than higher. That's then a haircut to returns.

                You're free to project higher real growth in the future than in the past, but then you aren't relying on history, you are relying on the future being much better than the past.
                There in lies the assumption that growth in real terms is linear. Productivity and efficiencies from science and tech don’t function that way. It took a decade to be able to price ANY pc at $1k.
                Give away thumb drives now have 1000 times storage capacity. Not predicting exponential growth, but not just volume but at a fraction of today’s costs. Multiples increase, just the math. Profits aren’t straight line with growth in volumes.


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                • #38
                  Originally posted by Tim View Post
                  There in lies the assumption that growth in real terms is linear. Productivity and efficiencies from science and tech don’t function that way. It took a decade to be able to price ANY pc at $1k.
                  Give away thumb drives now have 1000 times storage capacity. Not predicting exponential growth, but not just volume but at a fraction of today’s costs. Multiples increase, just the math. Profits aren’t straight line with growth in volumes.

                  Anything but linear. Moore's Law.

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                  • #39
                    Originally posted by StateOfMyHead View Post
                    I understand there is no way I am going to buy at the lowest or sell at the highest point of anything but if things are looking one way or the other I don't think it is unreasonable to act. I'm appreciative of all the responses and different views.
                    The thing is that nobody knows nothin’. You don’t know, I don’t know, the gurus on TV don’t know. It’s a gamble and you don’t have an edge.

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                    • #40
                      Yes, I think the run-ups of the market in 2020 and 2021 were irrational exuberance. I don't think companies become 40% more profitable during the pandemic. I wouldn't mind if the S&P drops to prepademic level as I have some XLE stocks that I need to sell and convert to QQQ.

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                      • #41
                        Originally posted by Tim View Post
                        There in lies the assumption that growth in real terms is linear. Productivity and efficiencies from science and tech don’t function that way. It took a decade to be able to price ANY pc at $1k.
                        Give away thumb drives now have 1000 times storage capacity. Not predicting exponential growth, but not just volume but at a fraction of today’s costs. Multiples increase, just the math. Profits aren’t straight line with growth in volumes.

                        productivity gains dont create greater earnings growth for the mkt as a whole
                        only for an individual company if that company is the only one with the advance
                        buffet had a nice discission of this re his original purchase of berkshire, a textile company at time of purchase
                        productivity gains throughout the industry forced him to increase capital expenditures
                        comsumers r the ones who benefit


                        Erstwhile Dance Theatre of Dayton performer cum bellhop. Carried (many) bags for a lovely and gracious 59 yo Cyd Charisse. (RIP) Hosted epic company parties after Friday night rehearsals.

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                        • #42
                          Originally posted by HumbleInvestor View Post
                          I guess the intended question is "should I buy now" or is there a bigger discount for waiting some more time.
                          my base case expectation is a secular bear mkt but i hold a sig stock portfolio because expected returns better there than elsewhere and timing is impossible.
                          however i keep > 10 yrs in cash to weather any storm
                          Erstwhile Dance Theatre of Dayton performer cum bellhop. Carried (many) bags for a lovely and gracious 59 yo Cyd Charisse. (RIP) Hosted epic company parties after Friday night rehearsals.

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                          • #43
                            Originally posted by CM View Post
                            my base case expectation is a secular bear mkt but i hold a sig stock portfolio because expected returns better there than elsewhere and timing is impossible.
                            however i keep > 10 yrs in cash to weather any storm
                            If were ever in the position to have >10 yrs in cash I wouldn't care what the market is doing. You have won the game kind sir.

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                            • #44
                              Originally posted by CM View Post
                              productivity gains dont create greater earnings growth for the mkt as a whole
                              only for an individual company if that company is the only one with the advance
                              buffet had a nice discission of this re his original purchase of berkshire, a textile company at time of purchase
                              productivity gains throughout the industry forced him to increase capital expenditures
                              comsumers r the ones who benefit

                              Not necessarily. The customer only benefits if it is a commodity good or service. No moats of any kind or scale or branding or patents needed.
                              Of course on a global scale, we know how effective that can be. US does the R&D and it gets used without agreements. A ton of leakage. Not everyone plays fair.
                              Might be why International will do better. Efficiency with out R&D is great for profits. If you have a moat, profit is not distributed to the customers.
                              Pharm and Apple and Microsoft and Intel are a few examples.

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                              • #45
                                Originally posted by Tim View Post
                                Not necessarily. The customer only benefits if it is a commodity good or service. No moats of any kind or scale or branding or patents needed.
                                Of course on a global scale, we know how effective that can be. US does the R&D and it gets used without agreements. A ton of leakage. Not everyone plays fair.
                                Might be why International will do better. Efficiency with out R&D is great for profits. If you have a moat, profit is not distributed to the customers.
                                Pharm and Apple and Microsoft and Intel are a few examples.
                                The point is that humans have been making technological advances forever. With regard to mkt history, there were railroads, steam engines, telegraph, indoor plumbing, electricity, cars, radio, tv, airplanes, computers, internet, etc. Real earnings growth has been zero for some decades and upwards of 4% some decades, but more or less steady in low single digits, because human advances do not cause mkt-wide earnings increases.

                                Instead, they raise general standards of living for consumers.
                                Erstwhile Dance Theatre of Dayton performer cum bellhop. Carried (many) bags for a lovely and gracious 59 yo Cyd Charisse. (RIP) Hosted epic company parties after Friday night rehearsals.

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