# Longest Bull Market in History



## Sarenco

I think it's worth noting that as of yesterday, 22 August 2018, the S&P500 recorded its longest bull market in history - 3,453 days without a correction of 20% or more.

I don't think that constitutes actionable information but it's interesting nonetheless.


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## elacsaplau

With market valuations at such elevated positions, there is  a chance that the market could witness a correction, bringing it more in line with historic norms.


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## Sunny

So basically what you are saying is the prices are going to fall because of elevated CAPE valuations and mean reversion......


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## elacsaplau

Ar an liathróid, a dhuine uasail...................after the recent spectator sport, I just couldn't resist


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## Sarenco

Now, now.  

For the avoidance of any doubt, I am making no predictions whatsoever about future stock prices.

Mind you, BTL residential property is looking increasingly attractive to me as an investment option - 8%+ gross yields are readily available accross Dublin at the moment.


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## Zenith63

I guess I'm thinking about the fact that if I have €100k and put it in a bank account I get say 2% yield.  If I buy an apartment for €100k maybe I could get 8% gross yield (€8k rent per annum).  But if I take a mortgage to get an apartment at 80% LTV, I'll end up with a €500k which for simplicity might return five times as much rent (say €40k).  What do you call the yield here which would be the rent achieved divided by the equity (€40k/€100k) 40%?  It's not including loan interest costs, maintenance etc. so isn't net yield.  Leveraged gross yield ?


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## Sarenco

Well, introducing leverage into the equation will obviously impact the net return on an investment but it doesn't change the gross yield ratio.

If you borrowed money and placed in on deposit that would similarly impact your net return but it doesn't change the deposit rate.


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## Sarenco

I see President Trump reckons the market would crash if he's impeached.

Now there's a prediction!

https://www.bbc.com/news/world-us-canada-45285585


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## Nickname

I think it is more important to look at is the high valuation of companies rather than how long the market is going up for.


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## joe sod

What about the bond market thats been in bull territory since 1982, a whole 36 years. Interest rates are at historic lows , they can only go one way back up. So stocks are risky (albeit its only really the US in this long bull market), so are bonds except very short duration bonds, so is property all over the developed world. Whats not in a bull market? emerging markets are not, precious metals are not, commodities are not , european markerts are not really either, maybe sterling. So are you suggesting investing in these instead


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## galway_blow_in

joe sod said:


> What about the bond market thats been in bull territory since 1982, a whole 36 years. Interest rates are at historic lows , they can only go one way back up. So stocks are risky (albeit its only really the US in this long bull market), so are bonds except very short duration bonds, so is property all over the developed world. Whats not in a bull market? emerging markets are not, precious metals are not, commodities are not , european markerts are not really either, maybe sterling. So are you suggesting investing in these instead



the european stoxx 600 is about 9% below its april 2015 all time high .


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## LoveTrees

I am sure next year we'll go bear for a while. I feel it...


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## joe sod

Well european and emerging markets are having a bad time now, (they are definitely not in a bull market) while the US market is at all time highs along with a very strong dollar. I have very few US stocks now, had been selling them down to focus on europe and emerging markets etfs and Uk investment trusts. The markets are telling me im wrong but I still think this is a sensible strategy. Its only the US markets that are in this decade long bull market also the bond markets are still sucking in huge money even tough they are at the lowest interest rates in history. Maybe Im wrong but I dont think so.


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## galway_blow_in

joe sod said:


> Well european and emerging markets are having a bad time now, (they are definitely not in a bull market) while the US market is at all time highs along with a very strong dollar. I have very few US stocks now, had been selling them down to focus on europe and emerging markets etfs and Uk investment trusts. The markets are telling me im wrong but I still think this is a sensible strategy. Its only the US markets that are in this decade long bull market also the bond markets are still sucking in huge money even tough they are at the lowest interest rates in history. Maybe Im wrong but I dont think so.



The current raging bull market is exclusively a U. S phenomenon. 

European stoxx 600 hasn't made new highs in nearly three and a half years.


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## galway_blow_in

joe sod said:


> Well european and emerging markets are having a bad time now, (they are definitely not in a bull market) while the US market is at all time highs along with a very strong dollar. I have very few US stocks now, had been selling them down to focus on europe and emerging markets etfs and Uk investment trusts. The markets are telling me im wrong but I still think this is a sensible strategy. Its only the US markets that are in this decade long bull market also the bond markets are still sucking in huge money even tough they are at the lowest interest rates in history. Maybe Im wrong but I dont think so.



Trouble with that approach is Europe never sustains a rising market if America is going the other way  

Europe is a follower.


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## joe sod

galway_blow_in said:


> The current raging bull market is exclusively a U. S phenomenon.
> 
> European stoxx 600 hasn't made new highs in nearly three and a half years.



but still the narrative we are hearing all the time is about stock markets being at all time highs when it is only the US market that this applies. Maybe there might be a crash like in 2001 after the dot com boom, everything fell but the high tech stocks were decimated. This time the tech stocks are leading the US markets up, maybe the potential correction will cause a big sell off in high tech stocks like in 2001 and the leadership in global stoock markets will change back to commodities ,energy and emerging markets like in 2001.


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## Gordon Gekko

But the tech stocks in 2001 were largely joke companies built on nothing.

Companies like Amazon hardly have feet of clay.

Just because we had a financial crisis now everyone thinks they can call the next collapse.

Perhaps the US is expensive and Europe is cheap because the former has the greatest and most innovative companies on the planet?


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## joe sod

Gordon Gekko said:


> But the tech stocks in 2001 were largely joke companies built on nothing.


 
Thats not the case , yes there were alot of joke companies but most of the capitalisation was actually proper high technology like microsoft, cisco and yes apple were also around in 2000. The investment in technolgy then resulted in the smart phones and social media and everything we take for granted now, it wasn't a joke


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## opexlong

> Perhaps the US is expensive and Europe is cheap because the former has the greatest and most innovative companies on the planet?



But where are the up and coming innovations that point to future successes (which have already been priced into valuations)? I'm not seeing it.


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## galway_blow_in

Gordon Gekko said:


> But the tech stocks in 2001 were largely joke companies built on nothing.
> 
> Companies like Amazon hardly have feet of clay.
> 
> Just because we had a financial crisis now everyone thinks they can call the next collapse.
> 
> 
> 
> Perhaps the US is expensive and Europe is cheap because the former has the greatest and most innovative companies on the planet?



Plus Americans have a culture of buying stocks for 401k pension plans or in general, germans hardly touch stocks, deeming them too risky and Irish people are penalised for investing in funds.

European markets heavily weighted towards financial and energy sector, low growth and old style business relative to tech dominant America.


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## joe sod

I see peter Brown  on news talk this morning interested in emerging market bonds, he says that its still high risk but probably at the end of the cycle, you get 10 percent yield and now the likelihood that emerging market currencies will appreciate again versus the dollar, of course the high yield was wiped out by the depreciating emerging market currencies up to this point however he thinks we are near the turning point. He also said that the trade tariffs imposed by trump was a damp squid effect on the market. All this against a background of getting nothing for holding German bonds.


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## jpd

idle chatter imho


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## galway_blow_in

joe sod said:


> I see peter Brown  on news talk this morning interested in emerging market bonds, he says that its still high risk but probably at the end of the cycle, you get 10 percent yield and now the likelihood that emerging market currencies will appreciate again versus the dollar, of course the high yield was wiped out by the depreciating emerging market currencies up to this point however he thinks we are near the turning point. He also said that the trade tariffs imposed by trump was a damp squid effect on the market. All this against a background of getting nothing for holding German bonds.



Are those sovereign or corporate bonds or a mix of both he was referring to ?


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## cremeegg

opexlong said:


> But where are the up and coming innovations that point to future successes (which have already been priced into valuations)? I'm not seeing it.



Brilliant.

That is why stock picking is only for the wise.

If you could see them they would be priced in.


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## joe sod

jpd said:


> idle chatter imho



not really he actually does put his money where his mouth is. Also the thread is about "the longest bull market in history", however emerging markets and their bonds are clearly not in a bull market. You could also say that german bonds are in a bull market as the market has bid up their price so much that you now get 0% for investing in a german bond.


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## Sarenco

It was very clear from the OP that this thread related to the S&P500.

If you want to speculate on the future direction of EM bonds (or any other asset class for that matter) that's obviously fair enough.  But it has nothing to do with the subject matter of this thread.


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## galway_blow_in

just looking at the euro stoxx 600 chart on the marketwatch website , price today is below where it was nearly twenty years ago in march 2000.

what is the point of owning a european broad based equity fund ?


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## Sarenco

galway_blow_in said:


> what is the point of owning a european broad based equity fund ?


Every dog has its day.

European stocks outperformed US stocks over the 20-year period to the end of 2007.  I've no idea which will outperform over the next 20 years so I hold both European and US equities.  It's basic diversification.


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## galway_blow_in

Sarenco said:


> Every dog has its day.
> 
> European stocks outperformed US stocks over the 20-year period to the end of 2007.  I've no idea which will outperform over the next 20 years so I hold both European and US equities.  It's basic diversification.



So from 1987 to 2007,European equities outperformed the u.s market ?

Must see can I find a chart.


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## opexlong

> But the tech stocks in 2001 were largely joke companies built on nothing.
> 
> Companies like Amazon hardly have feet of clay.


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## Gordon Gekko

What is your point?

In 2000, joke companies traded on crazy valuations.

Today, companies like Amazon are actually doing amazing things.


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## opexlong

Amazon, Cisco, Nortel and Yahoo were serious players in 2000. Microsoft suffered a big decline also (not clawing its way back to its 1999 price until 2016.) 

My point is that it isn't only joke companies, worth nothing and in the midst of being exposed as frauds, that can see their valuations cut in half or far worse.


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## joe sod

opexlong said:


> Amazon, Cisco, Nortel and Yahoo were serious players in 2000. Microsoft suffered a big decline also (not clawing its way back to its 1999 price until 2016.)
> 
> My point is that it isn't only joke companies, worth nothing and in the midst of being exposed as frauds, that can see their valuations cut in half or far worse.



Very good points, these companies were the architects of the internet and were not all joke companies, the funny thing was that 2012 was the perfect time to re invest in the likes of Microsoft, Cisco and Intel. They were punished too much by just being associated with the dot com crash even though they were still ground breaking technology companies that owned a huge number of patents that were needed in developing today's smart phones.
The same thing happened the oil companies in 2014, although not as extreme and the cycle has turned much faster. There was all this rubbish about "the end of oil" and we are burning more of it than ever before.


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## opexlong

> Very good points, these companies were the architects of the internet and were not all joke companies, the funny thing was that 2012 was the perfect time to re invest in the likes of Microsoft, Cisco and Intel.



Thanks joe. If the long-terms trends were just to these companies the prices would rise gradually over decades, with modest losses and re-gains, instead of spiking and crashing every ten years.


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## Gordon Gekko

Where did anyone say they were joke companies?

Throwing out a few names that grew into tech giants doesn’t disprove the idea that most of the dot.com bubble stuff was rubbish.


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## opexlong

Yeah most of the dot-com stuff was rubbish. Beanie babies, pet-food, e-Toys etc.

But investors at the time couldn't distinguish between fool's gold and real gold, and worthwhile companies (what few there were) suffered price declines as severe as the junk. There was no careful sifting of the wheat from the chaff.

Richard Bernstein (former Merill strategist) said the other day that FAANGs have such strong fundamentals compared to dot-coms - in terms of cash flow and intrinsic value - that they won't suffer a crash. His arguments gave me serious pause but weren't enough to change my mind. I try to listen to all points of view though.


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## joe sod

Down about 5% in a few days, things happen really fast nowadays. I notice alot of beginners new to investing looking for advice. However no advice can prepare people from having to stomach these market sell offs on little real news. Its impossible to tell which piece of news the market will puke up over. I think we are near the end of the bull market in tech stocks, it has been an incredible run, I had offloaded most of my us technology by the beginning of this year so missed out on the last big upswing and I invested alot of it in european and emerging market etfs which were cheap and even cheaper now. Thats the really hard thing in investing in the short term you can be punished for doing the right thing (obviously its only right or wrong in hindsight and it may still be a mistake).


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## Gordon Gekko

What’s the average pullback over the course of a year, 13% or so?

People seem to be reacting more quickly to sensationalist media stuff.


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## joe sod

Gordon Gekko said:


> What’s the average pullback over the course of a year, 13% or so?
> 
> People seem to be reacting more quickly to sensationalist media stuff.


 
what do you mean by average pullback of 13%?, i not really understand that statistic. I think people can react quickly because of electronic trading and cheap platforms, but it is more scary for the beginner and more likely he will sell up on such occasions than in the past, everyone has too much information at their finger tips.


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## Gordon Gekko

As I understand it, on average markets fall by circa 13/14% each year.


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## moneymakeover

Sorry GG can you explain/expand?


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## Gordon Gekko

When you say “explain/expand”, what do you mean?

The average annual pullback or drawdown is circa 13%.

That’s the peak to trough move during a 12 month period.

So say the Index goes from 100 down to 87 during 2019. The media will be screaming “MARKET CRASHING!!!”, but in reality it’s more or less average in terms of a move.


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## Gordon Gekko

The takeaway for me is that, even in benign conditions, an equity investor needs to be prepared for corrections of greater than 10% on the basis that they’re completely normal.

However, he/she must be ready to have the idiot of the week shouting in their ear via the media that “the end is nigh”.


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## moneymakeover

Just to be clear, are you saying during a bear market there tends to be a 13% on average drop.
No need to panic, it's completely normal.
And 13% is perfectly fine for person's pension who has 20 years to retirement?
Or an investor holding for the long term?


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## Gordon Gekko

No!

That during perfectly normal market conditions, on average, markets will fall by circa 13% from peak to trough.

i.e. it is perfectly normal for someone to be able to say at some point during a given year: “This post will be deleted if not edited immediately, markets are down 13%!”

Not a bear market, just ordinary life.


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## moneymakeover

If that happens during a normal year then how is that compatible with an average 4% annual increase?


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## moneymakeover

Are you saying during the same 12 month period it can be up 4% but there may be a 13% drop between two dates?


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## Gordon Gekko

Yes


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## galway_blow_in

A bear market is a 20% minimum drop, most years since 2009 have not seen a 13% correction however.


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## Gordon Gekko

galway_blow_in said:


> A bear market is a 20% minimum drop, most years since 2009 have not seen a 13% correction however.



49%, 28%, 16%, 19%, 10%, 6%, 7%, 12%, 11%, and 3% for the S&P since 2008.


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## joe sod

galway_blow_in said:


> A bear market is a 20% minimum drop, most years since 2009 have not seen a 13% correction however.



january 2016 was certainly nasty, i think it was down by 19% in a few days and that was after a bad ending of 2015. I think the market crashed by more in those few days than even 2008. The thing is when it is happening it is the real deal , its like a nightmare when you are having one it is real, its only when you wake up you realise it was a nightmare


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## galway_blow_in

Gordon Gekko said:


> 49%, 28%, 16%, 19%, 10%, 6%, 7%, 12%, 11%, and 3% for the S&P since 2008.



your starting year should be 2010 as i said since 2009 .


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## galway_blow_in

joe sod said:


> january 2016 was certainly nasty, i think it was down by 19% in a few days and that was after a bad ending of 2015. I think the market crashed by more in those few days than even 2008. The thing is when it is happening it is the real deal , its like a nightmare when you are having one it is real, its only when you wake up you realise it was a nightmare



which market are you talking about ? , 2016 didnt see anything like a 19% correction on the s + p .


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## Gordon Gekko

galway_blow_in said:


> your starting year should be 2010 as i said since 2009 .



What exactly is your issue?

I provided 10 years to give a meaningful period.


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## galway_blow_in

Gordon Gekko said:


> What exactly is your issue?
> 
> I provided 10 years to give a meaningful period.



just correcting your obvious mistake , thats all.

i said since 2009 so 2010 is the starting year for any detail with respect of sell offs .

most years starting in 2010 to now have not seen a 13% sell off in the s + p .


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## Gordon Gekko

galway_blow_in said:


> just correcting your obvious mistake , thats all.
> 
> i said since 2009 so 2010 is the starting year for any detail with respect of sell offs .
> 
> most years starting in 2010 to now have not seen a 13% sell off in the s + p .



How is it an obvious mistake?

I listed the drawdowns and specifically stated that they were from 2008.

It’s annoying to be a pedant, but it’s bizarre to be a pedant who gets things blatantly wrong and then argues about it as you appear to be doing.

Best of luck.


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## galway_blow_in

Gordon Gekko said:


> How is it an obvious mistake?
> 
> I listed the drawdowns and specifically stated that they were from 2008.
> 
> It’s annoying to be a pedant, but it’s bizarre to be a pedant who gets things blatantly wrong and then argues about it as you appear to be doing.
> 
> Best of luck.



Correcting a mistake isn't pedantic, if you find that annoying, I also wish you luck.

The 40% plus drop in 2008 is irrelevant within the context of my post yet you stuck it in there for your own arbritary reasons, references to 2008 distort trends as such years are so rare.


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## Gordon Gekko

galway_blow_in said:


> Correcting a mistake isn't pedantic, if you find that annoying, I also wish you luck.
> 
> The 40% plus drop in 2008 is irrelevant within the context of my post yet you stuck it in there for your own arbritary reasons, references to 2008 distort trends as such years are so rare.



Which is why I highlighted that it was from 2008.

No mistake.


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## galway_blow_in

Gordon Gekko said:


> Which is why I highlighted that it was from 2008.
> 
> No mistake.



You quoted my post which clearly states a 2010 starting point !

Your point-thesis is - was beside the point.


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## moneymakeover

Today rebound

Credit to those who held their nerve


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## opexlong

I've recently come across this interesting interview, which fits in nicely with the discussion.

Fred Hickey is a technologist who runs a tech investing newsletter which he started in 1987.


> Q. Mr. Hickey, despite of raising interest rates, global trade tensions and turmoil in the emerging markets the stock market in the United States is chasing one record after record. How long will this go well?
> 
> A. Today’s situation reminds me of the fall 2000 which was a very difficult time for me as a contrarian investor. The internet bubble had broken in March when the Nasdaq peaked at 5132 and all those crazy valued dotcom stocks had crashed. In the three weeks after the Nasdaq had peaked it looked like the whole stock market had broken. But it hadn’t because investors rotated into what they perceived to be safer big cap tech names. So, they piled into stocks like Intel, Cisco, Microsoft, Nortel, EMC and Sun Microsystems. And that’s what we’re seeing today in a similar way with stocks like Amazon, Apple and, again, Microsoft.





> Q. What happened next?
> 
> A. Once we got into September and October, the market started to roll over. Back then, I was short via puts a number of tech stocks. My biggest short position was Intel and the stock first went higher and higher. In August 2000, Intel rose 20% in just one month and pushed into a new high of almost 76 $ a share. For me, these were some of my toughest days trying to fight the mania. The maniacs were piling into the stock and had no clue. They were only chasing momentum – just as they’re doing it today. But as soon as Labor Day rolled around, Intel’s shares started to fall because fundamentally the business was deteriorating. Intel had to lower its outlook and the stock crashed 45% in one month. Think about it: At that time, Intel was the second largest company in the world. It’s the equivalent of Amazon today which means that Amazon’s market cap would go from around $1 trillion to $550 billion in just one month. That’s a shocking thing. But the difference is that Intel’s P/E ratio was 55 back then. Amazon’s is 155 today.





> True, the P/E ratios don’t look as high as they were in 2000. But other indicators do. For instance, the median price to sales ratio for the S&P 5000 is two times higher than it was in 2000. What’s more, the median price to book value is just as high as it was back then. This shows that this bubble is much broader than it was in 2000. And think about all the methods that corporations have taken in order to pump up their earnings which includes the record number of corporate buybacks and non-GAAP- earnings numbers.



Worth reading the whole thing.


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## joe sod

It seems something happening in the markets now. It's amazing that a whole year of gains can be wiped out in a few days. The old adage that the stock markets climb the stairs but descend the escalator is very true. Maybe as another poster pointed out a similar scenario to 2001 after the dot com crash is playing out and there will be a rotation out of us and high tech stocks into other areas, maybe oil and commodities like in 2001, or emerging markets even the troubled European financial stocks. However I don't think something as severe as 2001 is happening, simply because we havnt had the rip roaring stock market decades like the 1980s and 90s. Lots of people talk about the unbroken us stock bull market, however that came after the most devastating stock market crashes in 2001 and 2008.


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## Steven Barrett

joe sod said:


> It seems something happening in the markets now. *It's amazing that a whole year of gains can be wiped out in a few days*. The old adage that the stock markets climb the stairs but descend the escalator is very true. Maybe as another poster pointed out a similar scenario to 2001 after the dot com crash is playing out and there will be a rotation out of us and high tech stocks into other areas, maybe oil and commodities like in 2001, or emerging markets even the troubled European financial stocks. However I don't think something as severe as 2001 is happening, simply because we havnt had the rip roaring stock market decades like the 1980s and 90s. Lots of people talk about the unbroken us stock bull market, however that came after the most devastating stock market crashes in 2001 and 2008.



Don't forget there was a fall in market prices in February and April of this year as well, so it's not as if it's been on an upward trajectory all year. 

Increased interest rates in the US is the main driver behind this fall. With unemployment at record lows, there can be a higher cost of hiring people, more money, increased inflation. Increasing interest rates is the age old method of keeping inflation low by reducing disposable income. It looks nothing like 2001 where online businesses valued in the millions (quite quaint when they are now valued in the billions!) were worth nothing more than the url. Or 2007/08 when banks had no cashflow. Although it will be interesting to see if US companies have overstretched themselves regarding borrowings and struggle with higher interest rates. 



Steven
www.bluewaterfp.ie


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## galway_blow_in

joe sod said:


> It seems something happening in the markets now. It's amazing that a whole year of gains can be wiped out in a few days. The old adage that the stock markets climb the stairs but descend the escalator is very true. Maybe as another poster pointed out a similar scenario to 2001 after the dot com crash is playing out and there will be a rotation out of us and high tech stocks into other areas, maybe oil and commodities like in 2001, or emerging markets even the troubled European financial stocks. However I don't think something as severe as 2001 is happening, simply because we havnt had the rip roaring stock market decades like the 1980s and 90s. Lots of people talk about the unbroken us stock bull market, however that came after the most devastating stock market crashes in 2001 and 2008.


 
It's only U. S markets which have been doing well, the stoxx 600 financial sector etf in Europe is trading at Post brexit levels and the overall European market has been in a bear market now since before brexit


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## galway_blow_in

I haven't bought or sold anything in ages bar a particular cement company which is doing horribly. 

Not bothered though as dividend is decent


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## joe sod

galway_blow_in said:


> It's only U. S markets which have been doing well, the stoxx 600 financial sector etf in Europe is trading at Post brexit levels and the overall European market has been in a bear market now since before brexit



and even the S & P 500 performance has not been that stellar when you compare it with the 1990s, it increased by 170% between 1990 to
year 2000 (in other words it almost tripled), it actually decreased by 33% between the years 2000 and 2010 , it has increased by 107% from 2010 to now, however only by 40% over the year 2000 level, almost 2 decades later.
Therefore when talking about the unbroken bull market in the US markets it must be emphasised the enormous effect of the 2008 crash which resulted in the us markets dropping 33% between 2000 and 2010, this is the backdrop to this bull market an awful lot of it was recovery from 2008 even in the US.


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## galway_blow_in

joe sod said:


> and even the S & P 500 performance has not been that stellar when you compare it with the 1990s, it increased by 170% between 1990 to
> year 2000 (in other words it almost tripled), it actually decreased by 33% between the years 2000 and 2010 , it has increased by 107% from 2010 to now, however only by 40% over the year 2000 level, almost 2 decades later.
> Therefore when talking about the unbroken bull market in the US markets it must be emphasised the enormous effect of the 2008 crash which resulted in the us markets dropping 33% between 2000 and 2010, this is the backdrop to this bull market an awful lot of it was recovery from 2008 even in the US.



the spanish and italian stock markets are below where they were in 1998 , the french market around where it was in 2000 and the ftse marginally above 2007 levels , only germany has matched the u.s market this past decade .

i know you need a long term horizon but i make my points as a rebuke to the constant narrative of " runaway bubbles in assets "

doesnt stand up to scrutiny at all with regard equities , property yes !


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## joe sod

galway_blow_in said:


> the spanish and italian stock markets are below where they were in 1998 , the french market around where it was in 2000 and the ftse marginally above 2007 levels , only germany has matched the u.s market this past decade .


I dont understand why there is not much focus on these facts. Another much under reported fact is that the percentage of global wealth invested in the stock markets has reduced considerably since the 1990s , most of the money invested is now in the global debt and bond markets, followed by the global property markets


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## galway_blow_in

joe sod said:


> I dont understand why there is not much focus on these facts. Another much under reported fact is that the percentage of global wealth invested in the stock markets has reduced considerably since the 1990s , most of the money invested is now in the global debt and bond markets, followed by the global property markets



just need to correct something i said , the italian market is below 2000 levels , not 1998

the french C+C was higher in 1999 than today .

all these chart details available from marketwatch .

your right about property , any major city in europe has seen its property market rise dwarf the returns of said nations equity market .


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## cremeegg

The world is changing in many ways. In my opinion stock markets are a thing of the past and are set to dwindle.

The compliance costs of a listing and the associated public scrutiny become ever more onerous. 

Large corporations no longer need to raise finance through traditional stockmarket listings. Airbnb, Uber etc have access to all the money they want without a listing.

Raising finance through equity costs. Interest payments are tax deductible.

Large corporations with listings are buying back shares, to reduce their managements exposure to the criticisms of a whimsy market, (not to return cash to shareholders).

Investing in equities will become a niche activity. Innovative business will be well financed long before the public get an opportunity to invest.


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## joe sod

@cremeeg interesting your observations however it would seem odd that when it is easier than ever to invest in the stock markets much easier than bonds or property and much easier than in the past that it is just going out of fashion. If it is the case that stock market investing will no longer be done by normal people then what are we returning to eighteenth century oligarchs on the one hand or communists on the other. If people are not investing in the stock markets but in assets like property or bonds that pay no interest now are they not setting themselves up for another big crash like 2008 which was disastrous for the wealth of the normal Irish person, or bonds where the possibility of over indebted governments burning their bond holders. Also if less money is being invested in the stock markets as a proportion of the total surely that means that stock markets (exception of the US for now) are better and better value. Also if companies are choosing not to go to the stock markets for finance and are buying back their own shares is that not all the better for existing shareholders as their shareholding is being increased without them having to buy more shares


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## opexlong

> It looks nothing like 2001 where online businesses valued in the millions (quite quaint when they are now valued in the billions!) were worth nothing more than the url.



As I've pointed again and again on these threads and will continue to point out, the 1999-2001 crash was not a sell-off of worthless companies _only_.

I could've used the 1960s and 70s, when the software industry began, to make the same point.


> "Until recently, two men in a garage with a couple of transistors could call themselves an electronics company and raise millions in public offerings. In the early sixties, any company which used the word "technology" liberally in its prospectus, and the suffix "onics" or "ex" in its name, could command a 100-to-1 price-earnings multiple, even if its earnings were only a trick of accounting."      - Douglas Casey, writing in 1980



Okay so these companies crashed because they were worthless, as we'd expect, and the real tech companies like IBM didn't right? No, IBM had its price more than cut in half in 1973 from 21.58 to 9.94 and didn't recover until 1982.

The mistake is thinking that _only_ things like cryptocurrencies will suffer large losses in this market.

Stock valuations always return to their long-term averages over time (or overshoot them on the underside for a while). That doesn't mean that great businesses can't survive horrific price declines and recover their price over a 10-year or 20-year period. I'm not trying to preach against a buy-and-hold strategy as such.

So if you're holding FAANGM+ just be realistic that these stocks aren't going to have trillion-dollar valuations in two years' time (or three years or whenever).


----------



## cremeegg

joe sod said:


> @cremeeg interesting your observations however it would seem odd that when it is easier than ever to invest in the stock markets much easier than bonds or property and much easier than in the past that it is just going out of fashion.



I am not suggesting that stock market is going out of fashion. Just that the valuable opportunities that have been available to retail investors through the stock market in the past may no longer be available in the future.




joe sod said:


> If it is the case that stock market investing will no longer be done by normal people then what are we returning to eighteenth century oligarchs on the one hand or communists on the other. If people are not investing in the stock markets but in assets like property or bonds that pay no interest now are they not setting themselves up for another big crash like 2008 which was disastrous for the wealth of the normal Irish person, or bonds where the possibility of over indebted governments burning their bond holders.



Yes. 



joe sod said:


> Also if less money is being invested in the stock markets as a proportion of the total surely that means that stock markets (exception of the US for now) are better and better value. Also if companies are choosing not to go to the stock markets for finance and are buying back their own shares is that not all the better for existing shareholders as their shareholding is being increased without them having to buy more shares



Yes. There will be winners and losers if the stock market is no longer the main source of capital for companies. Existing shareholders of companies seeking to reduce their reliance on the markets are certainly likely to benefit.


----------



## opexlong

Every FAANG stock is now in a bear market

David McWilliams in today's _Irish Times_: 'Stocks in the big five tech companies have slumped. It was only a matter of time' (behind a paywall)

Trillion-dollar valuations represented an overshoot of the price positive-feedback mechanism.


----------



## joe sod

McWilliams is more of a social commentator today than a hard headed financial analyst, a cursory reading of most of the respected financial analysis would have informed you that the US market was overvalued and that this was predominantly because of the fang tech stocks. I doubt McWilliams is giving any hard advice on what investors should do now with their money, that's not really sexy material and that's where you can be obviously wrong.
He was correct about the Irish housing bubble 10 years ago and wasn't afraid then to hang his hat on that peg but since then he hasn't said anything particularly noteworthy. As I said it's more social commentary, material.that gets you on tv talk shows and sells books at Christmas.


----------



## opexlong

joe sod I agree. I just thought the headline was interesting .. "It was only a matter of time". Suddenly its conventional wisdom that FAANGs were always going to buckle. I don't recall McWilliams or any other mainstream financial journalist predicting it though. It would have been a useful perspective for Irish newspaper readers two months ago.


> a cursory reading of most of the respected financial analysis would have informed you that the US market was overvalued and that this was predominantly because of the fang tech stocks



Yes. I've stated my bearish arguments on faang tech stocks in multiple threads across this forum. I even started a thread quoting Morgan Stanley analysts since I guessed people might be more willing to accept "respected financial analysis" from them rather than from a pseudonymous internet commenter - though in fact it is the analysis and reasoning itself which is either correct or incorrect.


----------



## joe sod

well there has been significant sell offs and volatility over the last week, i bet most investors are down substantially as a result. I heard a good interview with peter brown this morning on radio 1 discussing whats happening. He says that both the US stock market, and the US dollar are overvalued. He says he expects both to correct over the next few years which means that european investors in US stocks could be hit on the double. However he reckons that european and emerging markets are now very good value especially for US dollar investors. He says that for US investors the european market is the cheapest its been for 30 years. Just to reinforce the point that it is really only the US that has been in this decade long bull market.


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## noproblem

No doubt at all that over the past couple of months and especially the past few weeks ordinary people who have money in different funds here in Ireland, eg, cautiously managed, active managed, absolute returns, (not naming companies)etc, etc, have seen a big drop in returns and for the not so experienced investor this can be really worrying. Can the more experienced people on here give advice or encouragement to people like that? As joe sod has said I too heard Peter Brown this morning and wonder am I correct in thinking there may be an improvement in European investment markets and consequently returns may improve somewhat? I know there's lots of different scenarios, etc, but it would be good to get general opinions from the more experienced investors


----------



## galway_blow_in

joe sod said:


> well there has been significant sell offs and volatility over the last week, i bet most investors are down substantially as a result. I heard a good interview with peter brown this morning on radio 1 discussing whats happening. He says that both the US stock market, and the US dollar are overvalued. He says he expects both to correct over the next few years which means that european investors in US stocks could be hit on the double. However he reckons that european and emerging markets are now very good value especially for US dollar investors. He says that for US investors the european market is the cheapest its been for 30 years. Just to reinforce the point that it is really only the US that has been in this decade long bull market.



European markets always follow u.s markets down, European equities have had poor earnings seasons this year  where as American companies have beaten expectations,  America is just a far better business environment.


----------



## joe sod

galway_blow_in said:


> European markets always follow u.s markets down, European equities have had poor earnings seasons this year  where as American companies have beaten expectations,  America is just a far better business environment.


 yea but you keep making that point, but its still the case that european markets are better and better value, and emerging markets have done even worse than europe. I think we are entering a period like after 2001 and the dot com crash, although i dont think it will be as extreme as 2001, when  the euro was actually worth less than the US dollar. I think Europe, emerging markets and commodities will out perform and the US market takes a back seat like what happened from 2001 to 2008, the canadian economy did much better than the US in that period, maybe also another global property bubble that seems to be well underway already.
Another striking point about the ftse index , its gone nowhere in 20 years and now has average yields of over 4%, yet people are bamboozled about all the negativity surrounding brexit, yet its hardly the case that the UK goes back to 1998


----------



## galway_blow_in

joe sod said:


> yea but you keep making that point, but its still the case that european markets are better and better value, and emerging markets have done even worse than europe. I think we are entering a period like after 2001 and the dot com crash, although i dont think it will be as extreme as 2001, when  the euro was actually worth less than the US dollar. I think Europe, emerging markets and commodities will out perform and the US market takes a back seat like what happened from 2001 to 2008, the canadian economy did much better than the US in that period, maybe also another global property bubble that seems to be well underway already.
> Another striking point about the ftse index , its gone nowhere in 20 years and now has average yields of over 4%, yet people are bamboozled about all the negativity surrounding brexit, yet its hardly the case that the UK goes back to 1998



The period where Europe outperformed the usa from 2003 - 2007 was a bull market 

I'm arguing if the U. S enters a bear market, there is no way europe won't join in.

European equities are always cheaper and the dollar strength since 2015 has made zero difference to European stocks.


----------



## joe sod

galway_blow_in said:


> The period where Europe outperformed the usa from 2003 - 2007 was a bull market



yea but not in the US, yes the us market recovered, but the leadership changed to the commodity and oil stocks in the US indexes, the boom after 2002 was in commodities, emerging markets, european stocks, but mainly real estate (which the irish economy was the worst hit  later). Also significantly the US dollar depreciated from 0.9 dollars to the euro to 1.5 dollars to the euro, this is a huge factor, therefore the underperformance of the US against european stock markets was amplified by another 60% because of the depreciation of the dollar in that period. That is the warning from peter brown, yes exchange rates get ironed out in the long term (20 years usually) but in the next decade you could be hit on the double by investing in US assets at the wrong time .


----------



## galway_blow_in

joe sod said:


> yea but not in the US, yes the us market recovered, but the leadership changed to the commodity and oil stocks in the US indexes, the boom after 2002 was in commodities, emerging markets, european stocks, but mainly real estate (which the irish economy was the worst hit  later). Also significantly the US dollar depreciated from 0.9 dollars to the euro to 1.5 dollars to the euro, this is a huge factor, therefore the underperformance of the US against european stock markets was amplified by another 60% because of the depreciation of the dollar in that period. That is the warning from peter brown, yes exchange rates get ironed out in the long term (20 years usually) but in the next decade you could be hit on the double by investing in US assets at the wrong time .


  Along with making new highs , the U. S market rose by more than 20% between early 2003 and late 2007,a bull market by any measure.

If the U. S market enters a lean few years  Europe won't escape, emerging markets are much less in sync with the U. S equity markets than Europe so it might do its own thing.


----------



## joe sod

galway_blow_in said:


> Along with making new highs , the U. S market rose by more than 20% between early 2003 and late 2007,a bull market by any measure.


 
well the S & P 500 briefly touched off its year 2000 high in late 2007 for a day or two then rapidly deteriorated again along with the global financial crash of 2008, it didnt properly take out the 2000 high until late 2013, I think the dow suffered bigger extremes both up and down. Obviously if you are a long term investor the US has been the star performer but even Warren Buffet the perenial bull on US stocks started making big international investments after 2002 and also had big bets on the depreciating dollar in that period.
Because something has been true for a long time namely that the US is the only game in town, many people get fooled into making investments at the wrong time , the same thing happened in the late 90s, the US dot com boom attracted huge amounts of international capital which also drove up the value of the dollar, those investors then got hit on the double.
To emphasise again the ftse is back more or less to where it was 20 years , surely for a US investor with the pound /dollar rate at historic lows along with the ftse where it was 20 years ago, its a no brainer


----------



## opexlong

More money-losing companies than ever are going public, even compared with the dot-com bubble


> Most companies going public this year entered their debut with a history of losing money. But investors are embracing them anyway.
> 
> Through last Friday, 83 percent of U.S. companies going public the first nine months of this year lost money in the 12 months leading up to the IPO, according to data compiled by University of Florida finance professor Jay Ritter. Ritter, whose data goes back to 1980, said this is the highest proportion on record.
> 
> The previous highest rate of money-losing companies going public had been 81 percent in 2000, at the height of the dot-com bubble.


----------



## opexlong

> No doubt at all that over the past couple of months and especially the past few weeks ordinary people who have money in different funds here in Ireland, eg, cautiously managed, active managed, absolute returns, (not naming companies)etc, etc, have seen a big drop in returns and for the not so experienced investor this can be really worrying. Can the more experienced people on here give advice or encouragement to people like that? As joe sod has said I too heard Peter Brown this morning and wonder am I correct in thinking there may be an improvement in European investment markets and consequently returns may improve somewhat? I know there's lots of different scenarios, etc, but it would be good to get general opinions from the more experienced investors



I'm up +25% these last few months thanks to the big market drops but I don't recommend an inexperienced investor try to "time" or short anything. I'm taking calculated risks which aren't appropriate for everyone.

Money managers should have hedges in place or be spread out among non-correlated assets to limit the pain. The latter is difficult in a global economy and many people are delusional about what is and isn't correlated. In the prelude to a recession, most stock indices, industries/sectors and industrial commodities are going to plunge in unison. The Shanghai Index and the MSCI Emerging Markets Index started falling in January, which is also when the NYSE composite peaked. US indices went sideways from January to September. Then US indices, the FTSE, the CAC 40 and the Nikkei started falling from October onwards. Other Euro indices fell within this period (Borsa Italiana in May, Dax in July etc.)

Oil collapsed. Corporate high-yield bonds have started to turn (myriad zombie corporations going belly-up, more to come.) Housing slowing down. Subprime auto-loans defaulting at highest rate in two decades.

I tend to agree with the poster from Galway who thinks Euro markets will fall further in response to big US market sell-offs. Maybe they won't, but in 2008-9 emerging markets, US and Euro markets fell in unison. The strategy of pivoting from one to another didn't work then.

I don't give investment advice but I'm long various commodities stocks, when I can get good ones at dirt-cheap prices. They will go up if and when the underlying commodity becomes scarce and expensive hence they're de-linked from the general run of stocks.


----------



## galway_blow_in

opexlong said:


> I'm up +25% these last few months thanks to the big market drops but I don't recommend an inexperienced investor try to "time" or short anything. I'm taking calculated risks which aren't appropriate for everyone.
> 
> Money managers should have hedges in place or be spread out among non-correlated assets to limit the pain. The latter is difficult in a global economy and many people are delusional about what is and isn't correlated. In the prelude to a recession, most stock indices, industries/sectors and industrial commodities are going to plunge in unison. The Shanghai Index and the MSCI Emerging Markets Index started falling in January, which is also when the NYSE composite peaked. US indices went sideways from January to September. Then US indices, the FTSE, the CAC 40 and the Nikkei started falling from October onwards. Other Euro indices fell within this period (Borsa Italiana in May, Dax in July etc.)
> 
> Oil collapsed. Corporate high-yield bonds have started to turn (myriad zombie corporations going belly-up, more to come.) Housing slowing down. Subprime auto-loans defaulting at highest rate in two decades.
> 
> I tend to agree with the poster from Galway who thinks Euro markets will fall further in response to big US market sell-offs. Maybe they won't, but in 2008-9 emerging markets, US and Euro markets fell in unison. The strategy of pivoting from one to another didn't work then.
> 
> I don't give investment advice but I'm long various commodities stocks, when I can get good ones at dirt-cheap prices. They will go up if and when the underlying commodity becomes scarce and expensive hence they're de-linked from the general run of stocks.




Doesn't surprise me that auto loans are problematic.

Average PE on a car company in Europe or the USA right now is under 7 with dividend yields at 6% for many of them, auto sector has almost been as bad as the financial sector in Europe this year.

Shares in the second biggest American auto maker were dearer in the late eighties  than today.


----------



## joe sod

I heard Peter Brown talking again this morning, he reiterated the point about us dollar and market being overvalued. He said the US has had its run for the last decade with all the tech stocks etc and its not the place to be over next 5 years, you now need to be looking for value. He even advised not investing in msci world index etfs and funds simply because the have over 50 percent in us markets.


----------



## galway_blow_in

joe sod said:


> I heard Peter Brown talking again this morning, he reiterated the point about us dollar and market being overvalued. He said the US has had its run for the last decade with all the tech stocks etc and its not the place to be over next 5 years, you now need to be looking for value. He even advised not investing in msci world index etfs and funds simply because the have over 50 percent in us markets.





joe sod said:


> I heard Peter Brown talking again this morning, he reiterated the point about us dollar and market being overvalued. He said the US has had its run for the last decade with all the tech stocks etc and its not the place to be over next 5 years, you now need to be looking for value. He even advised not investing in msci world index etfs and funds simply because the have over 50 percent in us markets.



Did he squeeze in a plug for his investment workshop road show?, his colleague used to constantly ring me up few years back about when they were on in Galway.


----------



## Ndiddy

Isn't the fall of US markets, precisely when you should keep investing( if that has been part of your plan all along)?  buy low as long as you believe that the US market won't implode and completely disappear, you are buying US shares at a discount.

its a gamble if you just jump in and out of market sectors but if you think the underlying factors of a company/geographical region are there and you have the time horizon, your money in a market downturn has much more buying power.


----------



## joe sod

galway_blow_in said:


> Did he squeeze in a plug for his investment workshop road show?, his colleague used to constantly ring me up few years back about when they were on in Galway.



no, but he is prepared to nail his colours to the mast and be specific whereas most financial advice on mainstream media is wishy washy or just stating the bleedin obvious like "brexit is going to be very bad for the british economy"


----------



## Gordon Gekko

Sensationalist and alarmist rubbish sells...that’s an unfortunate fact of life


----------



## elacsaplau

I am not blowing my own trumpet - but back in August, in the first response to the OP, i.e. post 2, I predicted what we have actually seen in markets since then. It's there in black and white. I said it.


----------



## galway_blow_in

joe sod said:


> no, but he is prepared to nail his colours to the mast and be specific whereas most financial advice on mainstream media is wishy washy or just stating the bleedin obvious like "brexit is going to be very bad for the british economy"



Well I would be less impressed by that individual.


----------



## Gordon Gekko

elacsaplau said:


> I am not blowing my own trumpet - but back in August, in the first response to the OP, i.e. post 2, I predicted what we have actually seen in markets since then. It's there in black and white. I said it.



Wow, I’m amazed. You said that there could be a correction.

I think it will rain on Christmas Day.


----------



## elacsaplau

I said it, Gordon, I definitely said it!


----------



## RedOnion

elacsaplau said:


> I am not blowing my own trumpet - but back in August, in the first response to the OP, i.e. post 2, I predicted what we have actually seen in markets since then. It's there in black and white. I said it.


You are familiar with the expression about even a stopped clock being right twice a day?


----------



## RedOnion

Gordon Gekko said:


> I think it will rain on Christmas Day.


It's better to say you think there's a *chance* it will rain sometime.


----------



## joe sod

Gordon Gekko said:


> Sensationalist and alarmist rubbish sells...that’s an unfortunate fact of life



It's hardly sensationalist and alarmists to say that investors are better investing outside the US in the next few years. On another point that gets no attention Irish investors are the most risk adverse people in Europe with most of their wealth apart from housing sitting in bank accounts earning no interest. This is when the ecb has created trillions of new euros in their bond buying program. In this light is it not a bit silly to be holding euros in a bank account when trillions of new euros have been created. It's the ultimate in currency debasement which in the past kings were killed for.


----------



## galway_blow_in

joe sod said:


> It's hardly sensationalist and alarmists to say that investors are better investing outside the US in the next few years. On another point that gets no attention Irish investors are the most risk adverse people in Europe with most of their wealth apart from housing sitting in bank accounts earning no interest. This is when the ecb has created trillions of new euros in their bond buying program. In this light is it not a bit silly to be holding euros in a bank account when trillions of new euros have been created. It's the ultimate in currency debasement which in the past kings were killed for.



European stoxx 600 is below where it was nearly four years ago , savings were a far better return than equities ( u.s excluded )

Stocks have been dreadful in Europe bar the period 2012-2015

Irish people are not at all the exception when it comes to aversion to equity investing  the germans are no different and they keep away from property too. 

Stock investment for individuals is far bigger in America.


----------



## Brendan Burgess

galway_blow_in said:


> European stoxx 600 is below where it was nearly four years ago , savings were a far better return than equities ( u.s excluded )
> 
> Stocks have been dreadful in Europe bar the period 2012-2015



Or to put it another way...

_When you look back, during certain specific periods, in certain specific markets, deposits have performed better than equities in those markets during those periods. 
_
Or to put it another yet another way...

_During most periods, most equity markets have outperformed deposits. 
_
Unfortunately, while we can see what happened in the past, we can't predict the future, other than to say that markets will go up and markets will go down.



Brendan


----------



## galway_blow_in

Brendan Burgess said:


> Or to put it another way...
> 
> _When you look back, during certain specific periods, in certain specific markets, deposits have performed better than equities in those markets during those periods.
> _
> Or to put it another yet another way...
> 
> _During most periods, most equity markets have outperformed deposits.
> _
> Unfortunately, while we can see what happened in the past, we can't predict the future, other than to say that markets will go up and markets will go down.
> 
> 
> 
> Brendan



Agree fully with that general philosophy but the poster I was replying to and who is taking his lead from Peter browne? , is both  lamenting the caution of irish investors and advancing the case for European equities over U. S stocks.

That has been a very poor strategy for a long time now,Europe is a shaky place.


----------



## cremeegg

elacsaplau said:


> I am not blowing my own trumpet - but back in August, in the first response to the OP, i.e. post 2, I predicted what we have actually seen in markets since then. It's there in black and white. I said it.



Sorry Elacsaplau what you said was 



elacsaplau said:


> With market valuations at such elevated positions, there is  a chance that the market could witness a correction, bringing it more in line with historic norms.



And the S&P, which was the subject of post 1 is today down 7.4% since August 22nd. That does not qualify as a correction.


----------



## joe sod

galway_blow_in said:


> European stoxx 600 is below where it was nearly four years ago , savings were a far better return than equities ( u.s excluded )
> 
> Stocks have been dreadful in Europe bar the period 2012-2015
> 
> Irish people are not at all the exception when it comes to aversion to equity investing  the germans are no different and they keep away from property too.
> 
> Stock investment for individuals is far bigger in America.



I read a very good comment on seekingalpha (mainly US based) under an article promoting investing in european equities due to the value available in late 2017, it basically answered in a succinct way why the european markets have done so badly.

"There are powerful social forces in Europe which treat notionally "private" businesses as a species of social property. Whatever the pretexts, compelling corporations to accept workers on boards must necessarily involve their pursuing their interests, which are maximizing employment levels and wages, not maximizing profitability. Just look at Macron's, and formerly even Hollande's, challenges in seeking to liberalize constricting employment law. Look at what happens when European companies attempt to move production out of high-cost countries.

In other words, investing in Europe involves real and ,long-term headwinds. If I buy shares in a corporation, I want an interest in a business which is pro-rata my own, not one which is, even in a significantly undefined manner, held or managed on behalf on society at large."


----------



## galway_blow_in

joe sod said:


> I read a very good comment on seekingalpha (mainly US based) under an article promoting investing in european equities due to the value available in late 2017, it basically answered in a succinct way why the european markets have done so badly.
> 
> "There are powerful social forces in Europe which treat notionally "private" businesses as a species of social property. Whatever the pretexts, compelling corporations to accept workers on boards must necessarily involve their pursuing their interests, which are maximizing employment levels and wages, not maximizing profitability. Just look at Macron's, and formerly even Hollande's, challenges in seeking to liberalize constricting employment law. Look at what happens when European companies attempt to move production out of high-cost countries.
> 
> In other words, investing in Europe involves real and ,long-term headwinds. If I buy shares in a corporation, I want an interest in a business which is pro-rata my own, not one which is, even in a significantly undefined manner, held or managed on behalf on society at large."



Good analysis.

Bar thee odd period, on a risk reward basis, you might as well just buy the S+P if passive investing long term.you would not have lost yet up against someone who bought the stoxx 600.


----------



## Gordon Gekko

There’s also less innovation going on in Europe. Where’s the tech? Other than SAP, I’m struggling to think of a large European tech company. Europe seems to be too laden down with struggling banks and old school companies.


----------



## galway_blow_in

Gordon Gekko said:


> There’s also less innovation going on in Europe. Where’s the tech? Other than SAP, I’m struggling to think of a large European tech company. Europe seems to be too laden down with struggling banks and old school companies.




Banks and energy and auto, all low growth.


----------



## joe sod

Gordon Gekko said:


> There’s also less innovation going on in Europe. Where’s the tech? Other than SAP, I’m struggling to think of a large European tech company. Europe seems to be too laden down with struggling banks and old school companies.



well if you are to believe government propaganda its in "silicon docks", obviously i dont buy that for 1 second. But I think the socialism argument that was commented on in the other post is bang on.I know this is a political area now but is europe a slow burn version of the soviet union? Its pretty stark to see the euro stoxx 600 back where it was in 1998 along with the ftse. Even when this subject was brought up in another post, we were "corrected" because the original poster was referring to the S&P 500 not the european index which is a bit strange since we are actually living in europe not the US, its automatically assumed that the "market" is the US one. Its also amazing that even on a dedicated financial information site like this one, nobody is really that interested except for the few posters on this thread.

       Another crucial point, the 1 trillion new euros from ECB quantative easing did not end up in the european stock markets because the market is lower than it was in 2015 when the easing really started, the question is where did these euros end up?

       Having said all that I still think europe will come good from an investment point of view in the short term. Im certainly not an investor in the S&P with the valuations where they are and especially because of the exchange rate with the dollar now.


----------



## galway_blow_in

joe sod said:


> well if you are to believe government propaganda its in "silicon docks", obviously i dont buy that for 1 second. But I think the socialism argument that was commented on in the other post is bang on.I know this is a political area now but is europe a slow burn version of the soviet union? Its pretty stark to see the euro stoxx 600 back where it was in 1998 along with the ftse. Even when this subject was brought up in another post, we were "corrected" because the original poster was referring to the S&P 500 not the european index which is a bit strange since we are actually living in europe not the US, its automatically assumed that the "market" is the US one. Its also amazing that even on a dedicated financial information site like this one, nobody is really that interested except for the few posters on this thread.
> 
> Another crucial point, the 1 trillion new euros from ECB quantative easing did not end up in the european stock markets because the market is lower than it was in 2015 when the easing really started, the question is where did these euros end up?
> 
> Having said all that I still think europe will come good from an investment point of view in the short term. Im certainly not an investor in the S&P with the valuations where they are and especially because of the exchange rate with the dollar now.



Imagine if property prices were @1998 levels ?

Even at the lows in 2012, they were never close to 1998 levels.


----------



## joe sod

galway_blow_in said:


> Imagine if property prices were @1998 levels ?
> 
> Even at the lows in 2012, they were never close to 1998 levels.


 
the issue of the quantitative easing euros not ending up in the stock markets is important, there doesn't seem be much research well not widely available to the public of where it went. Obviously in increased government debt and spending , you only have to look at Ireland  continuing to borrow money because of the artificially low interest rates even with a booming economy now. It's probably the case that the huge social budgets throughout Europe have been propped up by the ecb quantitative easing. If quantitative easing did not happen maybe the whole system would have crashed, maybe they have just bought more time. Going back to the Soviet union comparisons, did the Soviets not do something similar in the 1980s massive spending to keep the populations in the union compliant and quite. Is Europe on the same path ?


----------



## galway_blow_in

joe sod said:


> the issue of the quantitative easing euros not ending up in the stock markets is important, there doesn't seem be much research well not widely available to the public of where it went. Obviously in increased government debt and spending , you only have to look at Ireland  continuing to borrow money because of the artificially low interest rates even with a booming economy now. It's probably the case that the huge social budgets throughout Europe have been propped up by the ecb quantitative easing. If quantitative easing did not happen maybe the whole system would have crashed, maybe they have just bought more time. Going back to the Soviet union comparisons, did the Soviets not do something similar in the 1980s massive spending to keep the populations in the union compliant and quite. Is Europe on the same path ?



I'm too young to remember those days, was twelve when the wall came down, I do try and read up on the final days of the Soviet union and have watched docus on the subject.


----------



## joe sod

galway_blow_in said:


> I'm too young to remember those days, was twelve when the wall came down, I do try and read up on the final days of the Soviet union and have watched docus on the subject.



I'm not an expert on it myself, I was 17 when wall came down. I remember there was alot of stuff on Poland in the 1980s on the news and its resistance to the Soviet system. That's when the Soviets increased spending dramatically to keep the populations happy, originally they did it through brutality in the early years. When the Soviet union collapsed Poland ended up with the debts on its own books and the currency crashed, there was hyperinflation with the zlotty worthless. It's funny that nobody talks about the hyperinflation in Poland in the 90s, it's always Germany 1920s that's referred to. It's interesting that Poland is now putting up.a lot of resistance to increased European control in Poland. Obviously it's no where near the control of the Soviets but there are creeping similarities.


----------



## cremeegg

joe sod said:


> It's funny that nobody talks about the hyperinflation in Poland in the 90s, it's always Germany 1920s that's referred to.



Hyper inflation in Poland didn't last as long, months rather than years. Also before the hyperinflation took effect there was very little available to buy. For example if a new car cost Zl 1,000 in August 1989 it cost Zl 2,500 in Dec 1989, but you couldn't buy a car anyway. All major items were bought by putting your name down and waiting your turn until something became available, maybe 20 years to buy a house. 

Before hyperinflation everyday items were very cheap in terms of wages, but difficult to obtain. People queued for hours to buy sausage, when they finally got their allocation, the actual price was a pittance. If you wanted shoes you went to the shoe shop, they would tell you when there would be a delivery, maybe next week, you came back then and maybe they had received something in your size or maybe not.

After hyperinflation, everything was available, but it was expensive by western standards and hugely expensive in terms of Polish wages.

Poland economic transformation in the early 1990s was a huge achievement, though certain sectors paid a high price.

The present anti-EU sentiment is not as widespread as might appear, it is motivated by the worst type of nationalist paranoia and lack of self confidence.


----------



## joe sod

cremeegg said:


> Before hyperinflation everyday items were very cheap in terms of wages, but difficult to obtain. People queued for hours to buy sausage, when they finally got their allocation, the actual price was a pittance. If you wanted shoes you went to the shoe shop, they would tell you when there would be a delivery, maybe next week, you came back then and maybe they had received something in your size or maybe not



But is there something in this in relation to the housing crisis and what's really happening, there is a lot of demand even more so now because of the expectation that everybody should be housed.
In the Soviet times most production was very Labour intensive, so common goods required a lot more man hours to produce than in today's largely automated production systems. In  the communist system there was no incentive to work hard or to work in dirty industries because everyone was paid the same therefore productivity was low.
There is one big exception to this today and that is in housing and construction, it takes an awful lot of man hours to construct a house and it still does today, automation has no real effect in construction. Of course there is the issue of land, but getting workers into this labour intensive and fairly dirty industry is a big issue. Just like in the Soviet times nobody wanted to work on the collective farms or down the mines because there was no reward unless you were forced into like earlier during Stalinism.


----------



## galway_blow_in

cremeegg said:


> Hyper inflation in Poland didn't last as long, months rather than years. Also before the hyperinflation took effect there was very little available to buy. For example if a new car cost Zl 1,000 in August 1989 it cost Zl 2,500 in Dec 1989, but you couldn't buy a car anyway. All major items were bought by putting your name down and waiting your turn until something became available, maybe 20 years to buy a house.
> 
> Before hyperinflation everyday items were very cheap in terms of wages, but difficult to obtain. People queued for hours to buy sausage, when they finally got their allocation, the actual price was a pittance. If you wanted shoes you went to the shoe shop, they would tell you when there would be a delivery, maybe next week, you came back then and maybe they had received something in your size or maybe not.
> 
> After hyperinflation, everything was available, but it was expensive by western standards and hugely expensive in terms of Polish wages.
> 
> Poland economic transformation in the early 1990s was a huge achievement, though certain sectors paid a high price.
> 
> The present anti-EU sentiment is not as widespread as might appear, it is motivated by the worst type of nationalist paranoia and lack of self confidence.



Polish guy I know tells me that while not Spanish levels, regional division is an issue.

Where he is from, people are viewed as German by many including the current government.


----------



## opexlong

S&P 500 now down 17.54% from its September 20th peak. Nasdaq and Russell 2000 in a bear.

Worst December for stocks since 1931(so far). Worst quarter since Q4 2008.


----------



## galway_blow_in

opexlong said:


> S&P 500 now down 17.54% from its September 20th peak. Nasdaq and Russell 2000 in a bear.
> 
> Worst December for stocks since 1931(so far). Worst quarter since Q4 2008.



Yet ( unlike Europe)  still way above where they were in 2015


----------



## joe sod

moneymakeover said:


> The total market capitalisation of s&p500
> 
> In 1957 it was 0.17 trillion
> 1980 1 trillion
> Today 20 trillion
> 
> The question is: is it justified?



year 2000 16 trillion

this is from another thread but maybe it is more relative to this thread, The above increase in capitalisation of the S&P 500 looks dramatic, yet when you include the figure for year 2000 capitalisation of 16 trillion almost 20 years ago it takes the drama out of the statistic. Almost all of the charts showing the dramatic rise of the S&P 500 always  use 2009 as the starting point. If they used year 2000 or even 1990 a completely different picture is shown. Then it is obvious that the big inflation happened in the 1990s, the last 20 years has basically been a rollercoaster with the S&P 500 and the current big sell off approaching year 2000 peak yet again.


----------



## joe sod

update with the recent big sell off last few days S&P index was at 2214 points in august 2000, now its at 2351 points Dec 24 2018 almost 20 years later. So even the S&P 500 now back at year 2000 levels almost. Does this thread really stand up as the "longest bull market in history" when the best performing market in the world namely the US market is back where it was almost 20 years ago.


----------



## 1dave123

?

As per yahoo Finance ....... S&P 500

01/08/2000 was 1438.  On 31/8/2000 it was 1517.  On 24/12/2018 it was 2351.


----------



## joe sod

1dave123 said:


> ?
> 
> As per yahoo Finance ....... S&P 500
> 
> 01/08/2000 was 1438.  On 31/8/2000 it was 1517.  On 24/12/2018 it was 2351.



Im taking the data from macrotrends showing the performance of S&P 500 over 90 years. There is a caveat, it is inflation adjusted so the index for past years like 2000 all the way back to 1930 is readjusted to reflect todays prices

https://www.macrotrends.net/2324/sp-500-historical-chart-data


----------



## landlord

joe sod said:


> S&P index was at 2214 points in august 2000,



You might want to look at the charts again. The s&p is now back at where it was near the start of 2017.


----------



## galway_blow_in

joe sod said:


> update with the recent big sell off last few days S&P index was at 2214 points in august 2000, now its at 2351 points Dec 24 2018 almost 20 years later. So even the S&P 500 now back at year 2000 levels almost. Does this thread really stand up as the "longest bull market in history" when the best performing market in the world namely the US market is back where it was almost 20 years ago.



Your way off!, the s+p wasn't even @ 1600 in the year 2000.


----------



## joe sod

galway_blow_in said:


> Your way off!, the s+p wasn't even @ 1600 in the year 2000.


 
yes, but its the inflation adjusted charts im talking about as I explained in above post. It re adjusts year 2000 level to reflect todays prices and 18 years of inflation.



"The charts require little explanation. So far the 21st Century has not been especially kind to equity investors. Yes, markets do bounce back, but often in time frames that defy optimistic expectations."

There is still a positive return but only when you include dividends and reinvesting them. This is from April 2018 levels so also does not include the big sell off over the last few months.


----------



## Sarenco

FWIW, the S&P500 has just had its best January since 1987.

Again, not predictive of anything but interesting nonetheless (IMO).


----------



## Connard

joe sod said:


> yes, but its the inflation adjusted charts im talking about as I explained in above post. It re adjusts year 2000 level to reflect todays prices and 18 years of inflation.
> 
> 
> 
> "The charts require little explanation. So far the 21st Century has not been especially kind to equity investors. Yes, markets do bounce back, but often in time frames that defy optimistic expectations."
> 
> There is still a positive return but only when you include dividends and reinvesting them. *This is from April 2018 levels so also does not include the big sell off over the last few months.*



The S&P 500 is higher right now than it was in April 2008.


----------



## joe sod

Sarenco said:


> FWIW, the S&P500 has just had its best January since 1987.



yes but it followed the worst december since 1929 another poster pointed out before. Ultimately it doesnt matter because they have cancelled each other out as irrelevant noise. I think in the era of computer trading looking for patterns from the past before computer trading was a factor is now a useless activity. Because the very fact that you have computers trading is a huge factor in itself therefore when there is volatility it is much more rapid and violent than in the past.


----------



## Sarenco

The longest bull market in history has just celebrated its 10th anniversary!

In the wake of the financial crisis, the S&P hit an intraday low of 666 (eerie, huh?) on 6 March 2009 and has since increased by over 300%, without a 20%+ drawdown.

I don't think that's predictive of what might happen in the future but I think it's interesting nevertheless.


----------



## joe sod

Sarenco said:


> The longest bull market in history has just celebrated its 10th anniversary!
> 
> In the wake of the financial crisis, the S&P hit an intraday low of 666 (eerie, huh?) on 6 March 2009 and has since increased by over 300%, without a 20%+ drawdown.
> 
> I don't think that's predictive of what might happen in the future but I think it's interesting nevertheless.



On june 1 2000 S&P was at 1460, today its at 2748 almost 20 years later, an 88% increase on the june year 2000 figure. Both statistics 88% increase from year 2000, and 300% from 2009 are correct, but it just shows you how misleading quoting statistics in isolation are.


----------



## Sarenco

joe sod said:


> On june 1 2000 S&P was at 1460, today its at 2748 almost 20 years later, an 88% increase on the june year 2000 figure. Both statistics 88% increase from year 2000, and 300% from 2009 are correct, but it just shows you how misleading quoting statistics in isolation are.


What's your point?  That your start and end point are vitally important?  Of course they are!

Why choose 1 June 2000 as your starting point?  Why not, say, 1 June 1990?  Or maybe 1 June 1980?

The point I'm making is that we have just lived through a period of extraordinary calm in stock market history.  10 years without a single 20% drawdown?  That's unprecedented!

What will happen in the future?  I've no idea.


----------



## moneymakeover

What is your point?
That you are wrong?


https://amp.theguardian.com/business/2018/dec/21/stock-markets-worst-week-in-decade-nasdaq-dow

And
https://www.google.com/amp/s/www.cn...he-numbers-sp-500-falls-into-bear-market.html

December 24
S&P is 20.06% below its intraday all-time high of 2,940.91 from Sept. 21 closing in bear market levels


----------



## galway_blow_in

moneymakeover said:


> What is your point?
> That you are wrong?
> 
> 
> https://amp.theguardian.com/business/2018/dec/21/stock-markets-worst-week-in-decade-nasdaq-dow
> 
> And
> https://www.google.com/amp/s/www.cn...he-numbers-sp-500-falls-into-bear-market.html
> 
> December 24
> S&P is 20.06% below its intraday all-time high of 2,940.91 from Sept. 21 closing in bear market levels



Does it not need to close down 20 % in order to officially be recorded as a bear market ?

Does intra day count ?


----------



## Sunny

moneymakeover said:


> What is your point?
> That you are wrong?
> 
> 
> https://amp.theguardian.com/business/2018/dec/21/stock-markets-worst-week-in-decade-nasdaq-dow
> 
> And
> https://www.google.com/amp/s/www.cn...he-numbers-sp-500-falls-into-bear-market.html
> 
> December 24
> S&P is 20.06% below its intraday all-time high of 2,940.91 from Sept. 21 closing in bear market levels



How does any of that make Sarenco wrong????


----------



## moneymakeover

.


----------



## Sarenco

galway_blow_in said:


> Does it not need to close down 20 % in order to officially be recorded as a bear market ?


That's the generally accepted convention.

But, if you want to be _really_ nit-picky,  the S&P has not had a drawdown at any close of 20% or more from any previous high for 10 years now.  That's unprecedented.


----------



## RedOnion

Sarenco said:


> if you want to be _really_ nit-picky


As if anyone around here would do that!...


----------



## galway_blow_in

Sarenco said:


> That's the generally accepted convention.
> 
> But, if you want to be _really_ nit-picky,  the S&P has not had a drawdown at any close of 20% or more from any previous high for 10 years now.  That's unprecedented.



Your just stating a fact, there were no 20% drawdowns in the s+p

The likes of the DAX however has seen 20 % plus drawdowns almost every year this past five

Europe is very volatile by comparison


----------



## Sarenco

To be fair GBI, the DAX is comprised of only 30 stocks - financial theory suggests that should be more volatile than a more broadly diversified index, such as the S&P.

But you're right - US stocks have significantly outperformed European stocks over the last 10 years.

The direct opposite of what happened over the previous 10 years, when US stocks went nowhere.

What's going to happen over the next 10 years?  I've no idea.  

Best plan, IMO, is to hedge your bets.


----------



## joe sod

Sarenco said:


> What's your point? That your start and end point are vitally important? Of course they are!
> 
> Why choose 1 June 2000 as your starting point? Why not, say, 1 June 1990? Or maybe 1 June 1980?



because you chose 6 march 2009 as your starting point, the deepest trough of the worst financial crash since the 1930s as your starting point, thats why. On the surface a 300% increase in S&P500 since 2009 seems dramatic, an 88% increase since year 2000 is not. 
And thats the best performing stock market in the world , what about europe back in recession again with european indices gone nowhere in 20 years.


----------



## galway_blow_in

joe sod said:


> because you chose 6 march 2009 as your starting point, the deepest trough of the worst financial crash since the 1930s as your starting point, thats why. On the surface a 300% increase in S&P500 since 2009 seems dramatic, an 88% increase since year 2000 is not.
> And thats the best performing stock market in the world , what about europe back in recession again with european indices gone nowhere in 20 years.



I know it's sectoral but financials are an important component of the European stoxx 600

Read an extraordinary piece a while back in which the author referred to an investor who on the day the euro came into existence  embarked on a twenty year plan to buy the European banking index every day for twenty years

He lost almost 99% of the time

I'm not good at copy and paste with my phone but it's on reuters, " euro curse, bankings lost decades"


----------



## joe sod

galway_blow_in said:


> Read an extraordinary piece a while back in which the author referred to an investor who on the day the euro came into existence embarked on a twenty year plan to buy the European banking index every day for twenty years
> 
> He lost almost 99% of the time



but who in reality would have done that nobody, it exaggerates the point that investing in european financials has been a terrible investment for a very long time, any irish investors in irish banks can attest to that. Still some have profited from it like wilbur ross.

Also the point by sarenco of the 300% gain in the S&P since 2009, very few investors would have been buying in march 2009 and probably none of those that did are still invested in the S&P today, they are probably investing in european financials now.


----------



## Sarenco

joe sod said:


> because you chose 6 march 2009 as your starting point, the deepest trough of the worst financial crash since the 1930s as your starting point, thats why. On the surface a 300% increase in S&P500 since 2009 seems dramatic, an 88% increase since year 2000 is not.


You seem to have completely misunderstood my point.

I never suggested that a return of over 300% since the 2009 trough was particularly dramatic.  The point is that the _length_ of this bull market is unprecedented.

You're right, stock market returns since the turn of the century have been pretty underwhelming.  But 18 years is not a particularly long time in stock market terms.


----------



## galway_blow_in

joe sod said:


> but who in reality would have done that nobody, it exaggerates the point that investing in european financials has been a terrible investment for a very long time, any irish investors in irish banks can attest to that. Still some have profited from it like wilbur ross.
> 
> Also the point by sarenco of the 300% gain in the S&P since 2009, very few investors would have been buying in march 2009 and probably none of those that did are still invested in the S&P today, they are probably investing in european financials now.



It's an isolated quirky story but I thought it starkly illustrated just how dire that particular class of European equities have been for a generation


----------



## galway_blow_in

Sarenco said:


> You seem to have completely misunderstood my point.
> 
> I never suggested that a return of over 300% since the 2009 trough was particularly dramatic.  The point is that the _length_ of this bull market is unprecedented.
> 
> You're right, stock market returns since the turn of the century have been pretty underwhelming.  But 18 years is not a particularly long time in stock market terms.



You don't think eighteen years is a long time to be invested in the market ?


----------



## Sarenco

galway_blow_in said:


> You don't think eighteen years is a long time to be invested in the market ?


I don't.


----------



## joe sod

Sarenco said:


> You're right, stock market returns since the turn of the century have been pretty underwhelming. But 18 years is not a particularly long time in stock market terms.



thats fair enough, as a result would you be investing in global etfs (ex USA) (like Vanguard world ex USA etf) since the performance has been poor since the turn of the century, you could hardly say you are investing in overpriced assets. Even the much maligned irish property market has nearly doubled since 2000, so surely a low risk investor would be better off investing in global ex USA etfs like vanguard than irish property?


----------



## Sarenco

joe sod said:


> thats fair enough, as a result would you be investing in global etfs (ex USA) (like Vanguard world ex USA etf) since the performance has been poor since the turn of the century, you could hardly say you are investing in overpriced assets.


I don't see how you could reach that conclusion.

You can't conclude anything about the value of an asset based on its performance over some random time period.


----------



## galway_blow_in

Sarenco said:


> I don't.



What duration do you consider a long time ?


----------



## Sarenco

Some foundations, sovereign funds, etc. have infinite time horizons - they think in decades, not years.


----------



## galway_blow_in

Sarenco said:


> Some foundations, sovereign funds, etc. have infinite time horizons - they think in decades, not years.



I meant within the context of an individual investor


----------



## Sarenco

I'm not sure I really understand your question but I guess it would be reasonable to consider something like 30-40 years to be "long term" in the context of an individual investor's investment horizon.  

Over that sort of time horizon, the probability (but not certainty) of stocks outperforming fixed-interest investments becomes fairly overwhelming.


----------



## galway_blow_in

Sarenco said:


> I'm not sure I really understand your question but I guess it would be reasonable to consider something like 30-40 years to be "long term" in the context of an individual investor's investment horizon.
> 
> Over that sort of time horizon, the probability (but not certainty) of stocks outperforming fixed-interest investments becomes fairly overwhelming.



I suppose it would be best to tie that long term horizon to the concept of pension investment from an early age, when you take a multi decade - working life time frame approach , you can be pretty much guaranteed to have made a positive decision in putting money in the markets

Thinking you might hit the jackpot some way or other is in all liklihood sheer folly, wise investment choices are pretty boring


----------



## joe sod

opexlong said:


> I'm up +25% these last few months thanks to the big market drops but I don't recommend an inexperienced investor try to "time" or short anything. I'm taking calculated risks which aren't appropriate for everyone.



you posted this on dec 8 last when the market was experiencing heavy sell offs and most investors were down substantially, obviously you had the right strategy to deal with that particular sell off and you profited from it. Just wondering how your investment strategy has coped with the incredible market recovery so far this year. Are you still bearish and if you are you must have given back all those gains? Obviously brexit is still a big unknown but brexit is proving itself not to be a global phenomenon but localised to irish and british investors, in any case because of the long drawn out process the market has largely digested brexit.


----------



## Gordon Gekko

In my view, far too much effort is spent trying to time the market, trying to be too smart with the use of ETFs etc, and focussing too much on costs.

I’ve a very simple strategy:

- Retain 6 months’ worth of net salary in cash spread across two Credit Union accounts

- Max out my pension contributions and my wife’s AVCs; all of the contributions go into Zurich Life’s International Equity fund (0.50% for me, 0.75% for her). We’re going to stay invested in the same fund forever.

- Use any excess cash to pay down the mortgage

That’s it, nothing more complicated than that.


----------



## galway_blow_in

European economy appears to be inches from recession, America more or less carrying global economy


----------



## joe sod

galway_blow_in said:


> European economy appears to be inches from recession, America more or less carrying global economy



Yea but Europe has been priced for recession for years, it was clearly wrong to buy into the extreme pessimism in December as even European stocks have had a big recovery from that. Look how pessimistic the scenario for buying Irish property was back in 2010 to 2014, there were a million reasons not to invest then .


----------



## lledlledlled

Gordon Gekko said:


> In my view, far too much effort is spent trying to time the market, trying to be too smart with the use of ETFs etc, and focussing to much on costs.
> 
> I’ve a very simple strategy:
> 
> - Retain 6 months’ worth of net salary in cash spread across two Credit Union accounts
> 
> - Max out my pension contributions and my wife’s AVCs; all of the contributions go into Zurich Life’s International Equity fund (0.45% for me, 0.75% for her). We’re going to stay invested in the same fund forever.
> 
> - Use any excess cash to pay down the mortgage
> 
> That’s it, nothing more complicated than that.



For a little bit of additional diversity at no extra cost, would you not invest your wife's pension into a different fund than yours?


----------



## Gordon Gekko

lledlledlled said:


> For a little bit of additional diversity at no extra cost, would you not invest your wife's pension into a different fund than yours?



Because I like the fund and I like the company. Their International Equity fund effectively provides the equity content for all of their multi-asset funds. My father got great results from them over the years as Eagle Star and I like how they do things.

My other choices were Irish Life or New Ireland funds, and my wife needed an AVC PRSA. I don’t want a Self-Administered scheme. Rather than overthink it, I’ve chosen to go this route. I don’t think we’ll regret it.


----------



## Sarenco

So, the S&P500 reached a new all time high this week - it's up 17% so far this year.

Pretty incredible.

So what happens next?  Who knows.

But it might be time to start thinking about taking some risk off the table - it's starting to look very bubbly to me.


----------



## joe sod

Sarenco said:


> So, the S&P500 reached a new all time high this week - it's up 17% so far this year.
> 
> Pretty incredible.
> 
> So what happens next?  Who knows.
> 
> But it might be time to start thinking about taking some risk off the table - it's starting to look very bubbly to me.



But I thought you did not have any risk on the table in the first place, Sarenco. You were bearish last December even at the height of the Christmas sell off. It is true what you say about the incredibly long bull market, but remember we have had the unprecedented bull market in bonds since 1982. Also the long global bull market in property. If it all tanks there maybe no safe havens maybe gold and silver.
Robert shiller was talking about this topic, the very long bull market, but he added the caveat that it was coming off the deepest recession since the 1930s. He also said that this bull market including property (actually much more dangerous), is unique because of the lack of euphoria that normally associates with such markets, it's not 2005 or the 1920s, the man on the street is not excited like he was in other times. There is a wall of fear out there and incomes are not rising like they did before. He is much more concerned about the rise of populism across the world, the brexit vote and other stuff going on


----------



## Sarenco

I don't remember feeling particularly bearish last December.  I certainly didn't change the asset allocation within my pension fund, which is predominantly invested in global equities - and I don't see that changing anytime soon.

However, I think I might now dial back the allocation to equities somewhat and marginally bump up the allocation to bonds.  Nothing too dramatic.

I certainly won't be investing in PMs.

I'm not sure I agree that there is a lack of euphoria in the US markets at the moment - the pricing of some recent IPOs would suggest otherwise.

Why you think I have no risk on the table is beyond me.


----------



## joe sod

Presumably if you are putting more in bonds, you are choosing very short dated ones.

Warren buffet had a great quote recently,  the more time you invest money in stocks, the less risky they become, but the longer the time frame on a bond the more risky they become.

Basically investing money in long dated bonds in this ultra low interest environment is madness. It also explains why  Irish treasury management are trying to get as much long dated bonds out there now.


----------



## moneymakeover

When the idea of bonds was suggested, was that in relation to US corporate bonds?

Because with European rates so low it's hard to see any point in investing in European bonds


----------



## RedOnion

moneymakeover said:


> When the idea of bonds was suggested, was that in relation to US corporate bonds?
> 
> Because with European rates so low it's hard to see any point in investing in European bonds


You realise investing in USD bonds, but hedging your FX exposure, you're no better off than investing in EUR bonds?


----------



## galway_blow_in

joe sod said:


> Presumably if you are putting more in bonds, you are choosing very short dated ones.
> 
> Warren buffet had a great quote recently,  the more time you invest money in stocks, the less risky they become, but the longer the time frame on a bond the more risky they become.
> 
> Basically investing money in long dated bonds in this ultra low interest environment is madness. It also explains why  Irish treasury management are trying to get as much long dated bonds out there now.



If investing in long duration bonds is a bad idea, why do you think  there is  so much demand?

Bonds have been in a bull market since the early eighties


----------



## joe sod

galway_blow_in said:


> If investing in long duration bonds is a bad idea, why do you think  there is  so much demand?
> 
> Bonds have been in a bull market since the early eighties



Correct they have , and the Fed and the ecb are not able to get interest rates back up for this very reason, because so much money is already invested in them, they dwarf the global stock markets in money invested. Also the over indebted countries of the world, like Ireland need to be able to roll over their bonds as they mature. That process hit a big roadblock in 2009.
Why is there such a demand for them, because of their perceived safety, the global stock markets barring the US have not had the great returns that they historically had in comparison. The bonds were not defaulted on by and large in 2009, the central banks saved the day and created a huge artificial demand for them. That added to their "safe haven" status. If the bonds of the European governments or European banks were defaulted on back then, I doubt people would be piling in to them as "safe havens" now. They will only be safe havens once interest rates stays low and there is no inflationary shock, 2 big ifs.


----------



## Sarenco

joe sod said:


> Presumably if you are putting more in bonds, you are choosing very short dated ones.


No, not particularly.

The bond funds within my pension pretty closely reflect the aggregate, investment grade Eurozone bond market as a whole.  Last time I checked, that has an effective duration of around 7 years and a yield-to-maturity of around 0.5%.  I don't see any point in speculating on future interest rates - short or long-term.

I'm not looking to the fixed-income side of the portfolio to provide a meaningful return - I'm simply trying to deleverage the equity portfolio somewhat.


----------



## RedOnion

Sarenco said:


> I don't see any point in speculating on future interest rates - short or long-term.


Why not? Surely the largest, most liquid asset class has been completely mispriced by the entire market, and you know better than them?...


----------



## joe sod

RedOnion said:


> Why not? Surely the largest, most liquid asset class has been completely mispriced by the entire market, and you know better than them?...



All markets can be mispriced, it maybe the biggest most liquid asset class, because interest rates have fallen since 1982 essentially, 1 trillion has moved from global equity funds to global bond funds since 2008 because people were so spooked by that and because very few bonds were actually defaulted on, but that was very close!
The bond markets have not been tested since the 1970s which is beyond the memories of the financial participants of today. The oil shock and rising interest of that era were bad for stocks but very bad for bonds. At least you can wait for stocks to recover, a 30 year bond at 1.5 percent or whatever will not recover because it will always only pay 1.5 percent , not good in a high interest rate , high inflation era. Nobody predicted the oil crisis of the 70s. Nobody knows what could cause an inflationary shock, maybe a trade war with China getting out of hand


----------



## Sarenco

Corporate debt is at fairly unprecedent levels at the moment.

So how would an unanticipated spike in interest rates affect stock prices?  It would hardly be positive.

I don't hold long-term bonds in isolation - I hold long-term bonds in accordance with their market weight.

I've told you my modest plan of action.  What would you recommend?


----------



## Andrew365

I generally just purchase x amount each month and get the ups and the downs though recently it has been a lot more ups than downs on a monthly basis over the last 5 years. 


The market is a very different place vs the pre-financial crisis and in true crisis terms they are generally unforeseen. My view is that it is likely to be some form of cyber security fraud and liquidity issue that sees the markets roil again.


----------



## joe sod

Andrew365 said:


> The market is a very different place vs the pre-financial crisis and in true crisis terms they are generally unforeseen. My view is that it is likely to be some form of cyber security fraud and liquidity issue that sees the markets roil again.



it maybe in a different place, however if you strip out the US market, the global stock markets have not performed that great at all and still are not at 2008 valuations , for example the Vanguard World ex US ETF was worth $61 in 2008, it is now valued at $50. Yes the US is a large part of the global economy but what about China, the enormous growth, the mega cities that were built, the 100s of millions that became middle class in the last decade, yet the stock markets do not reflect that. Even the vanguard emerging markets etf which would have a bigger china component is not at 2008 levels and is off by the same amount.
In fairness the US dollar was worth a lot less in 2008 than today


----------



## galway_blow_in

Pretty rough month gone by, very predictable though, run since Xmas was incredible


----------



## joe sod

galway_blow_in said:


> Pretty rough month gone by, very predictable though, run since Xmas was incredible



if you strip out the big sell off at christmas and the subsequent recovery, the market has been doing nothing really. Also if you exclude the US market it has been not been good investing. I think there is alot of socialism and political interference going on , look at the UK energy companies at multi year lows due to fears that corbyn ,god forbid, if he gets near power will re nationalise everything


----------



## galway_blow_in

joe sod said:


> if you strip out the big sell off at christmas and the subsequent recovery, the market has been doing nothing really. Also if you exclude the US market it has been not been good investing. I think there is alot of socialism and political interference going on , look at the UK energy companies at multi year lows due to fears that corbyn ,god forbid, if he gets near power will re nationalise everything



It's often better in my opinion to invest a small amount but trade, was quite predictable that we would not see five months straight of gains, also predictable that trump would shoot his mouth off at the Chinese

European markets are a perpetual loser


----------



## EmmDee

joe sod said:


> it maybe in a different place, however if you strip out the US market, the global stock markets have not performed that great at all and still are not at 2008 valuations , for example the Vanguard World ex US ETF was worth $61 in 2008, it is now valued at $50. Yes the US is a large part of the global economy but what about China, the enormous growth, the mega cities that were built, the 100s of millions that became middle class in the last decade, yet the stock markets do not reflect that. Even the vanguard emerging markets etf which would have a bigger china component is not at 2008 levels and is off by the same amount.
> In fairness the US dollar was worth a lot less in 2008 than today



The Vanguard FTSE World ex US ETF (VEU) - as opposed to the Vanguard World ex US -  is tracking the FTSE World index rather than being a broader representation of world markets - had a high of $59 in 2008 and a low of $26 so you could equally say that you could have doubled your money if you invested in 2008. You also haven't included dividends in your calculation. VEU paid approx. $1.5 in 2018 for example ($8.5 in last 6 years - as far back as I have ready access to). 

Sticking with Vanguard - If you put $100 in at launch with the Vanguard World ex US ("VAU") when it launched in May 2009, it would be worth approx. $210 now

I'm not sure which emerging market ETF you are referring to - the Vanguard FTSE Emerging Market ETF ("VWO") has a reported 10 year cumulative total return of 58%


----------



## galway_blow_in

EmmDee said:


> The Vanguard FTSE World ex US ETF (VEU) - as opposed to the Vanguard World ex US -  is tracking the FTSE World index rather than being a broader representation of world markets - had a high of $59 in 2008 and a low of $26 so you could equally say that you could have doubled your money if you invested in 2008. You also haven't included dividends in your calculation. VEU paid approx. $1.5 in 2018 for example ($8.5 in last 6 years - as far back as I have ready access to).
> 
> Sticking with Vanguard - If you put $100 in at launch with the Vanguard World ex US ("VAU") when it launched in May 2009, it would be worth approx. $210 now
> 
> I'm not sure which emerging market ETF you are referring to - the Vanguard FTSE Emerging Market ETF ("VWO") has a reported 10 year cumulative total return of 58%



Irish investors cannot buy those etfs anymore


----------



## EmmDee

galway_blow_in said:


> Irish investors cannot buy those etfs anymore



I wasn't really suggesting them - the issue raised was on the relative performance of world markets. I was just cautioning on the use of ETF's as a proxy to measure that and if so, being careful to avoid "data mining" and bias confirmation.


----------



## joe sod

EmmDee said:


> The Vanguard FTSE World ex US ETF (VEU) - as opposed to the Vanguard World ex US - is tracking the FTSE World index rather than being a broader representation of world markets - had a high of $59 in 2008 and a low of $26 so you could equally say that you could have doubled your money if you invested in 2008



yes i agree, that you are still doing well in VEU if you invested in 2008/2009, but thats a theoretical point because very few investors were investing in 2008 in any asset, an awful lot of people were selling shares, some were just sitting tight but very few buyers. The people that sat out 2008 have recovered their money by now ( but only because of dividends and lots of patience and nail biting, oh and you you also had to pay more taxes on those dividends)
The topic of this post "the longest bull market in history" only applies to the US and actually only to small number of FAANG stocks, evertyhing else from europe to asia to emerging markets has been a very slow anemic recovery. The quantitive easing euros created by ECB havn't gone into the stock markets but into the bond and property markets, We are very far away from 1990s return on stocks and shares


----------



## Sarenco

Here's the original post -


Sarenco said:


> I think it's worth noting that as of yesterday, 22 August 2018, *the S&P500 *recorded its longest bull market in history - 3,453 days without a correction of 20% or more.


Very clear what index was being referenced.


----------



## Sarenco

The S&P500 has just closed at yet another all-time high ahead of the 4th of July holiday.

The unprecedented length of this bull market really is extraordinary.  Run bull, run!


----------



## joe sod

Sarenco said:


> The unprecedented length of this bull market really is extraordinary. Run bull, run!



also the unprecendented low interest rates going back to 1982, even at almost 0 interest rates money is not flowing from bonds to stocks which is the normal pattern in stock market bulls. Yes the US stock market has gone up but most of that quantitive easing dollars , euros and yen has not gone into stocks , its still in bonds or gone back to property. If there is another stock market crash , there will also be rush to sell the riskier bonds and this will crescendo throughout the bond markets and wont be contained like in 2008. The bond market is where the real danger lies because it is enormous and dwarfs global stock markets


----------



## Andrew365

S&P500 just broke 3,000 for the first time.... in the words of Bobby Axelrod its been a helluva ride


----------



## MrEarl

With rates likely to remain extremely low, there's potential for the markets to go higher in the next 12 months ... although that assumes that Trump, Boris etc. don't cause massive problems during the same period.


----------



## Sarenco

Yes.  But if it's in the press, it's in the price...

I started this thread almost a year ago to record something unprecedented.  And on it goes...

I've no idea what's going to happen tomorrow but we are living through something that's never happened before,  How to react to that is obviously up to each individual investor.

I'm starting to feel cautious (while keeping the majority of my retirement savings in global equities).

What are you doing?


----------



## joe sod

Andrew365 said:


> S&P500 just broke 3,000 for the first time.... in the words of Bobby Axelrod its been a helluva ride



still need to keep things in perspective, the ftse 100 at 7500 now but was around the same level in year 2000 before the dot com bust 20 years ago, the iseq is at 6250 but was at 10000 back in 2008 before the banking collapse. 
Yes the US stock market has been the star performer and it now is valued at 30 trillion, however the US bond market has grown even larger over the last 20 years and is now at 45 trillion total valuation even at such historically low interest rates.


----------



## Andrew365

joe sod said:


> still need to keep things in perspective, the ftse 100 at 7500 now but was around the same level in year 2000 before the dot com bust 20 years ago, the iseq is at 6250 but was at 10000 back in 2008 before the banking collapse.
> Yes the US stock market has been the star performer and it now is valued at 30 trillion, however the US bond market has grown even larger over the last 20 years and is now at 45 trillion total valuation even at such historically low interest rates.



Is that not because of record low interest rates makes in incredibly cheap for companies to issue debt which is lapped up from investors seeking yield. Much more profitable than using their own cash to fund growth etc?


----------



## Andrew365

Sarenco said:


> Yes.  But if it's in the press, it's in the price...
> 
> I started this thread almost a year ago to record something unprecedented.  And on it goes...
> 
> I've no idea what's going to happen tomorrow but we are living through something that's never happened before,  How to react to that is obviously up to each individual investor.
> 
> I'm starting to feel cautious (while keeping the majority of my retirement savings in global equities).
> 
> What are you doing?



Depends on your time to retirement? I have quite a long time 30+ years to retirement so I am still bullish on Equities and should have enough time to ride 2 more cycles. If it was less than 10 years I would be looking to see if my retirement goals have been met and if so start switching into a less risky split.


----------



## joe sod

Andrew365 said:


> Is that not because of record low interest rates makes in incredibly cheap for companies to issue debt which is lapped up from investors seeking yield. Much more profitable than using their own cash to fund growth etc?



yes and also incredibly cheap for governments including ireland to keep spending and they have no problem finding people to lend them this money even at ridiculously low interest rates. Yes the borrowers are acting rationally by taking this incredibly cheap money, but are the lenders ??


----------



## Andrew365

joe sod said:


> yes and also incredibly cheap for governments including ireland to keep spending and they have no problem finding people to lend them this money even at ridiculously low interest rates. Yes the borrowers are acting rationally by taking this incredibly cheap money, but are the lenders ??



Yes they are because they have very tight capital requirements.


----------



## joe sod

Andrew365 said:


> Yes they are because they have very tight capital requirements.



who are "they" the banks you mean?, so they are mandated to lend to for example  the irish government money for 10 years and only get 0.25% interest !! is it any wonder the banks throughout europe are in big trouble. Obviously the whole thing is set up to keep highly indebted governments in business. You could argue that the bond markets are now providing a social service


----------



## Sarenco

So your concern is that a spike in interest rates might cause borrowers to default.  Right?

What would that do to stock prices if corporates have loaded up on cheap debt to fund operations, buy back shares, etc?

I'm really struggling to understand what point you are trying to make.


----------



## joe sod

@Sarenco, in a word yes, the two assets are inextricably linked now, therefore if interest rates rise there is no safety in bonds. Therefore if it is still in the central banks control they can't raise interest rates because of what it will do to the bond markets. even if inflation goes up they will pretend its not happening. look at the Fed even with booming US economy and record low unemployment they have stopped raising interest rates and are reducing them again. The play book has been changed since the financial crisis because lowering interest rates should not cause money to flow into bonds it should be flowing out of bonds. The question is why are "investors" so willing to lend money even at negative interest rates, there is no precedence for this?

You posed the question about the "longest bull market in history" being unprecedented, but also the record money in bonds also unprecedented, the record low interest rates also unprecedented and this flow of money into bonds going all the way back to 1982, also unprecedented.


----------



## Andrew365

joe sod said:


> who are "they" the banks you mean?, so they are mandated to lend to for example  the irish government money for 10 years and only get 0.25% interest !! is it any wonder the banks throughout europe are in big trouble. Obviously the whole thing is set up to keep highly indebted governments in business. You could argue that the bond markets are now providing a social service



The banks throughout Europe are not in Big Trouble. What is actually happening is that Banks are struggling to make their target returns due to low interest rates and the amount of capital they have to hold now vs 2008 and the amount of extra regulation that controls the type of lending that they do. Banks will not have concentrated exposure to one industry or one client and the amount they do is stress tested to ensure they have enough capital to withstand if the market goes belly up. Actually what is happening is that Banks are moving back to more of a utility that should not be making huge amounts of money and thus they are in a transition phase and that is why we are seeing job cuts. It is no different to factory works losing jobs due to automation and efficiencies etc, it is part of the business cycle.

The concern across the market is the huge amount of corporate debt especially in the US in the BBB high yield and CLO (Collateralized Loans Obligations) market. I do agree now that the Central Banks have started tampering with Interest Rates / Quantitative Easing, it is very hard for them to stop and the tools they have are becoming less effective.


----------



## Sarenco

And on it goes....

The S&P500 has returned over 25% YTD.


----------



## joe sod

Sarenco said:


> The S&P500 has returned over 25% YTD.


 
yes and the euro stoxx 600 after the recent very good performance has just hit the high it reached in 1999, it can't go on .


----------



## Sarenco

joe sod said:


> yes and the euro stoxx 600 after the recent very good performance has just hit the high it reached in 1999, it can't go on .


What exactly is your point?

This thread is about the S&P500 - look at the opening post.  Why do you keep dragging up other indices? 

And you are still ignoring dividends.


----------



## joe sod

@Sarenco  it's merely to put your post in context, it's striking that the European markets are only getting back to 1999 levels, I take your point about dividends but it still cannot take away from the dire performance of the European markets.


----------



## Zenith63

Sarenco said:


> And on it goes....
> 
> The S&P500 has returned over 25% YTD.


I wonder how things would have looked without the brakes of Brexit, trade wars, impeachment proceedings etc being applied? Would the bubble have already burst? Have these effects prevented a dip this cycle and are we seeing two back-to-back bear markets?


----------



## Sarenco

joe sod said:


> I take your point about dividends but it still cannot take away from the dire performance of the European markets.


Including reinvested dividends, European stocks have returned around 4% per annum since 1999, in dollar terms.  Lagging the return on US stocks over the same period certainly but hardly "dire".

In any event, it has absolutely nothing to do with the length of the current S&P500 bull market (i.e. the subject of this thread).


----------



## joe sod

Sarenco said:


> Including reinvested dividends, European stocks have returned around 4% per annum since 1999, in dollar terms. Lagging the return on US stocks over the same period certainly but hardly "dire".



But only in dollars and only because the euro was at its lowest level ever against the dollar after its launch reaching a low of 0.9 euros to the dollar in 2000,  it'd now at  1.1 dollars to the euro , surely the performance of the euro stoxx 600 should be expressed in euros not dollars. In any case we live in Europe not the US so why the fixation on the performance of the S and P 500. All the dividends have done is compensated for the loss due to inflation, in absolute terms you are just about getting back the money you invested in 1999 if you stayed invested through all the turmoil of the last 2 decades and the financial crash.


----------



## Sarenco

joe sod said:


> surely the performance of the euro stoxx 600 should be expressed in euros not dollars


You can express performance in whatever currency you want - as long as you are consistent in making comparisons.

We are not restricted to investing in European securities simply because we live in Europe.  I've made the point before that the return on the MSCI Europe index and the MSCI World index are almost identical over the last 30 years.

Again, this has absolutely nothing to do with the unprecedented length of the current S&P500 bull market.


----------



## Colm Fagan

I'm astounded that, although bond yields are at record lows, more money went into bond ETF's (Exchange Traded Funds) in the first 10 months of 2019 than into their equity counterparts ($191 billion v $158 billion for equity ETF's).  Why do private investors keep shovelling money into bonds?


----------



## Sunny

Colm Fagan said:


> I'm astounded that, although bond yields are at record lows, more money went into bond ETF's (Exchange Traded Funds) in the first 10 months of 2019 than into their equity counterparts ($191 billion v $158 billion for equity ETF's).  Why do private investors keep shovelling money into bonds?



Are they Net figures or simply inflows??


----------



## moneymakeover

Does the huge amount invested in bonds augur well for equities?

If like is being reported the recession fears are declining, then it's likely money will flow out of bonds into equities?


----------



## Colm Fagan

Sunny said:


> Are they Net figures or simply inflows??


The article doesn't state whether they're gross or net.  The implication is that they're net.  It seems that one of the key drivers for the growth in bond ETF's is that investors (and I think this includes institutions, not just private investors as I had assumed initially) are finding that constructing and running fixed income strategies with individual bonds is more expensive and less efficient than in the past because of regulatory reforms.  Post-crisis reforms have caused banks and broker dealers to hold lower inventories of bonds, which reduces liquidity.  ETF's (supposedly) improve the liquidity position.   I'm not sure that would be true in a crisis, but that's a question for another day.
The report cited in the article was by a consultancy called ETFGI.  There might be something on their website to answer your gross/net question.


----------



## joe sod

@moneymakeover well according to Phillip lane the former central bank governor it's because of the demand by the increased number of pensioners for "low risk" assets like bonds. Bonds have been in a bull market for along time , they have performed much better than the euro stoxx 600 and without the big turmoil that equities have experienced during the financial crash. Sure even the Anglo Irish bond holders got paid back but the poor bank shareholders got wiped out, then the ecb basically steps in and creates this huge  extra demand for bonds which of course Phillip lane ignores.


----------



## NoRegretsCoyote

joe sod said:


> All the dividends have done is compensated for the loss due to inflation, in absolute terms you are just about getting back the money you invested in 1999 if you stayed invested through all the turmoil of the last 2 decades and the financial crash.



Inflation in the euro area has been about 1.5% pa since 1999.

Explain to me again how you would have lost in real terms by buying that index two decades ago?


----------



## EmmDee

Colm Fagan said:


> I'm astounded that, although bond yields are at record lows, more money went into bond ETF's (Exchange Traded Funds) in the first 10 months of 2019 than into their equity counterparts ($191 billion v $158 billion for equity ETF's).  Why do private investors keep shovelling money into bonds?



Without knowing the aim / strategy of the investors it's difficult to answer this. But I can think of two drivers; (a) an alternative to cash especially where negative rates are in place and (b) matching returns versus liabilities.

On the second point, I know trustees of DB schemes where, due to the ageing population in the DB schemes generally, are at a point where asset growth is no longer the driving force. They are now managing to "liability matching" i.e. just ensuring the portfolio is paying out to the scheme members.

These might drive bond / FI ETF demand


----------



## Sunny

EmmDee said:


> Without knowing the aim / strategy of the investors it's difficult to answer this. But I can think of two drivers; (a) an alternative to cash especially where negative rates are in place and (b) matching returns versus liabilities.
> 
> On the second point, I know trustees of DB schemes where, due to the ageing population in the DB schemes generally, are at a point where asset growth is no longer the driving force. They are now managing to "liability matching" i.e. just ensuring the portfolio is paying out to the scheme members.
> 
> These might drive bond / FI ETF demand




There are also technical factors. Fixed Income ETF's are only in the last year or two becoming viable investments for many investors especially in the US. They always lagged behind equity ETF's so are coming from a much lower starting point. So much of the money could be normal fixed income investors coming into the product rather than a sign of confidence in the bond market. On top of that this year we have had Brexit, Trade wars, political instability, central bank activity etc etc..... Not surprised to see more going in to fixed income but that could reverse just as quickly....


----------



## galway_blow_in

joe sod said:


> But only in dollars and only because the euro was at its lowest level ever against the dollar after its launch reaching a low of 0.9 euros to the dollar in 2000,  it'd now at  1.1 dollars to the euro , surely the performance of the euro stoxx 600 should be expressed in euros not dollars. In any case we live in Europe not the US so why the fixation on the performance of the S and P 500. All the dividends have done is compensated for the loss due to inflation, in absolute terms you are just about getting back the money you invested in 1999 if you stayed invested through all the turmoil of the last 2 decades and the financial crash.



Every nations market performance should be measured in euro ( from the POV of those who live in Ireland)

Anything else is purely academic


----------



## joe sod

Just when it looked like the euro stoxx 600 might finally push past its year 1999 peak trump sends it crashing back down again with renewed threats of sanctions.


----------



## galway_blow_in

joe sod said:


> Just when it looked like the euro stoxx 600 might finally push past its year 1999 peak trump sends it crashing back down again with renewed threats of sanctions.



Out of curiosity, where was the ISEQ in 1999?


----------



## joe sod

galway_blow_in said:


> Out of curiosity, where was the ISEQ in 1999?


 I dont know but from memory it was around 3 or 4000 points , its now at almost 7000 points after a very good recovery this year. It reached its all time high in 2007 of around 10,400 points and then a catastrophic fall to 2000 points in 2009 following the banking and property crash, so it has been very volatile over the last 2 decades more like an emerging market economy. 
It wasn't really badly hit in 2001 after the dot com crash because it was fairly light on technology stocks (although it had baltimore technologies and riverdeep then) , today I dont think there are any technology stocks in the iseq even if we have a "silicon docks"


----------



## galway_blow_in

joe sod said:


> I dont know but from memory it was around 3 or 4000 points , its now at almost 7000 points after a very good recovery this year. It reached its all time high in 2007 of around 10,400 points and then a catastrophic fall to 2000 points in 2009 following the banking and property crash, so it has been very volatile over the last 2 decades more like an emerging market economy.
> It wasn't really badly hit in 2001 after the dot com crash because it was fairly light on technology stocks (although it had baltimore technologies and riverdeep then) , today I dont think there are any technology stocks in the iseq even if we have a "silicon docks"



Interesting ( for me anyway) that despite the enormous fall to 2000 points in 2009,based on the recovery to today's level, an investor would have done better buying the S+P the same year

U. S market has more than trebled since even the high point of 2009


----------



## joe sod

@galway_blow_in  I would much prefer to have been an investor in the eurostoxx 600 back in 2000 than the iseq, as bad an all as it performed it did not have that catastropic collapse in 2009 that the irish market experienced. Alot of irish people were wiped out by that collapse , even recently look at the effect of brexit on the iseq it had a much bigger impact than it did on the ftse.


----------



## galway_blow_in

joe sod said:


> @galway_blow_in  I would much prefer to have been an investor in the eurostoxx 600 back in 2000 than the iseq, as bad an all as it performed it did not have that catastropic collapse in 2009 that the irish market experienced. Alot of irish people were wiped out by that collapse , even recently look at the effect of brexit on the iseq it had a much bigger impact than it did on the ftse.



bank of ireland is up more than 50% in the past four months , the banks had been massively shorted off the back of brexit fears .

no other country in europe experienced as severe a recession as us with the exception of Greece ( who.s stock market dropped to levels last seen in the late seventies from what ive read )  so you would expect the stoxx 600 to have done better than ireland over a twenty year period

i suppose investing in a very small market like ireland is not a terrific idea unless done in small doses , too little diversity


----------



## joe sod

galway_blow_in said:


> bank of ireland is up more than 50% in the past four months , the banks had been massively shorted off the back of brexit fears .



yes i actually bought bank of ireland a year ago, so i experienced that big drop, its basically back where it was a year ago, thankfully the shorters can make big mistakes aswell. Of course the banks were in a completely different position in 2008 so the shorters were correct then, they get used to kicking the same old kicking boys. I remember after the technology crash in 2001 it took a full decade before  the big tech stocks like microsoft and oracle became respectable again, they were still ridiculously cheap in 2011, microsoft has increased 5 fold since then and the dot com crash is long forgotten.


----------



## galway_blow_in

joe sod said:


> yes i actually bought bank of ireland a year ago, so i experienced that big drop, its basically back where it was a year ago, thankfully the shorters can make big mistakes aswell. Of course the banks were in a completely different position in 2008 so the shorters were correct then, they get used to kicking the same old kicking boys. I remember after the technology crash in 2001 it took a full decade before  the big tech stocks like microsoft and oracle became respectable again, they were still ridiculously cheap in 2011, microsoft has increased 5 fold since then and the dot com crash is long forgotten.



Bank of Ireland went almost as low over the recent summer as it did in 2012

Microsoft reinvented itself in the past four years, it's only really took off since 2016


----------



## joe sod

2019 has been a great year to be invested in the stock markets, finally europe ,uk, ireland and emerging markets have performed well, its not just the US markets now. It got off to a terrible start mind you with the december 2018 panic sell off. It just shows you it never pays to follow the panic. The panics at beginning of 2016 and 2019 proved to be great buying opportunities. Of course at some stage maybe next year there could be a  correction most notably in the US tech stocks. I came across a startling statistic last week,  that the market capitalization of Apple is now worth more than the total S&P 500 energy sector, thats more than all the US oil companies combined. Its not so long ago that Exxon Mobil was the biggest stock in the S&P. Clearly Apple is a great stock but is it worth more than the entire energy sector?, afterall oil demand is still rising albeit more slowly than in the 2000s.


----------



## Paul O Mahoney

Personally I think the markets aren't let's say as buoyant as we see. I can see the Dow at 30,000 pretty soon, however from there it's hard to call. 
The Fed yesterday piled over $400bn into the "repo market " as since September liquidity has dried up, and they were worried about another spike in the repo rate, normally its about 2% but spiked to 12%.
This is money that companies big and bigger essentially borrow overnight to fund outstanding liabilities like Corporate tax and other liabilities.  
Got me to ask the question,  if corporate America needs trillions of overnight dollars to keep going and pay things like taxes, why are they reporting profits every quarter? 
And let's be honest here US companies report EBITA, a company could report a billion dollars in profits under ebita but have 2 billion in interest and taxes, is that a profitable company? 
Just my thoughts....


----------



## Sunny

Paul O Mahoney said:


> Personally I think the markets aren't let's say as buoyant as we see. I can see the Dow at 30,000 pretty soon, however from there it's hard to call.
> The Fed yesterday piled over $400bn into the "repo market " as since September liquidity has dried up, and they were worried about another spike in the repo rate, normally its about 2% but spiked to 12%.
> This is money that companies big and bigger essentially borrow overnight to fund outstanding liabilities like Corporate tax and other liabilities.
> Got me to ask the question,  if corporate America needs trillions of overnight dollars to keep going and pay things like taxes, why are they reporting profits every quarter?
> And let's be honest here US companies report EBITA, a company could report a billion dollars in profits under ebita but have 2 billion in interest and taxes, is that a profitable company?
> Just my thoughts....



Companies are not using the repo market to borrow to pay tax liabilities. That's not how it works. Nobody is 100% sure what happened in September but it could have been a perfect storm of large amount of US treasuries entering the system with dealers looking to repo them, increased cash demands from corporates to pay tax bills etc which meant large withdrawals from the financial system and also the issues around the bombings in Saudia Arabia are rumoured to have impacted as they withdrew billions of dollars from the market to repair the damage (No idea if that is true or not though). This meant there was a cash shortage in the banking system and hence why the FED has stepped in. They got past year end without another spike so they seem to have managed it but it is still going to be something to watch this year if and when the FED steps away again.


----------



## Paul O Mahoney

Sunny said:


> Companies are not using the repo market to borrow to pay tax liabilities. That's not how it works. Nobody is 100% sure what happened in September but it could have been a perfect storm of large amount of US treasuries entering the system with dealers looking to repo them, increased cash demands from corporates to pay tax bills etc which meant large withdrawals from the financial system and also the issues around the bombings in Saudia Arabia are rumoured to have impacted as they withdrew billions of dollars from the market to repair the damage (No idea if that is true or not though). This meant there was a cash shortage in the banking system and hence why the FED has stepped in. They got past year end without another spike so they seem to have managed it but it is still going to be something to watch this year if and when the FED steps away again.


I made a mistake in understanding the corporate tax, it did however reduce liquidity in the market,  a market of approximately $4trn , and that did as we saw a spike to 12% overnight rates from the norm of 2% plus. 

Even we categorise it as an exception it still begs the question why the $400bn pump at year end?
It's now believed,  again "rumours " that the FED won't disentangle until April and will still pump $60bn plus monthly as it did from October. 

Dimon would like not to have his $120bn parked in the FED and no doubt neither does any other money maker, he believes that him Goldman et al will save the day if the Fed repeals its insistence of having an insurance against another 2008 deposited to "provide " liquidity. 

Now I'm no economics expert,  not even a banking one, but it really does ask a question as to why the US economy is still living on false credit?

Credit is fine once it can be paid for, but corporate America are "profitable " on a ebita basis to satisfy Wall Street on Eps and stuff....

In fact Corporate America has more debt now than it did in 2008 and is " profitable " and the USAs debt is now approximately$22trn.....and rising. 

These are just my simple thoughts,  but it doesn't make sense to me.


----------



## RedOnion

@Paul O Mahoney 
There are a huge number of nuances around debt and capital structures, particularly in the US. Just because a corporate is borrowing money doesn't mean it isn't profitable. In fact it doesn't even mean that they don't have cash! Take a look at Apple as an example - they were issuing bonds, although they had 200bn in cash on their balance sheet! 
There is a lot going on.

The lack of short term funds in such a liquid market will be studied as part of college degrees in future once economists agree on the cause!


----------



## joe sod

RedOnion said:


> Take a look at Apple as an example - they were issuing bonds, although they had 200bn in cash on their balance sheet!


Were they not issuing mainly eurobonds to take advantage of the madness that is negative interest rates in europe, sure Berkshire Hathaway did the same thing and they are stuffed with cash.


----------



## RedOnion

joe sod said:


> Were they not issuing mainly eurobonds to take advantage of the madness that is negative interest rates in europe


They issued USD bonds. They may have issued Euro debt as well. But regardless they are also long Euro funds (on which they are earning negative interest).


----------



## EmmDee

joe sod said:


> Were they not issuing mainly eurobonds to take advantage of the madness that is negative interest rates in europe, sure Berkshire Hathaway did the same thing and they are stuffed with cash.



No - they were borrowing on their US entities. A lot of their cash was offshore - at the time, repatriating would have triggered a significant tax liability. It has probably changed now with the new US repatriation tax


----------



## Andrew365

RedOnion said:


> @Paul O Mahoney
> There are a huge number of nuances around debt and capital structures, particularly in the US. Just because a corporate is borrowing money doesn't mean it isn't profitable. In fact it doesn't even mean that they don't have cash! Take a look at Apple as an example - they were issuing bonds, although they had 200bn in cash on their balance sheet!
> There is a lot going on.
> 
> The lack of short term funds in such a liquid market will be studied as part of college degrees in future once economists agree on the cause!



In the example of Apple, wasn't most of their money outside the US thus it was cheaper to raise capital by issuing bonds than briging the money back into the US and paying tax.

The low interest rates have created a large amount of corporate debt issuance over the last number of year, see the following link https://www.spglobal.com/en/researc...rporate-debt-market-the-state-of-play-in-2019

oh sorry @EmmDee already made the same point.


----------



## RedOnion

Andrew365 said:


> In the example of Apple, wasn't most of their money outside the US thus it was cheaper to raise capital by issuing bonds than briging the money back into the US and paying tax.


Pre 2018, yes.  But they started issuing debt again towards the end of 2019, after repatriating billions back to US (in USD and Euro).
I'm not getting into the specifics of why certain companies issue debt - I was pointing out complexity to a poster who questioned why profitable companies have debt at all.


----------



## Paul O Mahoney

RedOnion said:


> Pre 2018, yes.  But they started issuing debt again towards the end of 2019, after repatriating billions back to US (in USD and Euro).
> I'm not getting into the specifics of why certain companies issue debt - I was pointing out complexity to a poster who questioned why profitable companies have debt at all.


No I understand why companies have debt and why they issue debt and yes companies have cash and issue debt long term.
But this issue is short term debt and liquidity,  liquidity is massively important to the US economy it simply runs on credit,  when something like this happens it, to me anyway,  points to something not right,  it maybe nothing but the Fed seems to be concerned enough to plug the hole for now. I'm not trying to be chicken lickin here but many many articles have been written about this and each article seems to point to a fundamental problem.......either it's the fed or something else.
.


----------



## cremeegg

Paul O Mahoney said:


> This is money that companies big and bigger essentially borrow overnight to fund outstanding liabilities like Corporate tax and other liabilities.



Liabilities do not require funding, they are a source of funds.


----------



## Fella

If CGT wasn't such a ridiculous rate people might cash in more , I wonder how much extra tax the government could take in if they reduced CGT to say 12.5% .  Just from talking to a friend the other day who is reluctant to sell shares to fund a house deposit it really is a ridiculously high rate. If the stock market crashes the government make nothing , 12.5% is better than 0%.


----------



## Paul O Mahoney

cremeegg said:


> Liabilities do not require funding, they are a source of funds.


Are you saying that liabilities don't have to be paid?


----------



## EmmDee

Paul O Mahoney said:


> Are you saying that liabilities don't have to be paid?



Once they are paid, they no longer exist as liabilities. I think the point being made is that having a liability implies you have additional liquidity than if you paid it off. 

It's the old story of creditors being a cheap form of cash flow (or they used be) - "leaning on the trade" I believe was the phrase


----------



## Paul O Mahoney

EmmDee said:


> Once they are paid, they no longer exist as liabilities. I think the point being made is that having a liability implies you have additional liquidity than if you paid it off.
> 
> It's the old story of creditors being a cheap form of cash flow (or they used be) - "leaning on the trade" I believe was the phrase


Well in 30 years plus I never heard of that. What next having negative working capital is also good financial planning?

In the modern world most long/medium term liabilities aren't really paid off anyway,  they are simply replaced by new debt sometimes at more favourable interest rates but the underlying debt structure is still the same and in some cases increases. 
To me it looks as if we have learned nothing and I know the world has moved on from my time, but every major financial crash, or corporate collapse was helped along with massive amounts of debt.  
I'm old enough to remember Polly Peck declaring profits of £130m only to be bankrupt a few weeks/months later, I think it lead to FRS1 .
And Polly Peck was a pebble in comparison to Enron, WorldCom, Lehmans to name a few.
Anyhoo my view is that any disruption in the credit markets is not going to turn out well , it might be solved but I have my concerns.


----------



## Sunny

Paul O Mahoney said:


> No I understand why companies have debt and why they issue debt and yes companies have cash and issue debt long term.
> But this issue is short term debt and liquidity,  liquidity is massively important to the US economy it simply runs on credit,  when something like this happens it, to me anyway,  points to something not right,  it maybe nothing but the Fed seems to be concerned enough to plug the hole for now. I'm not trying to be chicken lickin here but many many articles have been written about this and each article seems to point to a fundamental problem.......either it's the fed or something else.
> .



There are a lot of things not right but as Red Onion says, this will be debated for years by economists. Of course there has to be concern when repo markets react like that but there are numerous technical factors at play from Central Bank activity, new regulations, Government bond issuance etc etc. I don't think anyone is saying that the banks didn't have liquidity but there are obviously constraints with that liquidity that need to be looked at. The world is in a new place now after QE and attempts to unwind it.


----------



## Paul O Mahoney

Sunny said:


> There are a lot of things not right but as Red Onion says, this will be debated for years by economists. Of course there has to be concern when repo markets react like that but there are numerous technical factors at play from Central Bank activity, new regulations, Government bond issuance etc etc. I don't think anyone is saying that the banks didn't have liquidity but there are obviously constraints with that liquidity that need to be looked at. The world is in a new place now after QE and attempts to unwind it.


Well it will be interesting to see how it all pans out.


----------



## joe sod

Is this thread now being taken completely off topic, I mean I got scolded much earlier for even discussing the performance of European equities, I was told the thread was specifically about the S and P 500. Now the discussion is about Apple issuing bonds, there are other threads discussing the bond markets.


----------



## RedOnion

joe sod said:


> Is this thread now being taken completely off topic, I mean I got scolded much earlier for even discussing the performance of European equities, I was told the thread was specifically about the S and P 500. Now the discussion is about Apple issuing bonds, there are other threads discussing the bond markets.


I was also thinking that the bond / debt discussion warranted a separate thread. 

But in terms of being off topic, and specifically Apple, there is a direct correlation between the bonds mentioned above, and their share price. Apple are using a lot of the debt they've issued to buy back their own shares, leading to a higher individuals share price. (And they are a constituent of the S&P 500).


----------



## Paul O Mahoney

joe sod said:


> Is this thread now being taken completely off topic, I mean I got scolded much earlier for even discussing the performance of European equities, I was told the thread was specifically about the S and P 500. Now the discussion is about Apple issuing bonds, there are other threads discussing the bond markets.


Don't know how you can discuss the US market and its bull run without at least discussing what is driving it and what might stop it.
Corporate Debt is an important factor in valuation of shares, Wall Street might look at EPS , Revenue,  missing consensus blah blah blah but it is a little more complex than that.


----------



## joe sod

@Paul O Mahoney , it's important to remember the bull run in the US is really being driven by the few faang stocks, Apple Amazon etc, strip that out and it takes away a lot of the performance of the US markets. I drew attention to the valuation of Apple being now greater than the total US energy sector. 
What could derail this bull market?, the unexpected return of inflation and the rise in interest rates although that would also cause carnage in the bond markets.


----------



## Paul O Mahoney

joe sod said:


> @Paul O Mahoney , it's important to remember the bull run in the US is really being driven by the few faang stocks, Apple Amazon etc, strip that out and it takes away a lot of the performance of the US markets. I drew attention to the valuation of Apple being now greater than the total US energy sector.
> What could derail this bull market?, the unexpected return of inflation and the rise in interest rates although that would also cause carnage in the bond markets.


If we knew what might "derail " the market wed all be shorting it. The fact is anything might derail it, a downgrade of a dow heavy stock, something like a revenue over statement of one of the Fangs, liquidity it's a long list. And history has shown us that problems in the US market are only made known when the problem is to big to stop.

There are some commentators both here , Europe and in the US that the US economy might enter recession from June....they might be right or not.
My personal view that balance sheets are more important that P&Ls and Corporate Americas balance sheets are debt ridden. 

And let's be honest here most trades on the stock market are done in dark pools places that the retail investor never gets to see, we know that these have been used to manipulate stock prices and they usually get information a long time before anyone else.

It's a very complex market with multiple risks and opportunities but it never fully understood. 

My thoughts


----------



## joe sod

Paul O Mahoney said:


> There are some commentators both here , Europe and in the US that the US economy might enter recession from June....they might be right or not.
> My personal view that balance sheets are more important that P&Ls and Corporate Americas balance sheets are debt ridden.



But these commentators have been predicting recession for a long time now as far back as 2015,even last year they said the recession was definitely happening as "the yield curve had inverted" and that is a definite precursor to a recession , it didn't happen. Using bond yields as a precursor to recessions obviously no longer works in the era of negative interest rates and central banks buying bonds on a massive scale. 
With regard to corporate debt,what does it matter if corporates have alot of debt now,its all issued at low or negative interest rates. The example of Apple a company stuffed with cash issuing bonds illustrates this perfectly.
In any case I would not be investing in any FAANG stocks now,thats where the overvaluation is, you could always invest in global ex US etfs,they have only started to perform now. You could definitely not be accused of investing in overpriced markets there.


----------



## Sunny

joe sod said:


> But these commentators have been predicting recession for a long time now as far back as 2015,even last year they said the recession was definitely happening as "the yield curve had inverted" and that is a definite precursor to a recession , it didn't happen. Using bond yields as a precursor to recessions obviously no longer works in the era of negative interest rates and central banks buying bonds on a massive scale.
> With regard to corporate debt,what does it matter if corporates have alot of debt now,its all issued at low or negative interest rates. The example of Apple a company stuffed with cash issuing bonds illustrates this perfectly.
> In any case I would not be investing in any FAANG stocks now,thats where the overvaluation is, you could always invest in global ex US etfs,they have only started to perform now. You could definitely not be accused of investing in overpriced markets there.



People have been saying that FAANG stocks (God, I hate that this is now a thing) have been overvalued as long as people have been predicting recession.


----------



## Paul O Mahoney

joe sod said:


> But these commentators have been predicting recession for a long time now as far back as 2015,even last year they said the recession was definitely happening as "the yield curve had inverted" and that is a definite precursor to a recession , it didn't happen. Using bond yields as a precursor to recessions obviously no longer works in the era of negative interest rates and central banks buying bonds on a massive scale.
> With regard to corporate debt,what does it matter if corporates have alot of debt now,its all issued at low or negative interest rates. The example of Apple a company stuffed with cash issuing bonds illustrates this perfectly.
> In any case I would not be investing in any FAANG stocks now,thats where the overvaluation is, you could always invest in global ex US etfs,they have only started to perform now. You could definitely not be accused of investing in overpriced markets there.


I wouldn't be buying that class of share either,  but one of my closest friends started work with Apple in 1988, 5% of salary forgone since then to buy shares......hes doing alright and has another 15 years left.


----------



## Sunny

Paul O Mahoney said:


> I wouldn't be buying that class of share either,  but one of my closest friends started work with Apple in 1988, 5% of salary forgone since then to buy shares......hes doing alright and has another 15 years left.



Nice one. Although I did the same when I joined an Irish bank in the 1990's...…!!!


----------



## joe sod

Paul O Mahoney said:


> I wouldn't be buying that class of share either,  but one of my closest friends started work with Apple in 1988, 5% of salary forgone since then to buy shares......hes doing alright and has another 15 years left.


It's a good way of saving, I bet he has a large amount now invested in Apple. However it is never a good idea to have a large amount of your net worth tied up in one stock. I saw the same thing happening during the dot com boom and bust, guys working in the technology and telecoms companies saw their share options sky rocket in value. Even though they were smart highly educated guys they still got wiped out during the tech bust and on top of that some lost their jobs as well. This period is largely forgotten about in Ireland largely because it was eclipsed by the later property crash


----------



## Paul O Mahoney

Corporate debt is an issue actually corporate debt is a massive issue.  Interest rates a


Sunny said:


> Nice one. Although I did the same when I joined an Irish bank in the 1990's...…!!!


Sister in law same joined about that time too, not a bean left.


----------



## Paul O Mahoney

My posts are posting wrong.......probably me


----------



## EmmDee

joe sod said:


> It's a good way of saving, I bet he has a large amount now invested in Apple. However it is never a good idea to have a large amount of your net worth tied up in one stock. I saw the same thing happening during the dot com boom and bust, guys working in the technology and telecoms companies saw their share options sky rocket in value. Even though they were smart highly educated guys they still got wiped out during the tech bust and on top of that some lost their jobs as well. This period is largely forgotten about in Ireland largely because it was eclipsed by the later property crash



c.f. Enron


----------



## galway_blow_in

Anyone else nervous?

I haven't touched my portfolio, i bought what i have lower than the current prices so didn't bother lightening up

Down from 53k a few weeks ago to 48 k, not a big portfolio

If things get bad enough, we'll have bigger concerns than wealth


----------



## flyingfolly

Just sold all my Tesla shares at 230% profit. Not much point in risking the drop that might potentially come


----------



## Alkers86

galway_blow_in said:


> Anyone else nervous?
> 
> I haven't touched my portfolio, i bought what i have lower than the current prices so didn't bother lightening up
> 
> Down from 53k a few weeks ago to 48 k, not a big portfolio
> 
> If things get bad enough, we'll have bigger concerns than wealth


Slightly nervous for my pension fund which is all in equities. I'm considering changing my existing share to something less volatile but leaving my future contributions in equities.


----------



## Fella

galway_blow_in said:


> Anyone else nervous?
> 
> I haven't touched my portfolio, i bought what i have lower than the current prices so didn't bother lightening up
> 
> Down from 53k a few weeks ago to 48 k, not a big portfolio
> 
> If things get bad enough, we'll have bigger concerns than wealth



I can't see what there is to be nervous about , logged into Degiro and my portfolio is up today  , was expecting it to be way down . Doesn't look too far off what it was a month or so ago when I last bought something. 
I am not nervous about coronavirus as I don't have underlining illnesses so shouldn't effect me .


----------



## galway_blow_in

Fella said:


> I can't see what there is to be nervous about , logged into Degiro and my portfolio is up today  , was expecting it to be way down . Doesn't look too far off what it was a month or so ago when I last bought something.
> I am not nervous about coronavirus as I don't have underlining illnesses so shouldn't effect me .



I've asthma myself so despite being early forties, I'm in the "at risk" category


----------



## joe sod

Warren Buffet did a very good 2 hour interview with CNBC squakbox on Monday, the backdrop was the rapidly falling share prices on Monday. He was asked about the Corona virus and he was not selling anything or one bit worried. He said  the media gets fixated on these things then it moves onto something else , he said last year they were fixated on terrorism and that is now forgotten. The only thing he has been consistently worried about is nuclear proliferation and the possiblility of a rogue regime getting access to them. 
More generally he is positive on stocks (although he cannot predict what happens in the short term), the main reason is because of zero and negative interest rates , if you buy a long term bond today yielding 1% you are taking a huge gamble that interest rates will stay below this for the 30 years of the bond to maturity, if interest rates rise much above 1% in that 30 years you will suffer capital loss if you sell the bond before maturity.
Therefore in that scenario the only game in town is the stock market, however if interest rates were at 3 or 4% then maybe he would be interested in bonds and stocks would have a higher threshold in comparison.


----------



## galway_blow_in

joe sod said:


> Warren Buffet did a very good 2 hour interview with CNBC squakbox on Monday, the backdrop was the rapidly falling share prices on Monday. He was asked about the Corona virus and he was not selling anything or one bit worried. He said  the media gets fixated on these things then it moves onto something else , he said last year they were fixated on terrorism and that is now forgotten. The only thing he has been consistently worried about is nuclear proliferation and the possiblility of a rogue regime getting access to them.
> More generally he is positive on stocks (although he cannot predict what happens in the short term), the main reason is because of zero and negative interest rates , if you buy a long term bond today yielding 1% you are taking a huge gamble that interest rates will stay below this for the 30 years of the bond to maturity, if interest rates rise much above 1% in that 30 years you will suffer capital loss if you sell the bond before maturity.
> Therefore in that scenario the only game in town is the stock market, however if interest rates were at 3 or 4% then maybe he would be interested in bonds and stocks would have a higher threshold in comparison.



Buffett never says anything new in those interviews. 

It's always the same few lines mixed amongst the folksy cheerfulness. 

"i don't know where stocks will be in ten years but higher" 

" i love it when stocks go down, i buy more" 

" providing you have a long term view, it doesn't matter if the market goes down 30" 

And so on. 

Spot on advice but we've heard him say it a hundred times


----------



## joe sod

galway_blow_in said:


> Buffett never says anything new in those interviews.
> 
> It's always the same few lines mixed amongst the folksy cheerfulness.



yea thats very true but the fact that the backdrop was the panic selling on Monday with CNBC having a split screen showing the fall in the dow and the european markets in real time. Even though he is saying the same things , it was the confidence and conviction of buffet contrasted with the sensationalism of the 24hr media, few people possess that.


----------



## Fella

joe sod said:


> yea thats very true but the fact that the backdrop was the panic selling on Monday with CNBC having a split screen showing the fall in the dow and the european markets in real time. Even though he is saying the same things , it was the confidence and conviction of buffet contrasted with the sensationalism of the 24hr media, few people possess that.



Do you think he really cares though Buffet? He already has so much money he's actively giving it away . He gives the same advice all the time , sure its easy for him to say buy an index or just buy good companies and do nothing. 

When you are making loads of money its much easier to make the right choices , when you have nothing and are only investing 20k or so you probably want to find that next Amazon , you want to see your 20k grow if it drops to 10k you probably panic. I've been in both camps I know what its like to have excess money and invest 5 figures a month and I know what its like to only have a small amount invested , the smaller the amount you have invested the more likely you are to play around with it , to watch the news to protect it. If your actively investing and buying so much every month or so as you accumulate more wealth trust me you just ignore the noise and you do welcome the chance to buy cheaper.

I don't get the obsession with Buffet either I don't even think theres enough stats to say he has any skill , he probably got lucky very early and is living off that success.


----------



## LoveTrees

galway_blow_in said:


> Anyone else nervous?
> 
> I haven't touched my portfolio, i bought what i have lower than the current prices so didn't bother lightening up
> 
> Down from 53k a few weeks ago to 48 k, not a big portfolio
> 
> If things get bad enough, we'll have bigger concerns than wealth



No way I'll get nervous like in 2018. I made myself a promise. I'll cash in when I'll retire in about 20 years from now. I've my emergency cash amount which stays the same. Anything on top gets automatically invested no matter which stage of the cycle. Thank God for fool.com

Then in 20 years from now I'll check if my bet worked or not. I just don't care... Really... In my opinion unless someone works full time on the stock markets then being a defensive diversified long term investor is the best way...


----------



## Techhead

Completely agree that Irish people are penalized for investing in stocks. Compared to the US we are taxed into the Stone Age


----------



## Duke of Marmalade

joe sod said:


> If you buy a long term bond today yielding 1% you are taking a huge gamble that interest rates will stay below this for the 30 years of the bond to maturity, if interest rates rise much above 1% in that 30 years you will suffer capital loss if you sell the bond before maturity.
> Therefore in that scenario the only game in town is the stock market, however if interest rates were at 3 or 4% then maybe he would be interested in bonds and stocks would have a higher threshold in comparison.


Yes but that would dictate that supply and demand would be pushing up stock prices to equally artificial heights.  Say the market prices stocks to give an expected yield of 2% i.e. twice what you can get on bonds.  Then interest rates revert to normal levels like say 4%,  the stock market would then want maybe 8% to compensate for the risk versus bonds.  That would entail a fall to 25% of current levels.


----------



## joe sod

Fella said:


> I don't get the obsession with Buffet either I don't even think theres enough stats to say he has any skill , he probably got lucky very early and is living off that success.



i agree he has a bit of a cult following , the yearly gathering in omaha is testament to that, but he is highly unconventional personality wise which explains the whole omaha jamboree. i suppose it is that personality that explains some of why he is the worlds richest investor (there are richer men in the world but not solely from investing capital). He is able to stand outside of current investing fashions most notably at the end of the 90s for years ignoring technology stocks and getting slated for it, Berkshire fell in value in 1998 and 1999 when the Dow was soaring on the back of technology stocks. So he was under big pressure then to get on board that but he resisted.
It is true that he got lucky which he admits himself ,being born in America where his skills could be utilised rather than in a poor war torn country. Also he was investing during some of the biggest stock market bull markets ever in 1950s 60s and 1980s 90s. I doubt he would have done so well starting out in year 2000


----------



## Fidgety

Buffett makes a lot of sense in describing his investing philosophy over the years. He also admits openly to getting stuff wrong e.g. missing out on the tech boom because he didn’t understand it. That’s changed with his investment in Apple but how much of that was down to Todd Combs?

A read of the annual shareholder letter shows that much of his wealth is determined by substantial long-term investments in blue chips like Amex and Coke.

To my mind, this long-term view makes sense and avoids a lot of head wrecking nonsense.


----------



## galway_blow_in

I have not sold anything but in hindsight should have

Would anyone seriously prefer hold when your holdings now stand a serious chance of being cut in half? 

Guess I'm asking if some events warrant a very different reaction?


----------



## TrundleAlong

galway_blow_in said:


> I have not sold anything but in hindsight should have


Many of the experts on AAM have suggested over the years that you invest in a basket of shares, not in individual stocks. Sit back and wait. Then over a period of years the stockmarket will do it's thing and you will average out in profit. I certainly would not like if my basket of shares that I had invested in had any travel related shares...airlines....travel companies.... cruise ship owners......hotel chains.....etc.  I would have hoped that the experts managing these funds would have pulled these before the latest events unfolded.
However I have often wondered how actively these funds are managed and do the suits schedule meetings to have meetings.  Better to manage these things yourself....the old saying.....if you are making a profit you are not making a loss......


----------



## Fella

galway_blow_in said:


> I have not sold anything but in hindsight should have
> 
> Would anyone seriously prefer hold when your holdings now stand a serious chance of being cut in half?
> 
> Guess I'm asking if some events warrant a very different reaction?



Well its just hard to predict for me , lets say day 1 markets drop 3% do I take my money out now ? I've seen days like this before and then day 2 its back to normal or up again , selling everything also gives rise to a CGT event . If I don't sell on day 1 then day 2 comes along another 3-4% wiped off its the same thing you probably start to do think the sell off is an overreaction . Before you know it its day 5 or something and you've lost 25% but it's hard to predict the bottom and if you sell around day 4-5 you could end up watching the markets rise dramatically on day 6.

It's all just a guessing game that I don't want to get involved in , I think if you invest regualary you just have to accept that at certain times in your investment career you are going to be buying cheap and other times you are paying a premium. Without stock market volitily there would be no returns so we need these corrections , its easy in hindsight to think it was obvious the markets would drop because of this coronavirus but theres been other times that you would expect the market to drop and its risen but we don't remember these times.

Unless your a trader I think that buy and hold is the best bet for the average joe.


----------



## galway_blow_in

TrundleAlong said:


> Many of the experts on AAM have suggested over the years that you invest in a basket of shares, not in individual stocks. Sit back and wait. Then over a period of years the stockmarket will do it's thing and you will average out in profit. I certainly would not like if my basket of shares that I had invested in had any travel related shares...airlines....travel companies.... cruise ship owners......hotel chains.....etc.  I would have hoped that the experts managing these funds would have pulled these before the latest events unfolded.
> However I have often wondered how actively these funds are managed and do the suits schedule meetings to have meetings.  Better to manage these things yourself....the old saying.....if you are making a profit you are not making a loss......



I've no airline or travel shares thankfully


----------



## galway_blow_in

Fella said:


> Well its just hard to predict for me , lets say day 1 markets drop 3% do I take my money out now ? I've seen days like this before and then day 2 its back to normal or up again , selling everything also gives rise to a CGT event . If I don't sell on day 1 then day 2 comes along another 3-4% wiped off its the same thing you probably start to do think the sell off is an overreaction . Before you know it its day 5 or something and you've lost 25% but it's hard to predict the bottom and if you sell around day 4-5 you could end up watching the markets rise dramatically on day 6.
> 
> It's all just a guessing game that I don't want to get involved in , I think if you invest regualary you just have to accept that at certain times in your investment career you are going to be buying cheap and other times you are paying a premium. Without stock market volitily there would be no returns so we need these corrections , its easy in hindsight to think it was obvious the markets would drop because of this coronavirus but theres been other times that you would expect the market to drop and its risen but we don't remember these times.
> 
> Unless your a trader I think that buy and hold is the best bet for the average joe.



I'm not going to sell now, not like i had most of my savings in equities anyway, I've twice as much in my current account as in stocks, going from 53k the day before the Irish general election to 45 k today is a pretty brutal drop however 

Could go much lower too, bought an energy company this morning which is now yielding over 8% now, down 35% and no dividend cut since WW2, biggest company on the ftse 

Opportunities exist at times like this too and oil was already battered prior to this


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## Fella

galway_blow_in said:


> I'm not going to sell now, not like i had most of my savings in equities anyway, I've twice as much in my current account as in stocks, going from 53k the day before the Irish general election to 45 k today is a pretty brutal drop however
> 
> Could go much lower too, bought an energy company this morning which is now yielding over 8% now, down 35% and no dividend cut since WW2, biggest company on the ftse
> 
> Opportunities exist at times like this too and oil was already battered prior to this



If you sold everything at 53k would you have walked away with more than 45k after CGT? 
If I sold everything I would have a very large CGT bill so its not all profit that is lost . The other problem is what the hell do I do with the large amount I have invested , I Could keep it in stockbroker account and wait but banks are useless and buy to let is a disaster so there is not much more option wise .


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## Fidgety

Fella said:


> If you sold everything at 53k would you have walked away with more than 45k after CGT?
> If I sold everything I would have a very large CGT bill so its not all profit that is lost . The other problem is what the hell do I do with the large amount I have invested , I Could keep it in stockbroker account and wait but banks are useless and buy to let is a disaster so there is not much more option wise .



My sentiments exactly. Moreover, when markets recover and the sellers jump back, you miss the rally. It's impossible to predict, emotionally draining and mentally wearing.


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## Techhead

Don’t panic. It’s not money it’s sentiment. Think will anyone even remember this virus next year or in 5 yrs.


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## TrundleAlong

galway_blow_in said:


> I'm not going to sell now, not like i had most of my savings in equities anyway,



Half a loaf is better than no loaf at all.   Take your profit, smaller as it may be than you originally had. You will feel better for it.


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## galway_blow_in

TrundleAlong said:


> Half a loaf is better than no loaf at all.   Take your profit, smaller as it may be than you originally had. You will feel better for it.



I'm not selling, just wanted to pose a question about the potentially unique situation facing us


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## galway_blow_in

galway_blow_in said:


> I'm not selling, just wanted to pose a question about the potentially unique situation facing




I even bought a particular Irish financial this morning, BV less than half, a country needs a banking system and the price this morning was at 2012 levels almost


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## IsleOfMan

galway_blow_in said:


> I even bought a particular Irish financial this morning, BV less than half, a country needs a banking system and the price this morning was at 2012 levels almost


More power to you.  I would have waited and had a look on Monday. A lot of people take their profits on a Friday (maybe not this Friday)  and head off to the pub also mindful that there is likely to be more negative press over the weekend than positive press.

I am tracking two particular shares at the moment. One a pharma and the other a cement company. I have been watching the live trades and there are people making money on the intraday trades even in this climate.

In my case I have to pay .5% costs on buying, .5% costs in stamp duty, .5% costs in selling on UK trades but 1% stamp duty on Irish trades.  My normal trade is about £95k so I have to make circa £1300 or €1800 before I make a penny for myself.  It is possible but requires balls of steel at the moment. Some are doing it though. 
I will have a look on Monday.


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## galway_blow_in

IsleOfMan said:


> More power to you.  I would have waited and had a look on Monday. A lot of people take their profits on a Friday (maybe not this Friday)  and head off to the pub also mindful that there is likely to be more negative press over the weekend than positive press.
> 
> I am tracking two particular shares at the moment. One a pharma and the other a cement company. I have been watching the live trades and there are people making money on the intraday trades even in this climate.
> 
> In my case I have to pay .5% costs on buying, .5% costs in stamp duty, .5% costs in selling on UK trades but 1% stamp duty on Irish trades.  My normal trade is about £95k so I have to make circa £1300 or €1800 before I make a penny for myself.  It is possible but requires balls of steel at the moment. Some are doing it though.
> I will have a look on Monday.



I'm looking at a company with a mouse for an emblem when the U. S market opens, moved 10 k into my account yesterday as i believe the selling is overdone, bought the biggest company on the FTSE first thing this morning and the Irish Bank a little later 

I'll have the ten grand spent by evening, have had the same portfolio for over a year so now is a good time to add some more ( i hope) 

I won't touch airlines however, too risky


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## Mapara

Looking like this correction has a bit to go yet,sometimes it's a case of one in the hand.


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## joe sod

Fella said:


> Well its just hard to predict for me , lets say day 1 markets drop 3% do I take my money out now ? I've seen days like this before and then day 2 its back to normal or up again , selling everything also gives rise to a CGT event . If I don't sell on day 1 then day 2 comes along another 3-4% wiped off its the same thing you probably start to do think the sell off is an overreaction . Before you know it its day 5 or something and you've lost 25% but it's hard to predict the bottom and if you sell around day 4-5 you could end up watching the markets rise dramatically on day 6.



This seems to be the pattern alright since the financial crash in 2008, everything happens so fast now rather than the long drawn out bear markets. The title of this thread "the longest bull market in history" is actually not correct because we have had several rapid sell offs lasting less than 2 months, then rapid recovery, happened in 2012, 2016 and 2018, December 2018 was the worst December in stock market history. Of course all of this is rapidly forgotten when the market recovers again. 
Previous prolonged bear markets happened when investors switched from stocks to bonds, but then bonds always provided reasonable yields of at least 3%, so they were a safe haven to park your money for a long time. This is not the case today and since the financial crash . Therefore in the era of zero and negative interest rates everything has changed, the old rule book has been thrown out the window. Unless there is real panic and a flight to precious metals


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## Sarenco

Sorry @joe sod but the title of this thread is absolutely correct.

The S&P500 has enjoyed and continues to be in the longest bull market in history.

There has not been a 20% plus draw down to the close of any trading day for well over 10 years.  That has never happened before.

That’s a fact - not an opinion.

I’ve no idea why you insist on re-interpreting this thread.

Incidentally, the Eurozone government bond index has increased in value this week.  So much for your view that bonds have no value.

I genuinely hope nobody pays any heed to your contributions on here - they really are pathetic.


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## joe sod

Sarenco said:


> There has not been a 20% plus draw down to the close of any trading day for well over 10 years. That has never happened before.



if you read the general thrust of my post, i explained that we are in uncharted territory because of zero and negative interest rates, that has also never happened before, not in Keynes time not in Adam smiths time, there have never been negative interest rates before. Warren Buffett went into a lot of detail in discussing this in his interview on Monday. As for bonds Buffet said (with respect to US treasuries which still have a yield) why would you lend to the government money for 30 years  at 1% when their stated objective is an inflation target of 2%, this is obviously amplified in the eurozone where there are negative interest rates. 
Its only a discussion everyones opinion is valid.


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## RedOnion

joe sod said:


> why would you lend to the government money for 30 years at 1%


US 30 year treasury bond are yielding well above 1%, so yes, you would be mad to lend at 1%.

They've performed very well in the last 2 weeks.

Interestingly, inflation protected bonds in US have a slightly positive yield, so the market is inferring that they expect inflation of c. 1.5% despite the stated target.


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## joe sod

Sarenco said:


> I’ve no idea why you insist on re-interpreting this thread.



Every thread gets re-interpreted , most people excluding myself have also re-interpreted it in accordance with their own circumstances, just because you might have started a thread does not give you ownership or the right to police what is discussed. I have been putting the bull markets in the context of the global stock markets , and the most important context is the unprecedented zero and negative interest rates world wide. If people are concerned about an "unprecedented" length of a US bull market in US stocks ,which I have also put in context because of the 3 rapid sell offs in that period and ,all of these felt like the end of the bull market you just have to look at old threads on this site for those periods. 

This could very well be proper bear market that you are craving but there is no safety in negative yielding bonds ,only for very short periods, its obvious that the buyers of these bonds do not intend to hold them to maturity, any hint of an interest rate hike and these will crash, there will be a rush to sell these , Warren buffet said this in his interview although not so explicitely


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## Sarenco

@joe sod 

You are obviously entitled to your own opinions but you are not entitled to your own facts.

You cannot back up your argument that the original post was not accurate.

Previous corrections may well have “felt” like the end of the bull market but history proved otherwise.

The past week demonstrated in spades why bonds - even negative yielding bonds - still have a place in a well constructed investment portfolio.


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## Sarenco

Will the bull market make it to 11 years?









						The bull market turns 11 on Monday — can it outrun the coronavirus stock selloff?
					

The longest bull market in U.S. history is set to hit another milestone on Monday. But with worries over the economic impact of the spread of COVID-19...




					www.marketwatch.com


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## Fidgety

I think it will but only if the Oil spat is resolved quickly. The impact on US jobs of a low oil price is significant given the indebtedness and high costs associated with fracking.


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## Sarenco

Well, the longest bull market in history has just celebrated its 11th anniversary.

The S&P500 has enjoyed an unprecedented 11 years without a drawdown of 20% or more at any close from a previous market high.

It’s worth bearing in mind that historically bear markets have happened roughly every 3.5 years, which makes the current bull market so extraordinary. 

It also puts the correction over the last couple of weeks into perspective.


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## Fella

Sarenco said:


> Well, the longest bull market in history has just celebrated its 11th anniversary.
> 
> The S&P500 has enjoyed an unprecedented 11 years without a drawdown of 20% or more at any close from a previous market high.
> 
> It’s worth bearing in mind that historically bear markets have happened roughly every 3.5 years, which makes the current bull market so extraordinary.
> 
> It also puts the correction over the last couple of weeks into perspective.



I rarely look at the markets but had a look with the news today , whats interesting to me is even with this big drop today when you draw a line backwards you are only going back to 2018-2019 levels . I have a  lump sum which I have transferred to my brokerage account , I have been waiting to see a day of a very large correction since I started investing where I could throw some money in but I have to say the market would have to fall a lot more for me to get involved with this lump sum. It doesn't feel value when your only going back to 2018 levels or so and then you wonder what happened between 2018 and now to justify the price rise.

Bring on the bear market!

*PS I am not trying to time the market , I invest every couple of months in predetermined investment trusts regardless of market conditions , the money I have set aside is excess cash that I keep for opportunities in arbitrage should they arise.


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## galway_blow_in

today was a truly wretched day , i dumped the irish bank i bought ten days ago after a few trading days as it barely rose during last mondays strong rally ,   my ninety euro gain looks fantastic now considering how  irish markets have sunk , my energy stock is down a whopping 25% but its a relatively small part of my overall portfolio and the dividend is 8% , the two american stocks i bought are down but both are huge mega caps and im confident they will come good 

the bulk of my holdings ive held since december 2018 but it still hurts to see such a drastic reduction in ones equity holdings in the space of a little over a month .

hoping to buy a house within two years assuming we sell our current dwelling , i thought having a third of ones savings in the equity markets was relatively conservative , wont ruin our plans but in hindsight i might have been better going to cash after seeing such strong gains in 2019


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## Daddy Ireland

A bear market is certain.  Fella your spot on the current drop only equates to going back to 2018 levels.  I can easily see a 20k Dow just as Nourini forecast and God help us all if as I fear this virus will impact hugely.  If the numbers explode 15k Dow is on the cards.  Must go and watch Claire Byrne at 10.30 p.m and fear is gripping or about to grip the country I'm sorry to say.


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## joe sod

Daddy Ireland said:


> Must go and watch Claire Byrne at 10.30 p.m and fear is gripping or about to grip the country I'm sorry to say.



more misery porn, even before the corona virus they always find some misery to focus on. I think people have become too focussed on negative stuff and exaggerating it rather than positive stuff. I think they will have a handle on the corona virus within a few weeks, I think it could peak in Italy fairly soon.


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## galway_blow_in

joe sod said:


> more misery porn, even before the corona virus they always find some misery to focus on. I think people have become too focussed on negative stuff and exaggerating it rather than positive stuff. I think they will have a handle on the corona virus within a few weeks, I think it could peak in Italy fairly soon.



good to know we are nearly over the worst of it


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## Daddy Ireland

Hope your right Joe Sod.


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## Fidgety

I’m not sure we know how badly it will impact us here in Ireland but I’m certain that we’re nowhere near over the worst of it. This has the potential to kill our people and severely disrupt our way of life. Until we see cases falling, treatment rates rising in effectiveness and fewer people dying, we simply don’t know how big the impact will be.

Let’s hope that by all of us doing our best to follow the guidelines, we minimize the impact.


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## LoveTrees

What Is a Bear Market and How Should You Invest in One? | The Motley Fool
					

A bear market is a period of falling stock prices, typically by 20% or more. During this time, investor confidence is low, and investing can be risky.




					www.fool.com


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## KOW

A lot of cash after selling a property year and a half ago. Promised myself over the past year to invest in 3 companies that I have watched for a number of years once a 30% or more of a correction came. Well that was today.
Starting tomorrow and probably over 6-8 week period will invest away. Do not need the money for a number of years.
Nervy a little but sure it will be okay over 5-10 yrs.


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## Sarenco

For the record, the S&P500 finally closed today, 12 March 2020, in bear territory.

The longest bull market in history (2009-2020), RIP.


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## joe sod

yes it was killed by a virus that was "Made in China" how apt. Im surprised by it all to be honest it came totally out of the blue. But then why panic it doesn't really make any difference just anyone invested in equities is now 20% or more poorer than they were a few weeks ago. You just have to be able to deal with that, you dont actually have to do anything just wait for the next bus, (thats if the bus is still running)


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## SPC100

The king is dead. Long live the king.

Keep on buying.


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## galway_blow_in

the FTSE 100 was higher in janaury 1998 than it closed today , startling fact


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## joe sod

galway_blow_in said:


> the FTSE 100 was higher in janaury 1998 than it closed today , startling fact



So it fell back from its 1999 high to the depths of the asian financial crisis of 1998, the first 20 years of the 21st century did not happen as regards the ftse (dividends excluded of course). European markets in general were not expensive before this panic, now they are much cheaper. Add to that , a lot of the ftse 100 companies are global multinationals.


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## galway_blow_in

joe sod said:


> So it fell back from its 1999 high to the depths of the asian financial crisis of 1998, the first 20 years of the 21st century did not happen as regards the ftse (dividends excluded of course). European markets in general were not expensive before this panic, now they are much cheaper. Add to that , a lot of the ftse 100 companies are global multinationals.



The big two in the FTSE are facing a very uncertain future due to climate change policy


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## joe sod

galway_blow_in said:


> The big two in the FTSE are facing a very uncertain future due to climate change policy



Maybe, maybe not , maybe other priorities take precedence, maybe climate change is not so pressing when thousands of first world citizens are dying from something, something that is actually medieval and originated in a medieval market in China. Maybe the vulnerabilities of the global system today rather than a possible threat in the future are now the focus. Maybe bread and butter stuff in UK and Europe today are much more important than they were before and everything gets repriced accordingly.


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## lledlledlled

joe sod said:


> more misery porn, even before the corona virus they always find some misery to focus on. I think people have become too focussed on negative stuff and exaggerating it rather than positive stuff. I think they will have a handle on the corona virus within a few weeks, I think it could peak in Italy fairly soon.



Not sure there's much evidence of this. It's getting worse in Italy by the day. 250 new deaths there today. Even China never had that, even at their peak.


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## Brendan Burgess

All discussions about whether to buy or sell will be in this thread






						"My shares have fallen 30% what should I do?" "Is this a good time to invest in the stock market?"
					

To save people reading through lots of posts in different threads, I am going to summarise my views and the contrary view in this thread.  There are two camps  Camp 1 believes that you cannot time the market.  In other words, it's not possible to identify whether the market is overvalued or...



					askaboutmoney.com


----------

