2017 - An extraordinarily calm year for the stock market

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Sarenco

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As the last trading day of 2017 passes, the S&P500 has just returned a positive return for each month in a single calendar year. That's the first time that has happened - ever!

Global stocks (FTSE All World) have now extended their winning streak to 14 consecutive months - the longest run on record.

I think that's extraordinary given the economic and political backdrop.

There's nothing actionable about that information - past performance is not indicative of future returns - but it's fun to look back at some of the gloomy predictions at the start of the year.

Just goes to show - predicting the future is hard, really hard.
 
Equity valuations (particularly US stocks) are certainly elevated by historical standards.

Does that imply an imminent correction or should we just expect lower returns going forward?

You guess is as good as mine but I don't have any sense that the equity markets are gripped by the sort of irrational exuberance that was evident in the late 20s, 60s and 90s.
 
had someone bought the s + p on december 31,st 1997 , would it have been unreasonable for them to have expected a doubling in value every ten years because if they had that expectation , they would be left today falling well short

the s + p closed that year at 963

i think such was the collapse to march 2009 from late 2007 that people over estimate the rise since the market bottomed , it had an enormous drop so the quadrupling in the past decade looks more astounding than it is

had someone bought a house in dublin on the last day of december 1997, their return would be way higher
 
Europe and Japan have been long due a recovery. When you see the ftse 100 index still not much higher than its level at the turn of the century 18 years ago. Yes there have been big gains over the last year in european indices but they were long overdue. Is the big risk now in the bond market with interest rates set to keep rising for years to come.
 
Galway

From December 1996 to December 2017, the total cumulative return of the S&P500 (with dividends reinvested) was 473%.

Judging by the CSO and earlier PTSB/ESRI indices, Dublin house prices have increased by less than 200% over the same period.
 
Are house prices back to the 2007 highs?


And before that from 1996 to 2007 what was the increase?

300%?
 
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I interact with American business people on a regular basis, across that limited group that I engage with they are at one amazed at the steady progression of the index, there seems to be little logic to it, I track it as a percentage piece of my pension fund, I will be transferring out my full exposure to S@P in early January to lock in gains.
 
I bought a 3 bed house in Fairview in December 1997 for €185k . In 2007 identical houses were selling for €700k . This month an identical house sold for €595k .
We are certainly close to the highs of 2007.
 
It is interesting, and insightful the few views offered here to reflect the topic title. I respect those views even as oddball as they are to each other, it exposes to some micro extent thow each of us is exposed to the 'market'.
Stock markets are hitting all time highs, bond yields at all time lows, property prices in capital cities hitting highs again.
Where is all this investment coming from? 2-3% growth rates?
 
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TheBigShort said:
It is interesting, and insightful the few views offered here to reflect the topic title. I respect those views even as oddball as they are to each other, it exposes to some micro extent thow each of us is exposed to the 'market'.
Stock markets are hitting all time highs, bond yields at all time lows, property prices in capital cities hitting highs again.
Where is all this investment coming from? 2-3% growth rates?
Click to expand...

the point made is that most stock markets with exception of US are only taking out the highs that were hit in 2000, 18 years ago, hardly a bubble, but you are concerned. On the other hand you have bitcoin which has risen 2000% in a few years and that in your view is not a concern and is worthy of your investment dollars. Is that not an "oddball" viewpoint.
I accept your point that our views are formed based on how much we have invested in a particular investment.
 
Sarenco said:
Galway

From December 1996 to December 2017, the total cumulative return of the S&P500 (with dividends reinvested) was 473%.

Judging by the CSO and earlier PTSB/ESRI indices, Dublin house prices have increased by less than 200% over the same period.
Click to expand...

Sarenco said:
Galway

From December 1996 to December 2017, the total cumulative return of the S&P500 (with dividends reinvested) was 473%.

Judging by the CSO and earlier PTSB/ESRI indices, Dublin house prices have increased by less than 200% over the same period.
Click to expand...

i obviously wrongly interpreted the common expectation experts have of the market , i always thought traditionally a doubling was expected every ten years , i.e if the market was 963 in december 1997 , it would be over 1800 by 2007 and 3600 by 2017

was i mistaken !
 
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That is fair comment Joe Sod. I suspect bitcoin is in a bubble. What its true value is, I do not know. I personally am not concerned. Should bitcoin burst, as predicted by some, where will all the money go? Other cryptos? Gold?, stocks? Property.
My guess a bit of everything with gold being the biggest riser.
On the other hand, if stocks and property burst, I expect bitcoin to rise.

As for the oddball comment, my point was that all the comments above were valid. But seeing as they all hold different perspectives, the comments are somewhat "oddball" with each other, and I include my own views in that.
 
Galway

Historically, the S&P has, on average, roughly doubled in value every 10 years, with dividends reinvested.

But that's a pretty meaningless statistic. We only have one investing lifetime and we are guaranteed not to achieve average returns on every euro invested during our lifetimes.

Also, it tells you nothing about inflation. It's the real (after inflation) return, net of costs and taxes, that ultimately matters.
 
joe sod said:
Europe and Japan have been long due a recovery. When you see the ftse 100 index still not much higher than its level at the turn of the century 18 years ago. Yes there have been big gains over the last year in european indices but they were long overdue. Is the big risk now in the bond market with interest rates set to keep rising for years to come.
Click to expand...

sarenco stated a number of weeks or months back that from 2002 to 2007 , europe outperformed the u.s market , maybe im wrong but it seems to me the equity markets are almost designed to benefit americans

i.e , if the dollar goes down in value , this benefits american companies and drives the u.s stock market up

by contrast if things improve in europe , the euro goes up in value and this is to the detriment of the euro stoxx 600 index , european markets while up this year peaked way back in the spring , the drop since then has coincided with the very strong appreciation of the euro v the dollar so even the 20% rise of the s + p this year is of very modest benefit to a european who owns u.s equities , add in the new changes lately where irish investors can no longer own u.s domiciled european based etf,s and also the irish situation where you have an eight year rule and a very high exit tax , its no wonder property appears more attractive to irish people with a little money
 
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robert 200 said:
I bought a 3 bed house in Fairview in December 1997 for €185k . In 2007 identical houses were selling for €700k . This month an identical house sold for €595k .
We are certainly close to the highs of 2007.
Click to expand...

185 k seems pretty high for a house in fairview back in 1997 , the lows of spring 2012 in dublin only reached 1999 levels as far as i know and that was for a very short time
 
TheBigShort said:
It is interesting, and insightful the few views offered here to reflect the topic title. I respect those views even as oddball as they are to each other, it exposes to some micro extent thow each of us is exposed to the 'market'.
Stock markets are hitting all time highs, bond yields at all time lows, property prices in capital cities hitting highs again.
Where is all this investment coming from? 2-3% growth rates?
Click to expand...

buffet reckons that stocks are not that expensive relative to interest rates , the s + p PE was something like 30 times in 1999 , today its about 21 with lower interest rates , european markets are outright cheap but then they have always been a good bit cheaper than u.s markets anyway due to the very small percentage of tech relative to the u.s and higher dependance on commodity companies and banks
 
joe sod said:
the point made is that most stock markets with exception of US are only taking out the highs that were hit in 2000, 18 years ago, hardly a bubble, but you are concerned. On the other hand you have bitcoin which has risen 2000% in a few years and that in your view is not a concern and is worthy of your investment dollars. Is that not an "oddball" viewpoint.
I accept your point that our views are formed based on how much we have invested in a particular investment.
Click to expand...

the DAX has risen by almost as much as the american markets this past decade , its an anomaly in europe of course , japan is still about half the value it was in 1990 but of course that was the biggest asset bubble in all of history
 
Sarenco said:
Galway

From December 1996 to December 2017, the total cumulative return of the S&P500 (with dividends reinvested) was 473%.

Judging by the CSO and earlier PTSB/ESRI indices, Dublin house prices have increased by less than 200% over the same period.
Click to expand...


Happy New Year Sarenco,

Two queries:

1. Where are you getting 473% - my "tool" tells me 423%; and

2. More significantly, are you not mixing oranges and apples in that you are quoting the S&P with income reinvested and not including rent in the house price return?
 
Many happy returns Dan.
Dan Murray said:
1. Where are you getting 473% - my "tool" tells me 423%;
Click to expand...
You're quite right - that should read 423%, not 473%.
Dan Murray said:
2. More significantly, are you not mixing oranges and apples in that you are quoting the S&P with income reinvested and not including rent in the house price return?
Click to expand...
Maybe. On the other hand, I'm not including real estate maintenance costs.
 
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