While that may be true, it really is not attributable to renewables. Quite the opposite, in fact. A combination of fossil fuel generation and incredibly high demand due to data-centre activity is what drives our higher prices, and the sooner those who seem to consider it a virtue to moan about the Greens accept that fact, the better for all of us. It’s just cold, hard economics, science and geopolitics - renewables are cheaper, cleaner and a more secure source of energy.thats your personal circumstance, thats very different from the irish electricity market which has the most expensive electricity in Europe, thats a fact. Its not just about renewables but the fact that we have alot of small inefficient power stations , a large and weak grid for the size of population, and have installed alot of emergency expensive generators (diesel generators basically) to keep the lights on. So rather than building efficient power stations we have been putting in emergency generators. Here is an article explaining it
Ireland now has EU’s highest electricity prices – Here’s how you can save
Electricity prices for Irish households are now €500 higher than the EU average, according to new data from Eurostat.www.newstalk.com
Asset allocation in a US stock market bubble
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SquirrelChaser
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I believe that the energy security aspect of renewable energy hasn't gotten anywhere near the attention it deserves, especially when it comes to decentralised generation.
Ukraine is going into its third winter of strikes aimed at its energy infrastructure. Such strikes are only effective because of centralised power generation and power distribution networks, and it's therefore possible to cut power to large areas with relatively few strikes.
Contrast that with wind turbines for every town and village, solar on every rooftop, and batteries in every home, farm and business. It's not that strikes on power stations & substations don't matter anymore, but their impact is massively reduced. In the Irish context it'd be more about mitigating the impacts of winter storms and fluctuating fossil fuel prices, but the benefits are still there.
Yeah, for share of electricity we're not the worst, though we're the third-worst Western European nation after France and Belgium (both heavily nuclear). In any case, it's hard to look at Ireland's electricity generation mix, and claim that it renewable generation is responsible for Irish power being more expensive than elsewhere in Europe; we just don't have that much renewable generation.
That’s local energy security, but there’s also geopolitical energy security too. We saw what happened to natural gas prices (and consequentially electricity prices) when Russia invaded Ukraine. A middle-east conflict that could destabilise oil delivery is never too remote a possibility either. And then you could have a manufactured 70’s-style OPEC- or Trump-led supply-constraining crisis too, who knows!
Tbh, when you think of how we under-exploit vast tracts of land for beef-farming and associated feedstocks when it could provide better food security through crop farming or better energy security through wind/solar, it’s almost criminal how parochial we are as a nation!
You are completely underestimating what the Ukrainians are dealing with , there is no way in a million years the Irish grid would be able to cope with what ukraine is doing. For a start we have no radar and air defences ,the Russians would have knocked out the country instantly. Also ukraine had a huge nuclear power generation which is zero carbon and runs 24 hours, 7 days a week. You need a constant supply to keep the grid stable, we need conventional power stations for that but since we closed down some prematurely we now need diesel generators to fill in when the wind is not blowing. There hasn't been much wind power on the grid in last few days, yet the lights are still on. That's because of money point , gas stations and diesel generation at peak demand.
Grid architectures change very, very slowly, and particularly changing from centralised non-variable to decentralised-variable generation is a massive structural change. But for an island grid like ours with the natural advantages we have with wind in particular, it’s absolutely the right thing to do. Yes, we are adding tons of variable renewables but alongside interconnector pipelines, lithium grid-scale battery storage, flywheel inertial storage, etc.
Dr Schiller’s indicator does not identify bubbles, nor is it is market timing device. It indicates periods when if you invest in the market you should expect your return to be lower than if you had invested at a lower CAPE ratio.
And it’s debatable if US stocks, particularly tech leaders, are excessively priced. The Americans are just better and this is reflected in stock market values. Here's a general overview of the Return on Invested Capital (ROIC) for the "Magnificent Seven" US tech stocks, i.e. Apple, Microsoft, Amazon, Alphabet (Google), Meta Platforms, Nvidia, and Tesla. They all have elevated ROIC:
- Apple (AAPL): Approximately 27%
- Microsoft (MSFT): Around 30%
- Amazon (AMZN): Roughly 12%
- Alphabet (GOOGL): About 20%
- Meta Platforms (META): Approximately 25%
- Nvidia (NVDA): Around 35%
- Tesla (TSLA): Roughly 15%
Here are the Return on Invested Capital (ROIC) values for the top seven technology companies by market capitalization in the EuroStoxx50:
- ASML Holding: Approximately 25%
- SAP SE: Around 15%
- Siemens AG: Roughly 12%
- Schneider Electric: About 10%
- Dassault Systèmes: Approximately 14%
- Infineon Technologies: Around 11%
- STMicroelectronics: Roughly 13%
If we look at company profitability, here are the individual Earnings Per Share (EPS) for the "Magnificent Seven" US tech stocks:
- Apple (AAPL): $6.11
- Microsoft (MSFT): $10.03
- Amazon (AMZN): $1.30
- Alphabet (GOOGL): $5.61
- Meta Platforms (META): $11.22
- Nvidia (NVDA): $3.34
- Tesla (TSLA): $3.62
Here are the individual Earnings Per Share (EPS) in USD for the top seven technology companies by market capitalization in the EuroStoxx50, converted at the current exchange rate of 1 USD = 0.95 EUR:
- ASML Holding: $20.14
- SAP SE: $5.92
- Siemens AG: $5.57
- Schneider Electric: $7.59
- Dassault Systèmes: $0.86
- Infineon Technologies: $2.66
- STMicroelectronics: $5.11
[All the above financial stats from asking Copilot a few questions, which I think shows an immediate efficiency benefit of AI.]
American stocks win hands down on capital allocation, generation of returns and payouts to shareholders. And this is assisted by efficient capital markets; and a pro-business, pro-innovation and pro-technology business environment fostered by American society. This benefits all American stocks with e.g. the S&P doubling in value between 2012 and 2021. And it benefits American investors, pensioners, etc.
I don’t see any reason to reduce one’s allocation to US stocks, although returns may not be as stellar in the immediate future.
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SquirrelChaser
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I think you're mistaking correlation for causation.
First, 5 of the top 7 occupy oligopolistic or effective monopolistic positions in their respective industries which facilitates supernormal rofits etc. There's very few monopolies in Europe due to effective competition law enforcement which simply doesn't exist in much of the world.
Second, around 60% of American adults own stocks while around 15% of Europeans do. Ignoring cross border investment, there's just far more money going into the US stock markets which inevitably inflates them more than US stocks. Europeans tend to keep their money in the bank not the stock market- it's a problem which has been attracting a bit more attention recently.
The S&P 500 lost decade - how to protect your retirement
The S&P 500 has generated strong returns in recent years. But should you invest all of your retirement savings in this index?
www.pyrfordfp.com
a bit more sober reading regarding the S&P 500 , between year 2000 and 2010 the S&P500 had a lost decade and investors actually lost money in real terms. Also the value of the dollar fell aswell, a double whammy for international investors. By 2010 there was huge negativity regarding stock market investing after having suffered both the technology and great financial crash, in fact the GFC was actually a domino from the dot com crash
As a stock investor - I like oligopolies & monopolies....they are good for returns.......competition is for losers, as they say.....and the losers are shareholder returns........the best contra example I can think of......is European telecoms......its a triumph for competition authorities.....there is just endless competition on the fixed and wireless side in most European countries including Ireland.....European's enjoy some of the cheapest mobile data plans in the OECD.....but there is no free lunch.......European telecoms stocks are at twenty year lows....they generate like 2% return on assets....they run leveraged to the hilt to try to get the RoE up to 8%....but its really below the cost of equity capital........what European telecom customers get (besides low prices)....is generally a service that is below par relative to other first world nations.......speeds/connectivity/coverage etc.....its an example IMO of competition authorities throwing the baby out with the bath water.....in pursuit of 'perfect' competition
No offence, but your posts are very difficult to read and understand with all the unnecessary ellipses ("...") and the lack of formatting into paragraphs etc. Consequently you may not be getting as much or as good feedback as you would if your posts were easier to read/understand.
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Noted - alot my posts are on the run and on the phone....when askaboutmoney starts paying me more I'll start formatting them and hire an editor
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SquirrelChaser
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Well, my pension is 100% in US index trackers, because I agree with you that oligopolies are good for investors.
I'm not sure what your point is about telecoms in Europe? But I do remember when competition was introduced to the Irish mobile market, and prices dropped by about 75% within about 6 months while market penetration rapidly approached 100%. And i guess that's my rebuttal- a high quality product which i don't have access to is utterly worthless to me. I have unlimited data now for €13 a month and I've honestly not noticed an issue with coverage or connectivity anywhere in Europe.
There's plenty of examples of European countries making plenty of money through effective competition. Ryanair would be one obvious example. I don't see it as a problem that they can't extract supernormal profits or that there's no European Musk, Bezos or Zuckerberg. I think that overall Europeans do fine (although obviously not everyone is fine).
But again, I'd rather l continue to live & work in Europe while my money continues to live and work in the US via an index fund.
If you had purchased US equites with perfect hindsight at the very peak of the market you would have been just fine over the long term
For the avoidance of doubt I’m not recommending just investing in the S&P 500, just that investors shouldn’t fret about trying to time the market.
For the avoidance of doubt I’m not recommending just investing in the S&P 500, just that investors shouldn’t fret about trying to time the market.
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yes but while that is true those figures are flattered by the exceptional performance of US markets since Covid, it would be interesting to run those figures again using March 2020 as the end point or September 2008. All of those tables are highly dependant on starting and end points
Not really? The start points are the various historical pre-crash peaks and the end point is the same in all cases (31st October 2024).
I only have annual data to hand but let’s follow the argument to end of 2022 so your last year is negative 18.1 and you don’t get the last 2 years
1929 is 10.1%
1940 is 11.3
1970 is 10.4
1987 is 10.4
2000 is 6.3
2007 is 8.6
2020 is 7.7
Doesn’t seem to make that much difference
For the avoidance of doubt I’m not recommending just investing in the S&P 500, just that investors shouldn’t fret about trying to time the market.
1929 is 10.1%
1940 is 11.3
1970 is 10.4
1987 is 10.4
2000 is 6.3
2007 is 8.6
2020 is 7.7
Doesn’t seem to make that much difference
For the avoidance of doubt I’m not recommending just investing in the S&P 500, just that investors shouldn’t fret about trying to time the market.
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it makes alot of difference the closer the years are though, the performance has now halved because the end year is 2022 rather than 2024. thats my point, it would be even more so if you were using a down year like 2020 or even 2021. Most people look at 10 or 20 year investing horizons therefore how things have performed since 1970 or 1987 is now too long ago to be relevant, in the long term we are all dead
Historical data is hardly irrelevant when trying to estimate your expected return.
2020 and 2021 were both positive years and the final year was a nightmare for investors.
But what are you going to buy instead. This is the reason why index investing works.
You buy everything and don’t worry about getting it perfectly right. You just know you’ll do better than sitting it out fretting about market timing.
This is another way of looking at the same data over more “reasonable” time periods
2020 and 2021 were both positive years and the final year was a nightmare for investors.
But what are you going to buy instead. This is the reason why index investing works.
You buy everything and don’t worry about getting it perfectly right. You just know you’ll do better than sitting it out fretting about market timing.
This is another way of looking at the same data over more “reasonable” time periods
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SquirrelChaser
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If that is true then most people are total fools.
If you start investing at 40 in your pension (like i did) your investment horizon should be at least 4 decades, given an average life expectancy of 80. Longer if you don't smoke.
Also, most people dollar cost average (over decades with pensions) which smooths the curves significantly.
Making a 40 year investment decision on the basis of the performance of a random 10 year period is just stupid. Which is why I'll start using the last 10 years performance to model my path to retirement shortly after hell freezes over.
And anyway, even the worst of those at 6. 3% would be an annualised return of around 4% after inflation. Better than any reasonable alternative no matter what way you look at it.