Longest Bull Market in History

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@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.
 
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.
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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
 
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.
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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.
 
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.
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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.
 
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.
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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.
 
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.
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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
 
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...…:(!!!
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Sister in law same joined about that time too, not a bean left.
 
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
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c.f. Enron
 
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
 
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
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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.
 
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
Click to expand...

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 .
 
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 .
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I've asthma myself so despite being early forties, I'm in the "at risk" category
 
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.
 
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.
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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
 
galway_blow_in said:
Buffett never says anything new in those interviews.

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

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...
 
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