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U.S. Stocks Havent Been This Overbought in 22 Years
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Date: December 11th, 2017 1:01 PM Author: thriller light parlor dysfunction U.S. Stocks Haven’t Been This Overbought in 22 Years
U.S. stocks rose to another record last week, and in the process reached their most overbought level in more than two decades, according to the relative-strength index. The technical indicator of market momentum signals an increased potential for a pullback when it rises above 70. The S&P 500 closed Friday with an RSI level just below 82. |
Date: December 11th, 2017 1:02 PM Author: maize spectacular double fault garrison we're due for a massive correction and it's going to be like '08 all over again (http://www.autoadmit.com/thread.php?thread_id=3824878&forum_id=2#34890503) |
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Date: December 11th, 2017 1:03 PM Author: thriller light parlor dysfunction (http://www.autoadmit.com/thread.php?thread_id=3824878&forum_id=2#34890509) |
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Date: December 11th, 2017 1:04 PM Author: internet-worthy international law enforcement agency coldplay fan (Said this foemlast 8 years) (http://www.autoadmit.com/thread.php?thread_id=3824878&forum_id=2#34890525) |
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Date: December 11th, 2017 2:38 PM Author: thriller light parlor dysfunction (http://www.autoadmit.com/thread.php?thread_id=3824878&forum_id=2#34891344) |
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Date: December 11th, 2017 4:37 PM Author: Trip ticket booth (http://www.autoadmit.com/thread.php?thread_id=3824878&forum_id=2#34892357) |
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Date: December 11th, 2017 2:59 PM Author: Galvanic Codepig Casino Good. Would love some cheaper prices. Boomer retirement accounts could use a good throttling too. (http://www.autoadmit.com/thread.php?thread_id=3824878&forum_id=2#34891492) |
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Date: December 11th, 2017 2:44 PM Author: sienna site What's the overall market P/E ratio and isnt 60% of the growth in like 10 stocks? (http://www.autoadmit.com/thread.php?thread_id=3824878&forum_id=2#34891393) |
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Date: December 11th, 2017 3:27 PM Author: Hyperventilating filthy pisswyrm A huge amount of the growth IN PRICE has been concentrated in a handfull of stocks including FANG. These companies are also now extremely widely held in large mutual funds like Fidelity's Balanced Fund and other indexes/ETF's.
You have this layering upon layering of leverage and overpriced shit which makes me really wonder about what the next crash or bust is going to look like.
What concerns me the most is that you have a huge population of people who are "doing what they are told" and taking the "low risk" route by buying indexes and mutual funds - but in this scenario the Indexes and Mutual Funds that have been billed as being balance and safe are anything but - they have been distorted and perverted. |
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Date: December 11th, 2017 3:29 PM Author: Ruddy laughsome shrine so where should we be investing our money? (http://www.autoadmit.com/thread.php?thread_id=3824878&forum_id=2#34891731) |
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Date: December 11th, 2017 3:41 PM Author: cerise marketing idea scamcoins (http://www.autoadmit.com/thread.php?thread_id=3824878&forum_id=2#34891835) |
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Date: December 11th, 2017 5:56 PM Author: Disgusting Pearly Plaza Roast Beef (http://www.autoadmit.com/thread.php?thread_id=3824878&forum_id=2#34892931) |
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Date: December 11th, 2017 3:31 PM Author: thriller light parlor dysfunction tbf, they are distorted and perverted because the money supply/interest rates are fucked up, so a bunch of extra money is fleeing to any asset that is seen as a hold of value like stocks, real estate, and even crypto
until the money supply shrinks, which is going to take a while, there is no real catalyst for things to crash |
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Date: December 11th, 2017 3:41 PM Author: Hyperventilating filthy pisswyrm Theoretically the money supply decreases when interest rates go up due to the pull effect that has on the broader cash economy for settlement of payments. As interest rates rise, the excess money gets sucked out of the system as debts are settled and whatever else occurs.
Like you said, the demand for store of value assets has exploded since 08 - but that has nothing to do with rational investing and economic behavior. When you invest, you purchase something that can PRODUCE capital. When you trade, you are relying on the Greater Fool Theory due to no inherent intrinsic value (Gold, Art, Bitcoin, Oil)
What I think might happen is that there are going to be some insane liquidity crunches if it ever stops being like it is currently and the question is - whats the catalyst? Buffett himself has said that it will be a VERY interesting day when the interest rates rise significantly.
I personally thing that the catalyst will be continually rising interest rates, which will force the mark down in price of capital producing assets (shares of companies, real estate, farmland, etc) due to a higher risk free interest rate.
At a 3% interest rate on the 10 year however, I think that a P/E of 35 (i.e earnings yield of 2.8%) on the broader market is simply not sustainable from a rational economic perspective. |
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Date: December 11th, 2017 3:44 PM Author: Alcoholic National Security Agency Doctorate I'd dispute the claim that oil has no inherent intrinsic value (http://www.autoadmit.com/thread.php?thread_id=3824878&forum_id=2#34891856) |
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Date: December 11th, 2017 3:45 PM Author: Hyperventilating filthy pisswyrm It produces nothing and its price is solely determined by market based actors is what I'm trying to say - different beast then when you compare to earnings from a utility company, rent from an apartment, crops from a farm etc. (http://www.autoadmit.com/thread.php?thread_id=3824878&forum_id=2#34891872) |
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Date: December 11th, 2017 5:49 PM Author: Motley business firm mad-dog skullcap Oil has no intrinsic value? You’re done here. (http://www.autoadmit.com/thread.php?thread_id=3824878&forum_id=2#34892892) |
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Date: December 11th, 2017 7:19 PM Author: Hyperventilating filthy pisswyrm See the above post I made. Of course I know it has "value" as energy units and related petchem prodcts - I'm saying that it does not produce capital goods of itself. A barrel of oil will not magically produce more smaller barrels of oil. (http://www.autoadmit.com/thread.php?thread_id=3824878&forum_id=2#34893376) |
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Date: December 11th, 2017 2:49 PM Author: Histrionic nibblets (http://www.autoadmit.com/thread.php?thread_id=3824878&forum_id=2#34891425) |
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Date: December 11th, 2017 2:55 PM Author: Curious Embarrassed To The Bone Coffee Pot Keep shorting a bull market, little bear cubs (http://www.autoadmit.com/thread.php?thread_id=3824878&forum_id=2#34891466) |
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Date: December 11th, 2017 8:42 PM Author: infuriating milk gtfo - you didnt build that (http://www.autoadmit.com/thread.php?thread_id=3824878&forum_id=2#34893968) |
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Date: December 11th, 2017 3:24 PM Author: Well-lubricated turquoise church building Explain why it is overbought. Corporate tax rate is going down. Unemployment is at a 17 year low. Consumer confidence is at a 17 year high. You seem to think people are just going to decide, welp, had enough of this! Point to some little-known trend that points to why there will be a correction (like the prevalence of stated income/NINJA loans in 2007). I'll wait. (http://www.autoadmit.com/thread.php?thread_id=3824878&forum_id=2#34891692) |
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Date: December 11th, 2017 3:26 PM Author: Ruddy laughsome shrine because it can't keep going higher (http://www.autoadmit.com/thread.php?thread_id=3824878&forum_id=2#34891706) |
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Date: December 11th, 2017 3:34 PM Author: Silver Startling Dog Poop Forum This may be true, but it doesn't mean there will be a crash. We might just go sideways for a couple year. We might go up for another year, then go sideways. We might go up for three, down for two, but going below now.
One way for PE to drop is for earnings to rise. The price just doesn't have to drop. |
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Date: December 11th, 2017 3:32 PM Author: Hyperventilating filthy pisswyrm Invert the P/E ratio of the S&P 500 (to get the earnings yield) and then compare it against the 10 year yield.
When you have a P/E of 25 on the SP 500 - thats an earnings yield of 4% (i.e 1/25) - then compare that to the 10 year bond yield - lets say its 2.25% - that spread is the net benefit you get from owning equity securities vs government bonds. Currently the spread is probably around 1.75% - what happens when Interest rates on the 10 year get to 3%? That spread narrows to 100 basis points. What happens when interest rates continue to go up?
What I am saying is that from a rational economic perspective there is a theoretical maximum in stock market value when you measure it against the 10 year - which is around a P/E of 30-35. A P/E of 35 on the broader market is an earnings yield of 2.8%... |
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Date: December 11th, 2017 3:34 PM Author: Ruddy laughsome shrine dumb here. can you explain in layman's terms? (http://www.autoadmit.com/thread.php?thread_id=3824878&forum_id=2#34891766) |
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Date: December 11th, 2017 3:37 PM Author: thriller light parlor dysfunction interest rates are really low so bonds arent worth investing in instead, people pour money into anything and everything else when interest rates go up, some of that money will go back to bonds, which means prices of everything else should go down
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Date: December 11th, 2017 5:55 PM Author: tantric theatre jew Thank you (http://www.autoadmit.com/thread.php?thread_id=3824878&forum_id=2#34892922) |
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Date: December 11th, 2017 5:52 PM Author: Motley business firm mad-dog skullcap Interest rates will never go up again (will never breach 3%, until the end of the USA). (http://www.autoadmit.com/thread.php?thread_id=3824878&forum_id=2#34892912) |
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Date: December 11th, 2017 5:55 PM Author: awkward set (http://www.autoadmit.com/thread.php?thread_id=3824878&forum_id=2#34892924) |
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Date: December 11th, 2017 5:57 PM Author: Big canary bawdyhouse really tough guy You should look at this over time. We had negative equity spread in the 80s and 90s.
Think ddm/ wacc terms. Growth is an important variable too. |
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Date: December 11th, 2017 5:51 PM Author: Motley business firm mad-dog skullcap Most people invest in stocks for the long term. What’s going to happen with all those numbers over the next decade? Are we not going to ever have a recession again? (http://www.autoadmit.com/thread.php?thread_id=3824878&forum_id=2#34892908) |
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Date: December 12th, 2017 8:15 AM Author: submissive public bath Corporate tax rate cut is already priced in (http://www.autoadmit.com/thread.php?thread_id=3824878&forum_id=2#34896877) |
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Date: December 11th, 2017 6:00 PM Author: Flesh frum institution Should I buy GE? (http://www.autoadmit.com/thread.php?thread_id=3824878&forum_id=2#34892951) |
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Date: December 12th, 2017 8:06 AM Author: pearl contagious gas station As a hedge against a potential stock market correction, should I invest in short term bonds in my taxable account? Probably gonna need the money in a few years to buy a house. . . (http://www.autoadmit.com/thread.php?thread_id=3824878&forum_id=2#34896852) |
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Date: December 12th, 2017 8:11 AM Author: Aphrodisiac space May as well just put the money in a high yield CD if you are going to do that. The bond principal can still go up and down. (http://www.autoadmit.com/thread.php?thread_id=3824878&forum_id=2#34896865) |