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Thread: Market Valuation

  1. #141
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    The march upwards of the S & P 500 was much influenced
    by the decline of the US $.

    So in 2017 S & P 500 went up 26 % in terms of US $
    but only 9 % in terms of Euros.

    https://www.pressreader.com/canada/t...82114932003603

  2. #142
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    Stock markets went higher, faster and more leveraged than ever.

    John Husman expects a 65 % correction to complete the speculative cycle.

    https://www.sprottmoney.com/Blog/the...09-022018.html

  3. #143
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    Six forces that might push stocks even lower:

    ---volatility ETF's volume
    ---RSI (Relative Strength Index) is in overbought territory
    ---high valuations, comparable with previous bubbles
    ---bond yields rising, leading to FED rising interest rates
    ---inflation rising
    ---tax cuts lowering profits and increasing inflation +interest rates

    https://www.investopedia.com/news/6-...m_medium=email

  4. #144
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    Stock prices and interest rates
    ----------------------------------

    Stock prices are quite sensitive to interest rates.
    The report below gives a simple explanation:

    https://johnhcochrane.blogspot.ca/

    P/D= 1/(r-g)

    P= price
    D= dividend
    r= return
    g= growth

    Presently approximative P/D=0.025 or 2.5 %

    Just a decrease of 0.5 % in (r-g)=0.02 or 2.0 % would
    imply a rise in P/D=50 or a rise of 25 % in stock price
    (assuming dividend D is constant).

    Conversely, an increase of 0.5 % in interest rate r
    would mean (r-g)=0.03 or 3.0 %, P/D=33 % or
    a 16.7 % fall in stock prices.

    No wonder stock prices are so volatile.

  5. #145
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    Earnings and stock prices
    ----------------------------

    Although earnings and stock prices have both gone up,
    there is a disconnect between them.

    As S & P more than quadrupled from its post financial crisis
    nearly 9 years ago to its record high in January 2018, only
    40 % of these gains can be attributed to earnings.

    There is not always about fundamentals. There are technicals,
    valuations, sentiment, money flows etc

    http://www.pressreader.com/canada/th...81934543414551

  6. #146
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    Markets, inflation and interest rates.
    ----------------------------------------

    https://www.bloomberg.com/view/artic...interest-rates

    Theory: if interest raise, bonds are more attractive and compete with stocks.

    Theory: in inflation rises, wages and input costs rise and so corporate profits decline.

    Nice theories, but , in real life, markets are more complex than that.

    What the data show ? Inflation and rates are different animals.

    Stocks did pretty well in periods of rising rates. (see table in report).

    Stocks did a lot poorer in periods of rising inflation.

  7. #147
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    Warren Buffett about present stock prices:

    https://ca.rbcwealthmanagement.com/d...commentary.pdf

    " We did not make an acquisition in 2017 because the prices
    reached an all time high."

    "Our cash reserves are now 116 $ billion."
    My note: a few months ago they were ca 100 $ billion.

  8. #148
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    The Fed: market valuation is still high:

    https://www.cnbc.com/2018/04/03/feds...orrection.html

    Comparing market valuation for many countries:

    https://www.starcapital.de/en/resear...ket-valuation/

    You can see the CAPE (Shiller) ratio for USA is 30. just a few
    countries have a CAPE ratio higher than that (Ireland, Denmark..)

  9. #149

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    Oak333 - I believe the full context of her speech must be weighed. In her speech today Fed Governor Lael Brainard also noted:

    "Along with her warnings about potential overvaluations in markets, Brainard said Fed policy has helped stem the type of excessive risk-taking that led to the financial crisis of 2008.

    For instance, she said stock market valuations don't look so bad compared to the still-low level of Treasury yields, and pointed out that lenders appear aware of the danger for property value to reverse.

    She also said there are few signs that crypotcurrencies would pose a widespread threat to the financial system.

    "Despite elevated asset valuations, overall risks to the financial system remain moderate in no small part because important financial reforms have encouraged large banking institutions to build strong capital and liquidity buffers," Brainard said."

  10. #150

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    The Banks are in, they still got nowhere to go, the Fed is still negative towards them IIRC
    so


    the fluctuations are:
    The Elite are repositioning themselves from the loses on NWO Medical Care in the US of A
    so
    Money Out!
    and
    Money In, regularly from the QE the banks are still absorbing
    has to be

    anyone think the 401k traders, the retirement traders, the pension traders are interested in removing profits from the market now?

    This Is The Best Everyone Has Had In 10 Years, We've Made Our Money Back, oh, wait

    now to reposition while the outflow is still covered, by the inflow from the banks

    if it's too simple, i maybe wrong
    LOL

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