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S&P / Leverage
Posted on 3/1/14 at 11:35 am
Posted on 3/1/14 at 11:35 am
All time highs for both. Hmmm...this one may be better viewed from the sidelines. Thoughts?
3
Posted on 3/1/14 at 11:37 am to ForeLSU
meh
Posted on 3/1/14 at 11:44 am to ForeLSU
I haven't looked closely at the leverage argument before, but there are other arguments for why the S&P might be currently overvalued, mostly relating to weak GDP and job growth relative to corporate earnings, and also to arguments about why international growth is not enough to adjust for the high stock prices of multinational corporations.
I don't think the correction will be anywhere near as bad as 2000 or 2008, because we seem to be close to the end of about a 14-year bearish period, but I do foresee a relatively moderate correction this year.
I don't think the correction will be anywhere near as bad as 2000 or 2008, because we seem to be close to the end of about a 14-year bearish period, but I do foresee a relatively moderate correction this year.
Posted on 3/1/14 at 12:13 pm to Doc Fenton
quote:I contend that the suppression of interest rates is a big contributor to the overvaluation of the market as well. I do think that valuation of multinational corporations are close to being accurate due to the low cost of labor in some Asian markets
I haven't looked closely at the leverage argument before, but there are other arguments for why the S&P might be currently overvalued, mostly relating to weak GDP and job growth relative to corporate earnings, and also to arguments about why international growth is not enough to adjust for the high stock prices of multinational corporations.
I don't think the correction will be anywhere near as bad as 2000 or 2008, because we seem to be close to the end of about a 14-year bearish period, but I do foresee a relatively moderate correction this year.
Posted on 3/1/14 at 12:15 pm to MontyFranklyn
Strange things can happen for extended periods of time when interest rates are suppressed.
Posted on 3/1/14 at 12:18 pm to Doc Fenton
quote:I personally look forward to the spike in rates. There are some huge plays to be made in the derivative markets
Strange things can happen for extended periods of time when interest rates are suppressed.
Posted on 3/1/14 at 12:27 pm to ForeLSU
Even if leverage is strongly correlated with the S&P, that doesn't mean it won't continue to increase.
Posted on 3/1/14 at 12:54 pm to foshizzle
Leverage is correlated to interest rates and interest rates are correlated to the S&P. While still a connection, I don't believe it's as direct as we think. If anything companies are levering up more and diluting shareholders less as they theoretically are increasing cash flows with debt dollars rather than equity dollars.
This post was edited on 3/1/14 at 12:55 pm
Posted on 3/1/14 at 1:10 pm to raw dog
quote:thus when the suppression of rates end the price will fall causing shareholders to sell making the price drop further.
Leverage is correlated to interest rates and interest rates are correlated to the S&P. While still a connection, I don't believe it's as direct as we think. If anything companies are levering up more and diluting shareholders less as they theoretically are increasing cash flows with debt dollars rather than equity dollars.
Posted on 3/1/14 at 6:53 pm to MontyFranklyn
It goes up oh so slow, and comes down oh so fast. Why wouldn't a prudent investor be taking profits given the level of margin, and not just margin, but the enormous amount of margin by retail investors right now?
As aggressive as I am, I guess I'm still pretty conservative. I'll always take 30-40% gains, and probably miss out on the rest of the bull market, but I have never ridden everything all the way back down. Never. Not once. I don't plan on starting now either. Again, I'll probably miss out on a lot of upside, but I'll also miss the entire downside.
My entire portfolio right now is options, speculative plays and deep value, beaten up turn around growth stocks.
When everyone was buying gold and silver, I already owned it. Now everyone is selling gold and silver, and I'm buying it. I'm not good enough to guess either the top or bottom, but I do recognize not blindly following the crowd.
Consistency always outperform occasional brilliance.
As aggressive as I am, I guess I'm still pretty conservative. I'll always take 30-40% gains, and probably miss out on the rest of the bull market, but I have never ridden everything all the way back down. Never. Not once. I don't plan on starting now either. Again, I'll probably miss out on a lot of upside, but I'll also miss the entire downside.
My entire portfolio right now is options, speculative plays and deep value, beaten up turn around growth stocks.
When everyone was buying gold and silver, I already owned it. Now everyone is selling gold and silver, and I'm buying it. I'm not good enough to guess either the top or bottom, but I do recognize not blindly following the crowd.
Consistency always outperform occasional brilliance.
Posted on 3/1/14 at 7:30 pm to Iowa Golfer
You can make a chart to fit any argument.
Posted on 3/1/14 at 10:20 pm to barry
I look at P/E's. Dow is 15.1; 500 is 18.5 (kinda high).
And I may buy some T tomorrow. Nice dividend and nice price (near 52 week low). Pro's and Con's on T?
And I may buy some T tomorrow. Nice dividend and nice price (near 52 week low). Pro's and Con's on T?
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