CAPE is 21.68 today, but you are wasting your time discussing equity valuations with a fixed income guy working for a huge firm. You got your panties in a wad when I kept pointing to CC charge offs being the driver in the reduction in outstanding revolving credit balances, not repayment from consumer card holders. Savings rates have declined again this year, people still can't control their buying impulses and continue to overspend. ZIRP sucks for retirees, especially those that can't afford taking on excess risk trying to generate 4-5% returns when they are lucky to find anything. What are they going to do, run down to the bank and replace their maturing 5-yr CD with one paying 1% or they could go buy a bond fund holding shite tons of bonds priced at a premium to face value and risk losing their asses. How much is ZIRP affecting their consumption capacity compared to where it might be if rates were within something resembling a historical range. I got an earful of that shite from multiple relatives over the holiday. Who is ZIRP really helping these days? It's a rhetorical question. Peace, brah, I am more with you than against you.

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Posted by Doc Fenton

New York, NY

Member since Feb 2007

52698 posts

Posted on 12/27/12 at 5:01 pm to tirebiter

quote:
CC charge offs being the driver in the reduction in outstanding revolving credit balances

quote:
Peace, brah, I am more with you than against you.

Agreed. My apologies if I went and dug up old bones.

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Posted by BennyAndTheInkJets

Middle of a layover

Member since Nov 2010

5605 posts

Posted on 12/28/12 at 11:14 am to tirebiter

quote:
From the July 2008 peak to October 2012, it's only gone from $2.58 trillion to $2.78 trillion. Given how much it usually increases in 4 years time in nominal terms, that's anemic.

Look from '09/'10 to today. I wouldn't call that rise anemic for the time period.

quote:
I think Shiller's cyclically-adjusted 10-year price earnings ratio (CAPE) stood at 21.45 for October 2012, down from the 27.31 level he records for October 2007, but up from the 13.32 level he records for March 2009.

Aside from the obvious accounting tricks used for P/E ratios, I'm not sure what all you gain from looking at those statistics. It shows you relative cheapness and richness of the equity market. I guess following my previous post about self-fulfilling prophecies you can take that as current market expectations for growth but that's kind of shaky at best.

quote:
you are wasting your time discussing equity valuations with a fixed income guy working for a huge firm

I worked equity at a small mutual fund as my first REAL financial job. I understand equity valuation but I acknoledge that my skills are limited compared to those that have been in the business for a long time. Also I wouldn't say my firm is huge, by AUM absolutely, by people employed we are still pretty small.

quote:
ZIRP sucks for retirees, especially those that can't afford taking on excess risk trying to generate 4-5% returns when they are lucky to find anything. What are they going to do, run down to the bank and replace their maturing 5-yr CD with one paying 1% or they could go buy a bond fund holding shite tons of bonds priced at a premium to face value and risk losing their asses. How much is ZIRP affecting their consumption capacity compared to where it might be if rates were within something resembling a historical range. I got an earful of that shite from multiple relatives over the holiday.

Closed system, you have people that benefit and people that don't.

quote:
Who is ZIRP really helping these days?

Mortgage originators, any corporation or small business that wants to borrow, and basically anybody that wants to borrow period. The idea is this helps anybody with an entrepreneurial spirit, only for that spirit to be immediately sucked away from regulation... All of my