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What ends the speculative froth in the market?
Posted on 1/22/21 at 8:02 pm
Posted on 1/22/21 at 8:02 pm
Are we looking at these crazy gains until the Federal Reserve starts raising interest rates aggressively? Another wave of lockdowns from the South African COVID strain being more resistant to vaccines? Don’t get me wrong, I love doubling my portfolio in months not years, but this can’t be sustainable over the long run. I hear lots of comparisons to the 90’s dot com bubble, but this seems to be a lot more dispersed in stocks in many industries, albeit in tech mostly in 2020 and in clean energy tech especially recently.
This post was edited on 1/22/21 at 8:03 pm
6
Posted on 1/22/21 at 8:11 pm to GeneralLee
With nearly everyone dripping into their retirement accounts, is this the new normal?
Posted on 1/22/21 at 8:12 pm to GeneralLee
When interest rates begin to rise and risk is rebalanced
Posted on 1/22/21 at 8:16 pm to GeneralLee
IMO, it comes down to earnings.
The value of a business is what can it bring to the bottom line.
The stocks that are trading at valuations well above the earning power of the businesses will most likely fall in price.
When? It might start with increased oil prices. It might start with increased taxes. It will likely happen when interest rates rise.
The best one can do is evaluate the stocks you own and make sure that are not extremely overvalued relative their ability to make money.
The value of a business is what can it bring to the bottom line.
The stocks that are trading at valuations well above the earning power of the businesses will most likely fall in price.
When? It might start with increased oil prices. It might start with increased taxes. It will likely happen when interest rates rise.
The best one can do is evaluate the stocks you own and make sure that are not extremely overvalued relative their ability to make money.
Posted on 1/22/21 at 9:42 pm to GeneralLee
I think it will be when the Fed announces the coming expiration of their emergency lending facilities. That’s when the music will really stop.
Actually, they won’t explicitly say it’s coming to an end. It’ll be more of a “hint” buried in some Fed meeting minutes. But Wall Street will know it when they see it.
Actually, they won’t explicitly say it’s coming to an end. It’ll be more of a “hint” buried in some Fed meeting minutes. But Wall Street will know it when they see it.
Posted on 1/22/21 at 10:06 pm to GeneralLee
Idk but I replied with this in another thread when a poster said how much the Money Board has been hitting stocks lately.
quote:
Honestly, this is what scares me going forward. Since March you could've picked any random allotment of stocks and had multiple multi-baggers over and over.
Retail traders are raking it in with ease. Kids on Reddit, Twitter, and TikTok are about ready to polish their lambos with their Robinhood gains.
It's just feeling exuberant.
Posted on 1/23/21 at 8:00 am to rintintin
quote:
Honestly, this is what scares me going forward. Since March you could've picked any random allotment of stocks and had multiple multi-baggers over and over. Retail traders are raking it in with ease. Kids on Reddit, Twitter, and TikTok are about ready to polish their lambos with their Robinhood gains.
This reminds me of the trading environment in Q4’99 ..... exactly like this .... except the dot-com bubble was nowhere close to the size of the current bubble. IMO, There is a lot of money to be made, but not without it’s risk.
There are a lot of folks conditioned to “buy the dip” in today’s environment... much more than I remember existing in 1999-2000 ..... it’s something to remain aware of to be certain.
Good fortunes to all ......keep your head on a swivel.
Posted on 1/23/21 at 8:26 am to rintintin
quote:
Since March you could've picked any random allotment of stocks and had multiple multi-baggers over and over.
Misleading imo. In March, most equities were absurdly undervalued due to peak COVID panic. You would have had multiple multi baggers buying in 2009 as well
Posted on 1/23/21 at 8:36 am to GeneralLee
I read something this morning saying margin debt is almost at 800 billion right now. I wonder if a lot of the younger investors are trading on margin thinking things will keep going up? Interesting times.
Posted on 1/23/21 at 9:00 am to cadillacattack
Ironically, last night I'm walking with some friends from a restaurant to a bar and we come across a childhood neighborhood friend.
He randomly proceeds to tell us how much money he's made in the stock market the last few months, and how he isn't working but he's made more money than anytime in his life.
It was the most random shite and not but an hour or so after I posted my initial reply in this thread.
That is exactly what I'm talking about and I immediately told my friends as we walked away that it might be time to hedge.
He randomly proceeds to tell us how much money he's made in the stock market the last few months, and how he isn't working but he's made more money than anytime in his life.
It was the most random shite and not but an hour or so after I posted my initial reply in this thread.
That is exactly what I'm talking about and I immediately told my friends as we walked away that it might be time to hedge.
Posted on 1/23/21 at 9:05 am to LSUtoOmaha
quote:
Misleading imo. In March, most equities were absurdly undervalued due to peak COVID panic. You would have had multiple multi baggers buying in 2009 as well
This is true, although it took over 4 years to get back to all time highs after the 2008 crisis.
We got back to all time highs in 6 months after the covid crash.
Posted on 1/23/21 at 9:27 am to rintintin
The big pullback / crash won’t be until March. Monday, 3/22 to be exact.
You will see a fast, huge move up first once we get out of this slow grinding consolidation since Nov. in the SPX & Dow.
You will see a fast, huge move up first once we get out of this slow grinding consolidation since Nov. in the SPX & Dow.
This post was edited on 1/23/21 at 9:37 am
Posted on 1/23/21 at 9:28 am to Hussss
The trend is your friend until she dumps ya.
Posted on 1/23/21 at 9:44 am to Shepherd88
quote:
When interest rates begin to rise and risk is rebalanced
This is the answer. The stock market is the only place to grow your money with rates being as cheap as they are. Fixed income is dead at least for awhile and hoarding cash in a savings account is almost worthless at this point. I think in this environment high-yield dividend stocks are gonna be on fire this year. We'll see.
As far as valuations go, there is crazy speculation all over the place. The bubble will burst at some point. I hope to be sitting at about 40-50% cash when that happens.
Posted on 1/23/21 at 9:55 am to Triple Bogey
We might not see interest rates rise for another year and 1/2 but the question is when will the market anticipate it.
Posted on 1/23/21 at 9:56 am to Triple Bogey
quote:
I think in this environment high-yield dividend stocks are gonna be on fire this year. We'll see.
everyone who has the means should have a stack of dividend stocks of a size relative to their total. Vanguard has an excellent dividend growth fund that pays me a not insignificant dividend income every year.
now is actually a good time for those who’ve made a few bucks this past year to make sure they have some coverage there. the dividend investors haven’t gone anywhere during this run
KO for example is undervalued and paying a dividend. Win/win
Posted on 1/23/21 at 10:14 am to Hussss
quote:
The big pullback / crash won’t be until March. Monday, 3/22 to be exact.
This concerns me now. If even Hussss thinks we won’t go down for the next two months then we are beyond frothy.
Posted on 1/23/21 at 10:28 am to Hussss
quote:I read this reply without the Posted By box in my iPhone window.
The big pullback / crash won’t be until March. Monday, 3/22 to be exact.
You will see a fast, huge move up first once we get out of this slow grinding consolidation since Nov. in the SPX & Dow.
No lie, I said to myself “That’s got to be Husssssss” as I scrolled to the left.
Posted on 1/23/21 at 10:55 am to go ta hell ole miss
quote:
This concerns me now. If even Hussss thinks we won’t go down for the next two months then we are beyond frothy.
Hussss has called top at least twice since November. His track record is less than stellar, he may be realizing it himself
Posted on 1/23/21 at 5:12 pm to Shepherd88
Fed is not touching rates through 2023, at the earliest. US Debt will be over 40 trillion + and soaring within 3 years
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