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The Felder Report


perulv
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A while ago I started subscribing to https://thefelderreport.com/. Can't remember where I came across the site first place. Every week is seems there is a new graph showing how the market is horribly overvalued, or in some other way a bad place to invest. I tend to agree with this sentiment (and also remind myself that I should not try to predict anything, especially not the future), but my question is this: Is he known for being generally bearish? What's your take on his insights? They make sense to me, but I almost feel I also should read the opinions of some super-bullish person, to balance it out a bit :)

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A while ago I started subscribing to https://thefelderreport.com/. Can't remember where I came across the site first place. Every week is seems there is a new graph showing how the market is horribly overvalued, or in some other way a bad place to invest. I tend to agree with this sentiment (and also remind myself that I should not try to predict anything, especially not the future), but my question is this: Is he known for being generally bearish? What's your take on his insights? They make sense to me, but I almost feel I also should read the opinions of some super-bullish person, to balance it out a bit :)

 

I honestly think most investors are better off ignoring these macro biased reports. I think it’s correct to think about the economic cycle in broad terms (Dalio, Howard Marks early vs late cycle), possibly take this into account but don’t get obsessed with it or conclude that any of this really is going to tell us what is going to happen and perhaps even more importantly when.

 

Again, this is just the circle for competence with stocks. If macro is your circle of competence than by all means used it for investing. I don’t think a lot of investors are good at it though, so they better stock with what they know rather than gamble with the unknown.

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The guy isn’t wrong.  Historically, there has been a pretty clear negative relationship between how expensive the market is and how good its future long term (by which I mean 10+ years) returns are (which BTW should not surprise any value investor).  And yes the US market index is indeed pretty expensive by historical standards.  The implication is that unless this time is different, future long term returns will suffer.

 

The catch though is that this is pretty useless for short/mid term forecasting. Maybe the market will start crashing on Monday. Maybe it will go up 60% over the next two years and then crash. Or maybe it will just slowly grind higher over the next few decades.

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I honestly think most investors are better off ignoring these macro biased reports. I think it’s correct to think about the economic cycle in broad terms (Dalio, Howard Marks early vs late cycle), possibly take this into account but don’t get obsessed with it or conclude that any of this really is going to tell us what is going to happen and perhaps even more importantly when.

 

Again, this is just the circle for competence with stocks. If macro is your circle of competence than by all means used it for investing. I don’t think a lot of investors are good at it though, so they better stock with what they know rather than gamble with the unknown.

 

No, it is by no means within my circle of competence :) But as you say, there might be value in having some general feel/opinion on where we are in the cycle. A year ago I thought the best way of investing was to ignore macro, "the market", altogether. But after reading Howard Marks, I do try to integrate some opinion on where the market is into my investing. I still don't know if it will make me a better investor though, and the line between trying to time the market and being "aware of it" is not always easy to find.

 

Is there anyone positive right now? Everyone "knows" that we're 10 years into a cycle and that a bear market is coming soon.

 

One of the first things someone taught me about "the market", is that it is pretty efficient. Probably no all the time, or we would all be wasting our time. But if "everyone knows" that things are going to downhill, "everyone" would sell now before it goes downhill, and the market would already be down. This actually puzzles me when I stuff like "everybody agrees that the inverted yield curve is bad news", and the market is pretty close to all time high  ???

 

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