Have We Hit The Top?

[brobro777]

3 minutes ago, gfp said:

Interesting that the entire SPX has formed a head and shoulders pattern.  I'm not predicting it will break down or advocating people should change their investment positioning - but something to keep an eye on since there will be others watching for a close below that neckline.

 

 

Haha I read Technical Analysis of Stock Trends by Edwards and McGee many years ago

 

 

[TwoCitiesCapital]

21 hours ago, gfp said:

Interesting that the entire SPX has formed a head and shoulders pattern.  I'm not predicting it will break down or advocating people should change their investment positioning - but something to keep an eye on since there will be others watching for a close below that neckline.

 

 

Even if a true signal - isn't the drawdown expected to be symmetrical to the head to the neckline? So in this case about 20 pts or ~3%?

Edited December 31, 2024 by TwoCitiesCapital

[gfp]

57 minutes ago, TwoCitiesCapital said:

 

Even if a true signal - isn't the drawdown expected to be symmetrical to the head to the neckline? So in this case about 20 pts or ~3%?

That’s right - Panic!!

[james22]

On 12/26/2024 at 6:28 PM, james22 said:

Encouraging.

 

But what we're missing here is that we've had decades of just sitting on our asses, leveraging cheaper labor versus going out of our way to really push the boundaries of engineering and manufacturing. And now that we have a company that's willing to do that because the leader is viewing that as a first principles approach to manufacturing, right? Instead of like, okay, cheap labor is good, but why aren’t we pushing manufacturing and engineering as much as we can to make this as efficient and as productive as possible?

 

https://www.zerohedge.com/technology/musk-led-manufacturing-revolution-nobody-talking-about

 

 

[brobro777]

Holy moly egg prices are $9 per dozen for cheapest Kroger brand in Los Angeles

 

It feels like there's a good chance 2025 will be full of action and volatility

[Spekulatius]

7 hours ago, brobro777 said:

Holy moly egg prices are $9 per dozen for cheapest Kroger brand in Los Angeles

 

It feels like there's a good chance 2025 will be full of action and volatility

$3.49 at a Trader Joe in NC. Similar prices in MA.

[brobro777]

9 minutes ago, Spekulatius said:

$3.49 at a Trader Joe in NC. Similar prices in MA.

 

Well bro in NC, you don't have homeless junkies defecating into the concrete planters on the sidewalks of Wilshire Blvd either

 

https://www.aqr.com/Insights/Perspectives/2035-An-Allocator-Looks-Back-Over-the-Last-10-Years this was good haha

 

 

[james22]

Lower financial leverage, higher quality, asset-light = Higher valuations

 

 

[Blake Hampton]

Quotes

 

"An investment operation is one which, upon thorough analysis, promises safety of principal and a satisfactory return. Operations not meeting these requirements are speculative."

- Benjamin Graham, Security Analysis

 

"The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money. After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball. They know that overstaying the festivities -- that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future -- will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There’s a problem, though: They are dancing in a room in which the clocks have no hands."

- Warren Buffett, 2000 Chairman's Letter

 

"In the first ten years after the war - the decade ending in 1955 - the Dow Jones industrials had an average annual return on year-end equity of 12.8 percent. In the second decade, the figure was 10.1 percent. In the third decade it was 10.9 percent. Data for a larger universe, the FORTUNE 500 (whose history goes back only to the mid-1950's), indicate somewhat similar results: 11.2 percent in the decade ending in 1965, 11.8 percent in the decade through 1975. The figures for a few exceptional years have been substantially higher (the high for the 500 was 14.1 percent in 1974) or lower (9.5 percent in 1958 and 1970), but over the years, and in the aggregate, the return on book value tends to keep coming back to a level around 12 percent. It shows no signs of exceeding that level significantly in inflationary years (or in years of stable prices, for that matter)."

- Warren Buffett, How Inflation Swindles the Equity Investor

 

^ This article still has a ton of applicability today, and it remains one of the best ever written on investment.

 

The Market

 

- TTM S&P 500 ROE: 17.2%

- 24-year average S&P 500 ROE: 13.3%

- Current S&P 500 P/B: 5.2x

 

- TTM average S&P 500 tax rate: 18.2%

- 30-year average S&P 500 tax rate: 30.3%

 

- Increased interest expense as companies refinance debt issued during ZIRP

- (ASU) 2016-1 requiring companies to record unrealized capital gains as income

 

If you were to adjust the Shiller P/E using historically average interest and corporate tax expenses, the number would be sitting at an all-time high by a wide margin. We are currently experiencing the most expensive stock market in history, more expensive than at the peak of the tech bubble.

 

Edited January 8 by Blake Hampton

[james22]

[Parsad]

59 minutes ago, james22 said:

 

Your loss!  Cheers!

[Grenville]

Hopefully you're just trolling us, but any book regardless of your perspective, just donate it....Ain't cool to disrespect knowledge whether you agree or disagree with it...

[james22]

Value investing doesn't define investing.

 

As suggested in the Average age thread, don't be fooled by eloquence.

[james22]

But if you want eloquence:

 

Something of Value

 

https://www.oaktreecapital.com/docs/default-source/memos/something-of-value.pdf

[james22]

 

[Spooky]

54 minutes ago, james22 said:

Value investing doesn't define investing.

 

As suggested in the Average age thread, don't be fooled by eloquence.

 

All investing is value investing - value investing is just buying something for less than it is worth.

[frommi]

Sometimes i think that every generation has to relearn the same lessons again, because young investors are not able to learn from their parents/grandparents because they think they know better. His son is probably in for a rude awakening. (as is most of this board)

[Milu]

9 hours ago, Blake Hampton said:

If you were to adjust the Shiller P/E using historically average interest and corporate tax expenses, the number would be sitting at an all-time high by a wide margin. We are currently experiencing the most expensive stock market in history, more expensive than at the peak of the tech bubble.

Be careful consuming too much Hussman, while he is undoubtably a very smart and well read guy, his performance as an investor has been shocking. 

 

“However beautiful the strategy, you should occasionally look at the results.”

Winston Churchill

[Blake Hampton]

I think there are scenarios where some of these "overvalued" equities still perform well. Companies like Apple might seem expensive, but like Buffett has previously said during an annual meeting, if people generally had to choose between their second car and an iPhone, they would pick the iPhone. He's basically telling us that they have unlimited pricing power, maybe the best pricing power of any business outside commodities.

 

I don't see how the market can do well from here.

[james22]

52 minutes ago, Spooky said:

All investing is value investing - value investing is just buying something for less than it is worth.

 

You repeat myself.

 

"Value" and "Growth" investing have more narrow definitions.

[james22]

2 minutes ago, Blake Hampton said:

I don't see how the market can do well from here.

 

You'll be a better investor once you get past believing you can see much of anything.

[Spooky]

3 minutes ago, james22 said:

 

You repeat myself.

 

"Value" and "Growth" investing have more narrow definitions.

 

No they don't, this is a misconception.

[Blake Hampton]

Just now, james22 said:

You'll be a better investor once you get past believing you can see much of anything.

"I have no idea on timing. It’s easier to tell what will happen than when it will happen."
- Warren Buffett

[Blake Hampton]

42 minutes ago, frommi said:

Sometimes i think that every generation has to relearn the same lessons again, because young investors are not able to learn from their parents/grandparents because they think they know better. His son is probably in for a rude awakening. (as is most of this board)

I completely agree.

 

“History Doesn't Repeat Itself, but It Often Rhymes”

- Mark Twain

[Gregmal]

Look, lets face it. We know being a bear is a perpetual thing. But even if it wasnt, and you got all bearish in H2-2021....we re now pushing 4 years with not much to show for it, and probably(as evidenced by all the hedge funds you heard about after 2022 that proceeded to then blow up) have losses to show for it. When you coulda just bought Berkshire or Apple or an index.