blakehampton Posted March 15 Share Posted March 15 Link to comment Share on other sites More sharing options...
blakehampton Posted March 18 Share Posted March 18 (edited) This is my crude valuation of the S&P500. I took the TTM dividend and put in a long-term average of 5% for dividend growth. Funnily enough, the S&P500 dividend is roughly the difference between its net earnings and capital expenditures. My discount rate is debatable, but I did a lot of thinking and concluded that 8% was a solid number. Please destroy it and prove me wrong. Edited March 18 by blakehampton Link to comment Share on other sites More sharing options...
bargainman Posted March 18 Share Posted March 18 On 3/14/2024 at 7:06 AM, Gregmal said: Totally. I remember making a rather irresponsible earnings wager on Apple in maybe 2012 or so and being told "thats silly, its $400B company...how much bigger can it get?"...these things are silly talking points. It's amazing. I remember after 2008 and 2009 when BRK was already one of the largest most well known companies. Since then it just kept going up up up. Link to comment Share on other sites More sharing options...
Spekulatius Posted March 19 Share Posted March 19 On 3/17/2024 at 9:10 PM, blakehampton said: This is my crude valuation of the S&P500. I took the TTM dividend and put in a long-term average of 5% for dividend growth. Funnily enough, the S&P500 dividend is roughly the difference between its net earnings and capital expenditures. My discount rate is debatable, but I did a lot of thinking and concluded that 8% was a solid number. Please destroy it and prove me wrong. This values only the stocks in the SP500 that actually pay a dividend. All those stocks like AMZN, TSLA, META (so far ) and many others are valued at zero in your model. I think this is the reason why the value in your model is too low. A dividend growth model can only be applied to dividend paying stocks. Link to comment Share on other sites More sharing options...
Gregmal Posted March 20 Share Posted March 20 Never forget: “the market is pricing in 6-8 rate cuts in 2024 and at SPY 4600 there’s absolutely no margin for error, the market is priced to perfection”…. Zero rate cuts and 3 dots plotted on the stupid chart later…. Link to comment Share on other sites More sharing options...
Luca Posted March 20 Share Posted March 20 Link to comment Share on other sites More sharing options...
Luca Posted March 20 Share Posted March 20 I'm here for the rally Jerome! Surprise us! Link to comment Share on other sites More sharing options...
Paarslaars Posted March 20 Share Posted March 20 (edited) Nothing unexpected it seems, no rate cuts yet but holding firm at 3 cuts this year. He does hint at higher rates in future years, may be an indication the cuts will not be done or undone quickly. Edited March 20 by Paarslaars Link to comment Share on other sites More sharing options...
blakehampton Posted March 21 Share Posted March 21 Approximate % Change From 2019 - Price of the S&P 500: 58% - M2 Money Supply: 36% - Earnings of the S&P 500: 34% - Median home price: 28% - Inflation: 21% - Median household income: 12% I thought to make a list of these items, and their respective changes before money printing, to lay out a picture of how the economy has responded since the pandemic. In my mind, all of these items should match the increase of the money supply but I also understand that the dispersion isn't going to be equal. Shouldn't we see them equal out over time though? Wont we see a reversion to the mean? This data tells me that we haven't seen the end of inflation and that household incomes haven't kept pace with really anything else. I also thought it might be interesting to think about company earnings and if they are generally quicker to revert than incomes. It seems unfair but so is the world. Link to comment Share on other sites More sharing options...
Gregmal Posted March 21 Share Posted March 21 LOL Link to comment Share on other sites More sharing options...
RedLion Posted March 21 Share Posted March 21 2 minutes ago, Gregmal said: LOL Lmfao Link to comment Share on other sites More sharing options...
changegonnacome Posted April 10 Share Posted April 10 On 2/14/2024 at 1:35 AM, changegonnacome said: I expect to see more references to 'sticky' 'stuck' & 'stubborn' inflation over the coming months Are we officially 'stuck' yet? (I dont think so....3 months doesnt make a year but we've most certainly hit the stubborn stuff and progress from here is likely not to come so easily) Issue I'm starting to see more of in 'real life' is contracts, SLA's starting to have inflation escalators built-in to protect suppliers/service providers on multiyear contracts......when inflation becomes a 'thing' again.....stubborness is a feature not a bug....lots of folks got caught out in the 2021/22......fool me once and all that.......the next newly inked contract going out the door explicitly calls out CPI......hence the transmission beta of inflation increasing in a post-inflationary period.....its ability to replicate itself across time increases. We are playing a dangerous game with the general population's inflation expectations.......all the surveys showed folks expecting inflation to 'go away' by about now thinking as they did that all of it was really covid supply chain related.......covid is in the rear view mirror, supply chains have 'healed'.....folks are gonna start realizing that maybe this 3-4% inflation stuff is the way its gonna be......anecdotally, so completely worthless, folks around me backs are back up talking about how stuff is still going up. The hive mind is beginning to smell an inflation rat! Link to comment Share on other sites More sharing options...
Santayana Posted April 10 Share Posted April 10 4 minutes ago, changegonnacome said: Issue I'm starting to see more of in 'real life' is contracts, SLA's starting to have inflation escalators built-in to protect suppliers/service providers on multiyear contracts......when inflation becomes a 'thing' As an anecdote, I just renewed the lease for my retail storefront, and the terms of the lease has annual increases that will increase the rent by 30% over the next 5 years. Minimum wage where I am is up 35% since the beginning of 2020. Shipping and transportation continues to climb. Yeah, inflation is going to be sticky. Link to comment Share on other sites More sharing options...
ValueArb Posted April 10 Share Posted April 10 My ex just told me she spent $10 on her usual order (burrito, a side nachos/cheese, and side pintos/cheese) at Taco Bell, without a drink. I am so old I remember paying under $3 for her Taco Bell order. Link to comment Share on other sites More sharing options...
Eldad Posted April 10 Share Posted April 10 8 minutes ago, ValueArb said: My ex just told me she spent $10 on her usual order (burrito, a side nachos/cheese, and side pintos/cheese) at Taco Bell, without a drink. I am so old I remember paying under $3 for her Taco Bell order. Soft taco supreme up to $3 a pop. Cheesy Bean and rice still holding strong at .99, but for how long? Link to comment Share on other sites More sharing options...
Luca Posted April 10 Share Posted April 10 2 hours ago, changegonnacome said: We are playing a dangerous game with the general population's inflation expectations.......all the surveys showed folks expecting inflation to 'go away' by about now thinking as they did that all of it was really covid supply chain related.......covid is in the rear view mirror, supply chains have 'healed'.....folks are gonna start realizing that maybe this 3-4% inflation stuff is the way its gonna be......anecdotally, so completely worthless, folks around me backs are back up talking about how stuff is still going up. The hive mind is beginning to smell an inflation rat! Just imagine what's gonna happen to prices and the supply chain when the war with China gets hotter...geopolitical conflicts may have further supply chain shocks and inflation surprises down the road...the energy transition is also not really pushing prices down...the fight against oil...coal...at the same time rents just go up up up so wages have to go up up up...I feel very comfy sitting on a lot of Fairfax Shares... Link to comment Share on other sites More sharing options...
Gregmal Posted April 10 Share Posted April 10 Yawn. Inflation will be 2.5-4.5%...rates will be 3-5%....get on with life. It seems both up and down everyone needs to extrapolate rather meaningless and arbitrary fluctuations and trends. 15 months of declines and its "wait and see" and 3 months of meh and "its ramping back up"...consistent much? Shelter still at 8 and thats...drumroll....because of higher rates. Insurance is a rate derivative as well. And energy has nothing to do with anything rate wise. Still basically where we've been all along. A big nothing burger with an overzealous audience. Link to comment Share on other sites More sharing options...
Spooky Posted April 10 Share Posted April 10 My view is this rate environment is much healthier than zirp. Link to comment Share on other sites More sharing options...
fareastwarriors Posted April 10 Share Posted April 10 (edited) 2 hours ago, ValueArb said: I am so old I remember paying under $3 for her Taco Bell order. It just means you don't eat at Taco Bell.... 3 items plus a drink for $8 in California. Solid deal still. Way better than the $15+ Big Mac combo... Edited April 10 by fareastwarriors Link to comment Share on other sites More sharing options...
Luca Posted April 10 Share Posted April 10 (edited) 5 minutes ago, fareastwarriors said: It just means you don't eat at Taco Bell.... 3 items plus a drink for $8 in California. Solid deal still. Way better than the $15+ Big Mac combo... Honestly thats a really solid deal. And yeah, MC D got way to expensive... Edited April 10 by Luca Link to comment Share on other sites More sharing options...
Eldad Posted April 10 Share Posted April 10 (edited) 25 minutes ago, Luca said: Honestly thats a really solid deal. And yeah, MC D got way to expensive... Seriously, you can still get 3 cheesy bean and rice burritos for $3.33 and be completely full. Tell the bums next time you give them a couple bucks. Edited April 10 by Eldad Link to comment Share on other sites More sharing options...
Spekulatius Posted April 10 Share Posted April 10 (edited) 1 hour ago, Luca said: Honestly thats a really solid deal. And yeah, MC D got way to expensive... You need to abuse the McDonalds app to get deals and order the right way and it still works. My son became an expert with this. Edited April 10 by Spekulatius Link to comment Share on other sites More sharing options...
Spekulatius Posted April 10 Share Posted April 10 Fiscal deficit of 6.3% of GDP means that if the Fed keeps interest rates high it’s not going to do much. It’s like driving full throttle while pulling the hand break. Link to comment Share on other sites More sharing options...
Sweet Posted April 11 Share Posted April 11 13 hours ago, Spekulatius said: Fiscal deficit of 6.3% of GDP means that if the Fed keeps interest rates high it’s not going to do much. It’s like driving full throttle while pulling the hand break. It's larger than I thought, they need to cut spending. It doesn't have to go to 0% of GDP, but it needs to be below GDP growth. Link to comment Share on other sites More sharing options...
John Hjorth Posted April 11 Share Posted April 11 16 hours ago, Spekulatius said: Fiscal deficit of 6.3% of GDP means that if the Fed keeps interest rates high it’s not going to do much. It’s like driving full throttle while pulling the hand break. 2 hours ago, Sweet said: It's larger than I thought, they need to cut spending. It doesn't have to go to 0% of GDP, but it needs to be below GDP growth. Please don't worry too much about this, because it really does not matter that much, because when the music may stop at a future point in time, it will also be like peeing in your pants, so there will be no fire. [Posted by a CoBF member who is a citizen in a nation with order in the pencil case, running at a surplus.] Link to comment Share on other sites More sharing options...
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