Have We Hit The Top?

[Value_Added]

22 minutes ago, Malmqky said:

 

I guess my question is why do you think as an individual investor this isn’t a massive opportunity for you if you’re correct?

if you’re fully invested then you can’t take full advantage.  Sure you can reposition into cheaper businesses but it’s not as good as cash.  I think Blake’s point is simply that the market is in the higher priced side and he is being defensive with cash to take advantage of a scenario where there’s a fire sale.  
 

@Blake Hampton it’s important to remember that everyone here has a different investing style and are at different points in their life. Yours will not match any of them exactly.  Simply staying invested knowing that the market will always move up over the long term works for some, especially when you hold quality purchased well.  Some just DCA into indexes and that works.  Others pick individual companies awaiting a catalyst and exit after said catalyst.  Some mix these strategies.  Some never sell because of taxes.  There’s no wrong answer.  Focus on you.  You don’t have to convince anyone but you need to ensure you know what your strategy is and you need to execute on it.  

 

if you want to opportunistically sit in cash and wait for fat pitches, do it!  But don’t let the markets “expensiveness” fool you from not acting.  META, LULU, and NFLX are great examples….all down huge while the market was arguable still expensive with more room to drop if you had an extremely bearish outlook.  META and NFLX were both down -75% while the market was only down -20%.  LULU was down -50% while the market was hitting all time highs.  The wrong market outlook and an attempt at forecasting could’ve easily left you on the sidelines.  
 

I’m of the opinion that if you sit in cash that you need be willing to make very large bets to fully take average of great opportunities when they arise.  I’m sure your goal is to beat the SPY over the long term and to do that you must remember that cash is an anchor if you don’t use it opportunistically with large bets.  Best case is you time it perfectly and you can deploy 100% into deeply discounted quality….but you likely won’t.  Worst case is you sit in cash and do nothing.  Key point to take away here is that cash is often tied to a bearish mindset that can be paralyzing and act as a HUGE anchor.  But it can be used as a tool for outsized long term returns if you know how to use it.

[Castanza]

20 minutes ago, Jaygo said:

I must disagree here.

 

What a lot of people see and sadly compare themselves to is extraordinary wealth or extraordinary amounts of debt consumption. By seeing this they feel poor or disenfranchised. 

 

Take a step back and really think how much money you actually want. I personally want to spend around 200,000 CAD per year (2025 money)

 

I can go a a few amazing trips, keep my kids in hockey, not think about money at all, pay by bills, pay my mortgage and save 40k per year for investments.

 

As a small business owner at favorable tax rate I need about 300K in profit to do that. Its honestly fairly easy if your willing to work hard and find a niche. 

 

Once I decide to take it a bit easier I will have built up a large enough portfolio to get about half my yearly spend from the investments and that will happen around the same time as I pay off my mortgage. Voila at 50 or in 10 years I should be free of absolutely necessary work. That sounds pretty rich to me however I doubt anyone will be drooling over my life on instagram. 

 

If I was 22 today I would set myself on this path asap, dont worry about the market, the national debt or the current administration. Just worry about how to build a successful business in a needed industry and for the love of all things marry the right girl!!!!! 

 

Do you still work in the construction field? 

[james22]

5 minutes ago, Gregmal said:

Opportunity is what you make of it. If you do what everyone else does you get what everyone else gets. If you think differently you have the chance to arrive at different outcomes. 

 

But this is one of the reasons bright young investors reject simply holding 100% S&P500 for 30 years.

 

Because it's the same advice dumb young investors can follow and they believe should should be able to leverage their intelligence and education somehow. 

[73 Reds]

7 minutes ago, Spooky said:

There is certainly an element of that where people are seeing extravagant wealth through social media which makes them unhappy but that’s not what I’m talking about. I’m just looking at data like this which applies to a lot of countries:

LOL, the chart tells me that you want to be a long term homeowner and you don't want to settle for the "median".   But if all you truly want to be is "average" there has never been a better time in history.  You could win the Mr./Mrs. Mediocrity Award and live a pretty nice life in the US.

[Spooky]

9 minutes ago, Castanza said:

Nonsense! There are far less barriers to success today than there ever has been in human history. The only thing preventing people from becoming “successful” is motivation and self discipline. The real difference between today and the 1950s post war era is attitude. 

 

 

 

I generally agree - we are living in the best time to be alive. My point is just that traditional wealth generating asset classes like the S&P 500 and housing are expensive relative to history so a young person trading their labour for capital will have a hard time building wealth that way. There is so much capital out in the world today that finding opportunities to invest in takes a lot more work.

[Vish_ram]

Is there an updated Shiller PE that accounts for increased Fed driven liquidity, reduced normalized 10-Year Real Interest Rate, higher net profit margins, higher net ROIC for S&P....

[james22]

1 hour ago, Blake Hampton said:

This is not normal.

 

You're too young to know what normal is.

 

1 hour ago, Blake Hampton said:

I will listen to Bitcoin fanatics and investors 3x my age tell me all day that it is, but I will never believe it

 

LOL

[Gregmal]

3 minutes ago, james22 said:

 

But this is one of the reasons bright young investors reject simply holding 100% S&P500 for 30 years.

 

Because it's the same advice dumb young investors can follow and they believe should should be able to leverage their intelligence and education somehow. 

I’ve long had the suspicion that despite all the “just buy the index” talk, very few actually just do that. 

[Spooky]

3 minutes ago, 73 Reds said:

LOL, the chart tells me that you want to be a long term homeowner and you don't want to settle for the "median".   But if all you truly want to be is "average" there has never been a better time in history.  You could win the Mr./Mrs. Mediocrity Award and live a pretty nice life in the US.

 

?? Feels like you are misunderstanding my point and the current reality for a lot of people in the USA. If you are in the top 10% that holds stocks and other assets you have done amazing, the people who don't just keep falling further behind.

Edited 12 hours ago by Spooky

[james22]

1 minute ago, Gregmal said:

I’ve long had the suspicion that despite all the “just buy the index” talk, very few actually just do that. 

 

Well yeah, execution is the hard part.

 

And where intelligence is an advantage (giving conviction) - holding when others are selling.

[Jaygo]

3 minutes ago, Castanza said:

Do you still work in the construction field? 

Somewhat, Id say more in building services now. 

 

Started as a shitty architect and worked for a custom home builder who realized I had a real talent for woodworking, I went out on my own as trim carpenter doing crown moulding, custom bookshelves, coffered ceilings etc and did very well. Started to resent my customers so moved into landscape and apartment building maintenance, that morphed into doing power washing and painting. That's basically where I am now but commercial only. I am on my 4th micro company and this is where I plan to stay for good. 

 

 

 

 

[Jaygo]

5 minutes ago, Spooky said:

 

?? Feels like you are misunderstanding my point and the current reality for a lot of people in the USA. If you are in the top 10% that holds stocks and other assets you have done amazing, the people who don't just keep falling further behind.

The chart you posted is very flawed, homes have increased in size, complexity, regulation and quality ( insulated windows, metal fasteners etc) 

 

The average salary thing is skewed as well since the era that the chart begins with was very different. Many people were big company salary men, now we live in the gig economy and the ones on salary are now at a disadvantage.

[Value_Added]

1 minute ago, Gregmal said:

I’ve long had the suspicion that despite all the “just buy the index” talk, very few actually just do that. 

Everyone feels they can beat the market.  And simply thinking about it doesn’t seem all that hard.  It’s really the same as most things in life…emotion and our actions often get in the way of better outcomes.  People with clear minds have great ideas…and hindsight is 20/20.  “I can do this” …until you don’t.  Even index investors sell at the wrong time.  The key is to have a strategy and execute on it.  The media and mania gets into people’s minds and they act irrationally.  

[73 Reds]

6 minutes ago, Spooky said:

 

I generally agree - we are living in the best time to be alive. My point is just that traditional wealth generating asset classes like the S&P 500 and housing are expensive relative to history so a young person trading their labour for capital will have a hard time building wealth that way. There is so much capital out in the world today that finding opportunities to invest in takes a lot more work.

Making money is about so much more than investing.  Yeah, I know we are on an "investment board".  But figuring out professionally what you are good at (or even adept) is something that most young people today have an opportunity to do that some of us older folks did not, at least at the beginning.  Life was not always this convenient where folks could sit around all day (or whenever) and talk about different ways to make money while at the same time doing something productive to actually make money.  And there are no set working hours - working hours are whenever one chooses to work in many areas.      

[Spooky]

Just now, Jaygo said:

The chart you posted is very flawed, homes have increased in size, complexity, regulation and quality ( insulated windows, metal fasteners etc) 

 

The average salary thing is skewed as well since the era that the chart begins with was very different. Many people were big company salary men, now we live in the gig economy and the ones on salary are now at a disadvantage.

 

This was just the first chart I pulled up in a google search. There is so much data out there on this topic.

[Castanza]

Just now, Spooky said:

 

?? Feels like you are misunderstanding my point and the current reality for a lot of people in the USA

How much if that reality is self induced? I’d say the majority of it. A quick glance at spending habits of individuals in the 1950s vs people today will tell you all you need to know. 
 

There is a reason my grandmother/grandfather had the same small house, same couch, drove used cars, an outdated kitchen for damn near 40 years. Not because they couldn’t have upgraded but because they were frugal and they weren’t constantly trying to borrow against their future. They understood the value of their time and the value of their money. People today value their things against other peoples things. 
 

I don’t feel bad for couples with 80k in student debt, combined income of 160k, a mortgage over 2k and another $1500 in car payments that are struggling to make it. 
 

 

[Eng12345]

4 minutes ago, Jaygo said:

The chart you posted is very flawed, homes have increased in size, complexity, regulation and quality ( insulated windows, metal fasteners etc) 

 

The average salary thing is skewed as well since the era that the chart begins with was very different. Many people were big company salary men, now we live in the gig economy and the ones on salary are now at a disadvantage.

Yeah the inflation in expectations is real. 

 

I grew up in the 90s in a 1970s home that was 1800 square feet including the basement. It was a nice neighborhood and I'm sure was spectacular in the 70s. 

 

I have now purchased a mid range home in my area that is 3 years old and is 2700 square feet not including the basement. 

 

 

 

 

The housing unaffordability crisis is consumer driven. It's what the people want. 

[Spooky]

1 minute ago, 73 Reds said:

Making money is about so much more than investing.  Yeah, I know we are on an "investment board".  But figuring out professionally what you are good at (or even adept) is something that most young people today have an opportunity to do that some of us older folks did not, at least at the beginning.  Life was not always this convenient where folks could sit around all day (or whenever) and talk about different ways to make money while at the same time doing something productive to actually make money.  And there are no set working hours - working hours are whenever one chooses to work in many areas.      

 

https://fortune.com/2024/10/03/boomers-wealthiest-generation-millennials-biggest-losers/

[Spooky]

Just now, Castanza said:

There is a reason my grandmother/grandfather had the same small house, same couch, drove used cars, an outdated kitchen for damn near 40 years.

 

I don't own a house or a car. Need to make sacrifices.

[73 Reds]

1 minute ago, Spooky said:

 

https://fortune.com/2024/10/03/boomers-wealthiest-generation-millennials-biggest-losers/

But younger generations are always less wealthy than their predecessor generations until they grow older because older generations have had more time to generate wealth.  And even so, they are still better off than much older generations at the same juncture.  Besides, how exactly does one measure wealth?  JP Morgan and John Rockefeller were hugely wealthy in their times but who would want to trade places today with them?

[Blake Hampton]

In essence, the huge fiscal deficit we're currently seeing is a huge transfer of purchasing power through entitlement spending. The vast majority of government expenditures in Social Security, Medicare, VA benefits, all going to older generations through debt issuance.

 

I think that if all this debt somehow transfers into inflation, that will be when some big questions are answered.

[Spooky]

9 minutes ago, 73 Reds said:

But younger generations are always less wealthy than their predecessor generations until they grow older because older generations have had more time to generate wealth.  And even so, they are still better off than much older generations at the same juncture.  Besides, how exactly does one measure wealth?  JP Morgan and John Rockefeller were hugely wealthy in their times but who would want to trade places today with them?

This chart shows the breakdown of ownership of stocks by age bracket at different periods of time. Older generations increasingly own a higher proportion. Sub 40 went from 13% in 1990 to 4% in 2019.

[73 Reds]

16 minutes ago, Spooky said:

This chart shows the breakdown of ownership of stocks by age bracket at different periods of time. Older generations increasingly own a higher proportion. Sub 40 went from 13% in 1990 to 4% in 2019.

I think the chart can be explained in at least two ways:  (1) older people have had more time to accumulate wealth in stocks and stocks have done very well since 1990; and (2) There are many more opportunities to create and hold wealth today - particularly for young people - than merely owning stocks.  A traditional brokerage account in 1990 offered opportunities to buy stocks (or mutual funds) and hold cash.  Today even traditional brokerage accounts have far more investment alternatives and the gig economy offers so many more ways to make money so (for some young people's mindsets) why even bother with stocks at all?  There is also the notion that today's young people (at least in the US) seem to be all about the "experience" and less so concerned with material wealth.

Edited 11 hours ago by 73 Reds
missed line

[Gregmal]

37 minutes ago, Castanza said:

How much if that reality is self induced? I’d say the majority of it. A quick glance at spending habits of individuals in the 1950s vs people today will tell you all you need to know. 
 

There is a reason my grandmother/grandfather had the same small house, same couch, drove used cars, an outdated kitchen for damn near 40 years. Not because they couldn’t have upgraded but because they were frugal and they weren’t constantly trying to borrow against their future. They understood the value of their time and the value of their money. People today value their things against other peoples things. 
 

I don’t feel bad for couples with 80k in student debt, combined income of 160k, a mortgage over 2k and another $1500 in car payments that are struggling to make it. 
 

 

A lot of these things were well on their way to being solved a few years ago. Never in my life have I seen a job market like we did in 2021 and 2022. Anyone who needed a better job could get one. Middle class folks could snap and get 20% raises with some WFH thrown in. The minimum wagers just had to drive past a Burger King on the way to work to see a $25 an hour offer.

 

And this was killed because the government and corporate bigwigs hated seeing that transfer of power so they used the oldest, stupidest trick in the book…shout inflation as an excuse to claim a good economy was bad. They claimed things were “too expensive” and then took actions that make the most expensive things, like housing and auto related stuff, waayyyy more expensive. All of this to take back power from the….eh cough, beat inflation! 

 

Now the inflation is gone, nothing to show for it except the lasting impacts of more expensive financing reverberating through housing, insurance, financing, etc...and we wonder why the average guy cant get ahead lol.

 

EDIT: I quoted @Castanza but was replying to the post about inflation and wages diverging creating affordability issues. 

Edited 11 hours ago by Gregmal

[Spooky]

35 minutes ago, 73 Reds said:

I think the chart can be explained in at least two ways:  (1) older people have had more time to accumulate wealth in stocks and stocks have done very well since 1990; and (2) There are many more opportunities to create and hold wealth today - particularly for young people - than merely owning stocks.  A traditional brokerage account in 1990 offered opportunities to buy stocks (or mutual funds) and hold cash.  Today even traditional brokerage accounts have far more investment alternatives and the gig economy offers so many more ways to make money so (for some young people's mindsets) why even bother with stocks at all?  There is also the notion that today's young people (at least in the US) seem to be all about the "experience" and less so concerned with material wealth.

 

We will need to agree to disagree. Your version of reality sounds nice but it is not what I see day to day.