Are we in a bubble?

[Castanza]

16 minutes ago, Blake Hampton said:

Can I get some valuation math?

 

Or am I suppose to buy the market because it simply goes up?

 

That's what Buffett teaches alright.

 

Yes, that's what history teaches. DCA with doing nothing is the single most effective investment strategy. If you spend 5 years sitting the market out and miss out on standard market returns you need to perfectly time roughly a 50% drawdown and go all in at that exact moment simply to get back to PAR. Good luck with that. 

[73 Reds]

47 minutes ago, Castanza said:

 

Yes, that's what history teaches. DCA with doing nothing is the single most effective investment strategy. If you spend 5 years sitting the market out and miss out on standard market returns you need to perfectly time roughly a 50% drawdown and go all in at that exact moment simply to get back to PAR. Good luck with that. 

@Castanza Your post makes far too much sense for folks like Blake, among many who would not be complaining had they been rather fully invested in the market or well-performing stocks for the last number of years.  Admittedly, when I was young it took me a bit of time to learn this lesson and I didn't have an investment group like COBF repeating this message at every turn.

[Gregmal]

It's funny, really...because not long ago, and somewhat consistently, Blake has made remarks about people "not knowing what theyre doing". However when asked, if someone viewing his trailing returns, say over the past 3-5 years, would arrive at the conclusion he knew what he was doing, let alone that he was performing acceptable, he was much less interested in discussing it. 

 

I dont think any made up metric, Buffett index, Schiller PE, Chamath's latest BS, etc...would have any weight on what I was doing. Rather, my performance scorecard/track record, would. Hopefully Blake gets there one day. 

[Castanza]

15 minutes ago, 73 Reds said:

@Castanza Your post makes far too much sense for folks like Blake, among many who would not be complaining had they been rather fully invested in the market or well-performing stocks for the last number of years.  Admittedly, when I was young it took me a bit of time to learn this lesson and I didn't have an investment group like COBF repeating this message at every turn.

 

Yup same for me...it seems every young investor first getting into the game goes through this progression. If I would have just gone with buy and hold when I first started I would have been wealthier today that I am currently. Example: I had 1k shares of AMD with a cost basis of $8 and 500 shares of NVDA with a cost basis somewhere in the 30's. I sold both for doubles but missed out on massive gains. I wanted investing to feel exciting and I got into listening to the market experts making calls and different podcasts like The Motley Fool etc. You become a borderline conspiracy theorist when you start making big market calls and listening to all these doomers. You're better off DCAing and making your 401k, Roth IRA, HSA and throwing anything else you have into a brokerage and real estate while keeping your personal finances in check. 

[Castanza]

4 minutes ago, Gregmal said:

It's funny, really...because not long ago, and somewhat consistently, Blake has made remarks about people "not knowing what theyre doing". However when asked, if someone viewing his trailing returns, say over the past 3-5 years, would arrive at the conclusion he knew what he was doing, let alone that he was performing acceptable, he was much less interested in discussing it. 

 

I dont think any made up metric, Buffett index, Schiller PE, Chamath's latest BS, etc...would have any weight on what I was doing. Rather, my performance scorecard/track record, would. Hopefully Blake gets there one day. 

 

The world is complex. People trying to distill advanced global economies down to some metric or equation are on a fools errand. 10k years of human history and in general we have only gone up. 

[73 Reds]

3 minutes ago, Castanza said:

 

Yup same for me...it seems every young investor first getting into the game goes through this progression. If I would have just gone with buy and hold when I first started I would have been wealthier today that I am currently. Example: I had 1k shares of AMD with a cost basis of $8 and 500 shares of NVDA with a cost basis somewhere in the 30's. I sold both for doubles but missed out on massive gains. I wanted investing to feel exciting and I got into listening to the market experts making calls and different podcasts like The Motley Fool etc. You become a borderline conspiracy theorist when you start making big market calls and listening to all these doomers. You're better off DCAing and making your 401k, Roth IRA, HSA and throwing anything else you have into a brokerage and real estate while keeping your personal finances in check. 

Certainly anyone with a 401k would be wise to contribute and DCA all they can into an S&P 500 index fund or broad based index fund for as long as they can before retirement.  For others (like me who only had a job with a retirement plan for 2 years) the concept still makes sense with after-tax dollars, particularly if you don't have great investment skills.  Anyone who has been regularly contributing to a 401k plan allocated to SPY or the like should be very pleased with their results.  And most important, if they are young like Blake they should not care at all about performance of the index or bubbles for decades to come.  

[SharperDingaan]

Let the man make his own mistakes  .......

 

The DCA thing is very sound advice for most people; but when you're young ... you also need to reach; and if you get burnt now and again ... it's tuition. Put enough boats out there, eventually one will come in; and if it pays off the mortgage decades earlier ......

 

But nothing can happen until one selectively takes on market risk, all the time, and changes the game if it makes sense. Sh1te at investment, but great at business  .....

 

SD

Edited May 16 by SharperDingaan

[Blake Hampton]

Any valuation math?

Or do you believe valuation doesn't matter?

[Paarslaars]

3 minutes ago, Blake Hampton said:

Any valuation math?

Or do you believe valuation doesn't matter?

Alright, people are screaming semi or memory is a bubble but MU, largest western memory company, is trading at 6-8x forward PE. It's not a bubble when earnings are exploding... provided these estimations are realistic and sustainable.

[Gregmal]

14 minutes ago, Blake Hampton said:

Any valuation math?

Or do you believe valuation doesn't matter?

On what LOL?

 

This is an investment forum and so many folks have done, shown, expanded upon individual investments, with real valuation work...except for the one guy shouting loudest about "showing the math"! The only time you've even attempted to buy anything, was OXY, in which you more or less bought "because Buffett was buying", and even as you declare us smack dab in the middle of "the greatest energy shock in world history", its been a total piece of shit performance wise...like come on dude. 

[Blake Hampton]

1 minute ago, Gregmal said:

On what LOL?

 

This is an investment forum and so many folks have done, shown, expanded upon individual investments, with real valuation work...except for the one guy shouting loudest about "showing the math"! The only time you've even attempted to buy anything, was OXY, in which you more or less bought "because Buffett was buying", and even as you declare us smack dab in the middle of "the greatest energy shock in world history", its been a total piece of shit performance wise...like come on dude. 

This doesn't look like math to me.

[Castanza]

15 minutes ago, Blake Hampton said:

Any valuation math?

Or do you believe valuation doesn't matter?

FFH, is sub $1600 usd today. BRK and MKL were just trading near book...there are dozens upon dozens of equities mentioned on here every day that are trading at fair or cheap valuations. 

 

[Blake Hampton]

Looking for wisdom from Trumpers.

[Blake Hampton]

Come on guys. You're all telling me the market's a great investment right? Let's see the math and hear your assumptions.

I'm just curious.

[Blake Hampton]

I've let you know my assumptions and shown you how I think about it.

The best most of you can come up with are insults.

[Castanza]

31 minutes ago, Blake Hampton said:

Come on guys. You're all telling me the market's a great investment right? Let's see the math and hear your assumptions.

I'm just curious.

 

Well the market has returned 119% since Jan 2020....what's your performance? My assumption is the market will continue to return ~9% annually over my lifetime. DCA is agnostic to market valuation no? 

 

30 minutes ago, Blake Hampton said:

The best most of you can come up with are insults.

 

33 minutes ago, Blake Hampton said:

Looking for wisdom from Trumpers.

 

Only one posting insults is you my dude...

 

 

Edited May 15 by Castanza

[Gregmal]

LMFAO, man...usually the "I'd rather bitch and complain about "the market" than make money" is reserved for egotistical billionaires like Klarman and Einhorn. Never seen it from a government employee who's finances are located in the kids section of the federal tax brackets before.....

[Spooky]

34 minutes ago, Blake Hampton said:

Any valuation math?

Or do you believe valuation doesn't matter?

 

Why not just buy Fairfax at a roughly 10 p/e that is buying back lots and lots of stock? Or Berkshire with 40% market cap in t-bills. 

 

If you have a 20-30 year time horizon I would probably also just hold my nose and buy the S&P 500. Based on historical data, there has never been a 30-year period where the S&P 500 (or its proxy, the Dow Jones Industrial Average) has had a negative total return.

Edited May 15 by Spooky

[Gregmal]

Just now, Spooky said:

 

Why not just buy Fairfax at a roughly 10 p/e that is buying back lots and lots of stock? Or Berkshire with 40% market cap in t-bills. 

 

If you have a 20-30 year time horizon I would probably also just hold my nose and buy the S&P 500.

We raised this awhile ago...I think about 2 years ago. And Blake said he wouldnt touch Fairfax with a 10 ft pole because they had way too much exposure to long dated bonds. It was then explained to Blake that Fairfax had most of its exposure in sub 5 year bonds, and Blake told us that the textbook told him those were long dated bonds and they were going to get massacred as we entered a hyper inflationary decade similar to the 1970s....

[thepupil]

4 minutes ago, Blake Hampton said:

I've let you know my assumptions and shown you how I think about it.

The best most of you can come up with are insults.

 

SPX 2026E: 336

SPX 2036E @ 7% nominal growth: 660

 

Exit Multiple: 20x. SPX in 2036: = 13,200 = 5.9%/yr+1% divvy = 6.9%/yr. 

 

10 yr bond = 4.6%

Implied equity premium = ~2%. 

 

Is it therefore rational to buy stocks w/ a LT time horizon? 

 

Yes. 

 

Could these assumptions be wrong? Yes. Maybe SPX falls 40% in 3 years and then makes more than 7% to get to 7%. Maybe you have a lost decade where stocks do nothing. Maybe one therefore doesn't want to be 100% long US stocks of the cap weighted index.

 

Maybe mix in some bonds. Maybe buy some individual stocks if you have $$$ outside a 401k (which is the only reason index levels would be the only consideration etc). 

 

 

just gotta play whatever cards you're dealt. 

 

 

[Gregmal]

30 minutes ago, thepupil said:

 

SPX 2026E: 336

SPX 2036E @ 7% nominal growth: 660

 

Exit Multiple: 20x. SPX in 2036: = 13,200 = 5.9%/yr+1% divvy = 6.9%/yr. 

 

10 yr bond = 4.6%

Implied equity premium = ~2%. 

 

Is it therefore rational to buy stocks w/ a LT time horizon? 

 

Yes. 

 

Could these assumptions be wrong? Yes. Maybe SPX falls 40% in 3 years and then makes more than 7% to get to 7%. Maybe you have a lost decade where stocks do nothing. Maybe one therefore doesn't want to be 100% long US stocks of the cap weighted index.

 

Maybe mix in some bonds. Maybe buy some individual stocks if you have $$$ outside a 401k (which is the only reason index levels would be the only consideration etc). 

 

 

just gotta play whatever cards you're dealt. 

 

 

Pffft, thats MAGA speak. Only cultists make money in the stock market.

 

You know how real progressive men get outsized returns? Starts with a C and ends with ASH. 

[Sweet]

3 hours ago, Gregmal said:

It's funny, really...because not long ago, and somewhat consistently, Blake has made remarks about people "not knowing what theyre doing". However when asked, if someone viewing his trailing returns, say over the past 3-5 years, would arrive at the conclusion he knew what he was doing, let alone that he was performing acceptable, he was much less interested in discussing it. 

 

I dont think any made up metric, Buffett index, Schiller PE, Chamath's latest BS, etc...would have any weight on what I was doing. Rather, my performance scorecard/track record, would. Hopefully Blake gets there one day. 

I put Blake’s avatar into one of these apps that age you.  
 

This is what I got:

 

 

Edited May 15 by Sweet

[DegenerateGambler]

There is a bubble in some categories of AI (POET) and Space (ASTS, even SpaceX at their valuations), but the market as a whole is not exactly a huge bubble like the dot com bubble.

[Gregmal]

Yea the term bubble is like catnip to a certain class of finance nerds. They’d be better off never looking for them, than always apparently thinking they’re in one. 

[DegenerateGambler]

By the measure of total US stock market capitalization / total US money supply, we are now at 94% of the dot com bubble.  But this one does not feel as outrageous as that one for some reason.