Quote:
Originally Posted by toeser
"the stock market (as a whole) returns 9 or 10% annually"
Starting points are huge in that calculation. We have been in probably the longest bull market in history. Valuations are roof level. I don't think we are done yet, because I have not seen what I consider to be a blow-off top. However, we are building stock market bubbles, housing bubbles, debt bubbles, and crypto-bubbles. When this mess tops, we are going to have a very bad decade follow. It's my biggest concern for retirement planning.
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correct, and here is a graph of market returns by decile of valuations, or categorization of valuation into 10 equal buckets of counts.
we are at the far right 10 on the X axis. The problem with this valuation analysis is that the market overvaluation scenario counts at this level is few and far between. So when these levels do come, the graphs shows with the negative bar that the next 5 year returns are expected to be negative.
The market has already started to correct, the number of stocks which are at 50% of their top price is huge in the speculative space. See CVNA, one of my favorite shorts. 300% returns on puts captured last week. see Freshpet, and a bunch of others. . . in the small cap space, so eventually some of this will get to the sp500 but slowly. .
The market up days to down days is heavily weighted to the up days, because the down days are bigger, and often times much bigger, as price declines come from NO buying, and price increases come from buying. . asymetrical and non linear.
good luck for the next 5 years, utilities and energy are the best long term investments, because the world needs both, and the world is slowly starting to run out of dense energy sources. . .