Stock Market S&P 500 Fair value calculation

[CoachKandSportsguy]

Here's S&P's S&P 500 forward GAAP earnings estimate from the S&P website:

Q2 2022: $42.53
Q3 2022: $49.23
Q4 2022: $51.25
Q1 2023: $50.87
Total: $193.88, round to $194
Current level: 4200

1) P/E 15x put the S&P 500 @ 2900
2) Assuming that the earnings are always beat,
by 5% on average due to share repurchases,
($194 x 1.05) =$204 x P/E 15 = @3100
2) Assuming that the earnings are always beat,
by 10% at the extreme due to under forecasting for an intentional beat
($194 x 1.10) =$213 x P/E 15 = @3200

Will the market go straight down to that level? No, it goes down in staggered drops and rallies, like stairs. If you assume that all information is in the market, then why is the P/E so high as compared to average growth, when inflation is elevated, there are shortages in mfg and labor?

Here is a comparison of the current market and the decline in the GFC in the 2000's. note the similarity in the stair steps down.

Don't be Irving Fisher, "Stocks have reached what looks like a permanently high plateau." any guess when he said that? Just be patient, prices will return to normal levels if not lower

[manaboutown]

Regression toward the mean...

A 2018 article: Access Denied (https://www.nasdaq.com/articles/regression-trend-will-sp-500-prices-ever-revisit-their-mean-2018-01-05)

[Babubhat]

Irrelevant on a short term basis. It’s about money flow, algorithms and technical analysis. Earnings are a wild card in this environment. Plain old guessing

[melpetezrinski]

Irrelevant on a short term basis. It’s about money flow, algorithms and technical analysis. Earnings are a wild card in this environment. Plain old guessing

So, you trade/invest on technicals rather than fundamentals. That's great, it's certainly a valid approach and probably advisable, since you think, "earnings are a wild card". I try to incorporate both, as I have a financial background and like to use DCF models to give me some idea of corporate financial health. What are the technicals telling you? Are we in a new bull market or just a bear market rally? I strongly believe the latter.

[jimbomaybe]

So, you trade/invest on technicals rather than fundamentals. That's great, it's certainly a valid approach and probably advisable, since you think, "earnings are a wild card". I try to incorporate both, as I have a financial background and like to use DCF models to give me some idea of corporate financial health. What are the technicals telling you? Are we in a new bull market or just a bear market rally? I strongly believe the latter.

I am inclined to pray you are wrong, but Ill bet you are right

[CoachKandSportsguy]

Just remember, this is your behavioral finance:

Narrative Always Follows Price in the Markets (https://awealthofcommonsense.com/2022/08/narrative-always-follows-price-in-the-markets/)

LOL! on the DCF though :boxing2: and yeah, I have built them for M&A purchase pricing, have seen top consultants build them, and none have actually worked on equities on a consistent basis, because they are not bonds. Its a financial theory of bond pricing taken into the equity space. Bond future cash payments are known, face value return, not so much, but one binary variable probability basis. Equities, not so much, bond cash flows don't have mgmt changes, product obsolescence, basically human corporate management survival and competitiveness, and greed.

but if it works for you :beer3: . . . technical analysis is usable short term, fundamentals longer term and both still subject to the uncertainties of the future. I have 20 plus years of daily market and fundamental data, and so far only 1 fairly repeatable pattern, which is based on options expiration timing. Only happens once or twice a month, but i have made money on the daily trade many times.

And everyday I realize its not worth working any more, but coachk won't let me quit, because if I quit, she quits. . and that's at least 2 years away.. . .

future former finance manager

[Boomer]

I don’t make it so hard………..

I read about companies that get my attention for some reason.

I make sure I understand, generally, what those companies do.

I check on a few numbers and trends.

I have to feel comfortable that they can continue to pay a quarterly dividend — and they almost always have to have a very long history of increasing that dividend annually.

I let some patience and a little intuition into my choices. (Yes. I am a woman. :) )

Then…….I wait…….until those on my shopping list take a bit of hit.

I bought a few in July.

Happy so far……

BUT, even so, after decades of doing it like this, of course, I know I do not always pick winners. (Yeah, like I said — I am a woman, so I don’t go around talking about how I never lose at this game. In fact, I don’t go around talking about it at all, except on TOTV, anonymously.)

And, sooooo, even if those July buys fall a little in share price, I feel pretty sure those companies will continue to send me money every quarter.

Old fashioned style of investing? Maybe.

But, so far, it ain’t broke, nor am I — yet. :)

Buy ‘n’ Hold Boomer

[melpetezrinski]

Just remember, this is your behavioral finance:

Narrative Always Follows Price in the Markets (https://awealthofcommonsense.com/2022/08/narrative-always-follows-price-in-the-markets/)

LOL! on the DCF though :boxing2: and yeah, I have built them for M&A purchase pricing, have seen top consultants build them, and none have actually worked on equities on a consistent basis, because they are not bonds. Its a financial theory of bond pricing taken into the equity space. Bond future cash payments are known, face value return, not so much, but one binary variable probability basis. Equities, not so much, bond cash flows don't have mgmt changes, product obsolescence, basically human corporate management survival and competitiveness, and greed.

but if it works for you :beer3: . . . technical analysis is usable short term, fundamentals longer term and both still subject to the uncertainties of the future. I have 20 plus years of daily market and fundamental data, and so far only 1 fairly repeatable pattern, which is based on options expiration timing. Only happens once or twice a month, but i have made money on the daily trade many times.

And everyday I realize its not worth working any more, but coachk won't let me quit, because if I quit, she quits. . and that's at least 2 years away.. . .

future former finance manager

"but if it works for you". It has! It's why I was able to retire at 47 and move to TV and play softball and golf all day.

I don't want to debate the usefulness of DCF models, as it's only part of a starting point when and if I look at individual companies. 90% of my equity portfolio is in ETF's and has been for probably the last 10 years.

So, what does "20 plus years of daily market" analysis tell you? Are we in a new bull market or just a bear market rally?

[CoachKandSportsguy]

"but if it works for you". It has! It's why I was able to retire at 47 and move to TV and play softball and golf all day.

I don't want to debate the usefulness of DCF models, as it's only part of a starting point when and if I look at individual companies. 90% of my equity portfolio is in ETF's and has been for probably the last 10 years.

So, what does "20 plus years of daily market" analysis tell you? Are we in a new bull market or just a bear market rally?

it doesn't tell me anything about the current market "regime", cause I only look for trading setups, where I can make a very short term trade to add alpha to the portfolio, or pick the turn on the 39 days average market wave cycle.

since I have been in 401K cash/bonds for about 1 year, and IRA similar but more cash less bonds, and more equities, I am still waiting for a fairer value before going long on a 60-80% level. . .

which is why I occasionally post about fair value for the SP500, for those like @manabouttown to hold onto his cash for a bit while we continue to stair step down, like the chart indicates. . . or for anyone who wants to reduce market risk within their portfolios. . .

future former finance guy

[CoachKandSportsguy]

I let some patience and a little intuition into my choices. (Yes. I am a woman. :) )
Buy ‘n’ Hold Boomer

intuition is basically one of the 4 personality traits per Myers Briggs, none of the 4 personality types are limited to women, its just on a generalized gender basis, women are a higher proportion of the total, like about 2/3 of the population with the typical women traits.

so don't flatter yourself about intuition and being a woman, in the N category of INTP, my intuition is above 90% for the trait, tested several different times with different types of tests by my employer.

As far as your style, if it works for you, :0000000000luvmyhors

and that should be love the horse you ride!

future former finance guy. . .

[manaboutown]

At the end of April I sold a large commercial real estate property I had held for almost 40 years. It was a great time to sell as cap rates were very low. Since then I have proceeded to dip my toe into the water buying a little stock now and then. About 25% of the sales proceeds went into mostly buying a few more shares of stocks I knew well and had held a long time. Then...drum roll...short term T-bills moved into the 3% range and I have put almost all the rest of it into them. I will need to pay taxes on my gain 4/15/23 and a sufficient amount of them to pay my tax bill will mature prior to that date. As I see it the market has a far higher probability of going down for a while than going up so I feel defensive.

"For much of the last 12 years, cash yielded nothing, and allocating to it represented a deliberate choice to pay an often high price for insurance. But times change. Cash yields have risen sharply at a time when Morgan Stanley’s forecasts for global cross-asset returns are low, squeezed by tighter policy if economic data continue to hold up, and higher risk premiums if the data turn down. The market is giving investors the opportunity to earn ~3% on safe, liquid T-bills, or ~5% on safe (but less liquid) short-duration CLO AAAs, and somewhere in-between for other AAA securitized paper that has cheapened as banks have faced RWA constraints. These aren’t the most exciting investments, but sometimes it makes sense to take what the market gives you."

From: Morgan Stanley: Cash Looks "Relatively Attractive" Right Now | ZeroHedge (https://www.zerohedge.com/markets/morgan-stanley-cash-looks-relatively-attractive-right-now)

[TomPerry]

The Market will bottom on September 21, 2022.

[Ski Bum]

Here's S&P's S&P 500 forward GAAP earnings estimate from the S&P website:

Q2 2022: $42.53
Q3 2022: $49.23
Q4 2022: $51.25
Q1 2023: $50.87
Total: $193.88, round to $194
Current level: 4200

1) P/E 15x put the S&P 500 @ 2900
2) Assuming that the earnings are always beat,
by 5% on average due to share repurchases,
($194 x 1.05) =$204 x P/E 15 = @3100
2) Assuming that the earnings are always beat,
by 10% at the extreme due to under forecasting for an intentional beat
($194 x 1.10) =$213 x P/E 15 = @3200

Will the market go straight down to that level? No, it goes down in staggered drops and rallies, like stairs. If you assume that all information is in the market, then why is the P/E so high as compared to average growth, when inflation is elevated, there are shortages in mfg and labor?

Here is a comparison of the current market and the decline in the GFC in the 2000's. note the similarity in the stair steps down.

Don't be Irving Fisher, "Stocks have reached what looks like a permanently high plateau." any guess when he said that? Just be patient, prices will return to normal levels if not lower

Just some thoughts...

PE at 15... why? That might be an assumption for the market of yesteryear. Lots of things have changed. 18 and 21 are common numbers. At $4200 is 21.

6 month projection... Why? TOTV readers are long-term investors. And the market is forward looking one to five years.

Don't count on stock buy backs. The Brandon Bill taxes buy backs. Businesses will change their behavior.

I never did understand relying on charts of past data. Business is always evolving and very much moves on emotional behavior, especially in the short term. Maybe that behavior is reflected in past charts, I don't know. I really think the biggest pressure on the market right now is expectations for the upcoming election.

I am an MBA and MSIB (MS International Business)... not looking to argue, but explore ideas.

[Fastskiguy]

Nice to know there are so many people outperforming here in the villages. Apparently even really smart people who do this full time with big research teams can't beat the indexes yet everybody on this thread seems to be making a killing.

Access Denied (https://www.cnbc.com/2022/03/27/new-report-finds-almost-80percent-of-active-fund-managers-are-falling-behind.html)

Joe

[manaboutown]

Nice to know there are so many people outperforming here in the villages. Apparently even really smart people who do this full time with big research teams can't beat the indexes yet everybody on this thread seems to be making a killing.

Access Denied (https://www.cnbc.com/2022/03/27/new-report-finds-almost-80percent-of-active-fund-managers-are-falling-behind.html)

Joe

Which posters claimed they were outperforming the market?

This thread, at least as I see it, is addressed to what happens next as P/Es are rather high.

[Fastskiguy]

Which posters claimed they were outperforming the market?

This thread, at least as I see it, is addressed to what happens next as P/Es are rather high.

I'm assuming everybody here thinks they are but maybe not.

OK so let's do this....if you are underperforming the S&P 500 index please post below

Joe

PS I'm 70/30 stock/bonds so technically I'm underperforming the S&P 500 index

PPS I think threads like this are like the tipping threads where everybody claims they are tipping 25% or more.

[dewilson58]

PS I'm 70/30 stock/bonds so technically I'm underperforming the S&P 500 index

PPS I think threads like this are like the tipping threads where everybody claims they are tipping 25% or more.

:bigbow:

[melpetezrinski]

Just some thoughts...

PE at 15... why? That might be an assumption for the market of yesteryear. Lots of things have changed. 18 and 21 are common numbers. At $4200 is 21.

6 month projection... Why? TOTV readers are long-term investors. And the market is forward looking one to five years.

Don't count on stock buy backs. The Brandon Bill taxes buy backs. Businesses will change their behavior.

I never did understand relying on charts of past data. Business is always evolving and very much moves on emotional behavior, especially in the short term. Maybe that behavior is reflected in past charts, I don't know. I really think the biggest pressure on the market right now is expectations for the upcoming election.

I am an MBA and MSIB (MS International Business)... not looking to argue, but explore ideas.

"I really think the biggest pressure on the market right now is" the expectations of significant interest rate hikes (75 bps) and quantitative tightening. DON'T FIGHT THE FED

[manaboutown]

I'm assuming everybody here thinks they are but maybe not.

OK so let's do this....if you are underperforming the S&P 500 index please post below

Joe

PS I'm 70/30 stock/bonds so technically I'm underperforming the S&P 500 index

PPS I think threads like this are like the tipping threads where everybody claims they are tipping 25% or more.

Over my adult lifetime I focussed on investing in income producing real property, not stocks. I have held some but not much money in stocks from my late teens. Stocks just didn't interest me. I never spent much time on them. They were my rainy day reserves, not my primary investments. My goal was not to risk losing too much money while hoping it would grow a little over time. I never compared my personal performance to the S&P 500. Still don't. It is irrelevant to my objectives. At age 80 I am cashing out of some of my RE investments and am looking to buy and hold good solid dividend paying stocks. Having recently received cash from a sale of real property I have put most of it into T-bills paying about 3%. I put maybe 25% of it into some stocks I knew a little bit about as I had held them a long time, mostly solid dividend paying stocks.

Stocks now comprise between 15 and 20% of my invested assets. I am learning about stock market investing but do not want to be adventurous.

My only stock market war story is in the mid 1980s I bought two shares of Berkshire Hathaway at about $3,000/share. Dumb luck on my part.

[CoachKandSportsguy]

the struggle is real

https://www.talkofthevillages.com/forums/2127509-post38.html

for J Pow at J Hole

IYKYK

[joelfmi]

I am inclined to pray you are wrong, but Ill bet you are right
Surprise: US Banks To Start Seizing Accounts?


If the Freedom Convoy taught us anything, it’s this:

Those in power will do whatever it takes to stand on the necks of freedom-loving folks like you and me.

And that includes seizing your bank accounts without notice.

I know, most people think ‘surprise’ bank seizures could never happen in America, but get this:

It’s 100% legal for your bank to seize your checking and savings accounts if it falls on hard times.

It’s part of an Obama-era law that lets bankers take down the economy with multi-billion dollar blunders… and then seize your assets to bail themselves out.

Now, you might not know about this sneaky law…

But that won’t stop Washington from forcing you to write off your savings so their cronies and benefactors can stay in business.

P.S. European banks have already seized $11.62 billion from their customers’ savings accounts. [

[Boomer]

Just some thoughts...

PE at 15... why? That might be an assumption for the market of yesteryear. Lots of things have changed. 18 and 21 are common numbers. At $4200 is 21.

6 month projection... Why? TOTV readers are long-term investors. And the market is forward looking one to five years.

Don't count on stock buy backs. The Brandon Bill taxes buy backs. Businesses will change their behavior.

I never did understand relying on charts of past data. Business is always evolving and very much moves on emotional behavior, especially in the short term. Maybe that behavior is reflected in past charts, I don't know. I really think the biggest pressure on the market right now is expectations for the upcoming election.

I am an MBA and MSIB (MS International Business)... not looking to argue, but explore ideas.


Because I want to ask you a pertinent question, I must ignore the fact that you could not resist dragging your politics into this with that knee-jerk, dog-whistle routine you did.

Here goes.......

Because of your claimed ed cred, it seems like you are the perfect person to ask for a clear explanation that I have been looking for......

Although I know my holdings have benefited quite nicely from stock buybacks, I still do not understand how they are a good thing......

Sure my share prices go up and, obviously, buybacks are really good for high level execs running those companies. But how are buybacks, especially under the 2017 corporate tax law change, not just plain greed in action at the taxpayers' expense?

I know much of the corporate tax cut money was used for buybacks, instead of investing it in cap improvements and employees.

While some investors, who think they're hot stuff, subscribe to that old, "Greed is good" routine, I always say, "Unrestrained greed is bad economics" -- and all those buybacks could be taking us small investors ridin' for a fall. (Should those buybacks have been restrained in the first place when the corporate tax cuts were unleashed?)

I really do want to know what you have to say about buybacks and how they are of actual benefit to the real business of business and not just playing with easy money.

I hope you will take my question seriously and explain the justification for buybacks helping the big picture -- not just making the big-time execs' net worth a whole lot higher -- and lulling us small investors into a false sense of what ours is really worth.

For small investors who are heavy traders, maybe they are having a good time with these buybacks. For me, it feels like buybacks create phantom wealth and that makes a longterm buy and holder like me a little skittish.

I tend to think big picture, and I have not been able to get my head around how all these recent stock buybacks are good for our big picture economics.

Thanks in advance for your explanation of how I am wrong about my concern over buybacks creating phantom wealth.

I remain,
Buy 'n' Hold Boomer

[jimjamuser]

The Market will bottom on September 21, 2022.
A bottom at Oct. 15th. But, not necessarily an absolute bottom.

[jimjamuser]

Just some thoughts...

PE at 15... why? That might be an assumption for the market of yesteryear. Lots of things have changed. 18 and 21 are common numbers. At $4200 is 21.

6 month projection... Why? TOTV readers are long-term investors. And the market is forward looking one to five years.

Don't count on stock buy backs. The Brandon Bill taxes buy backs. Businesses will change their behavior.

I never did understand relying on charts of past data. Business is always evolving and very much moves on emotional behavior, especially in the short term. Maybe that behavior is reflected in past charts, I don't know. I really think the biggest pressure on the market right now is expectations for the upcoming election.

I am an MBA and MSIB (MS International Business)... not looking to argue, but explore ideas.
I agree that emotional behavior is MORE important for timing buys and sells than MOST investors realize.

[Aces4]

I'm assuming everybody here thinks they are but maybe not.

OK so let's do this....if you are underperforming the S&P 500 index please post below

Joe

PS I'm 70/30 stock/bonds so technically I'm underperforming the S&P 500 index

PPS I think threads like this are like the tipping threads where everybody claims they are tipping 25% or more.


I agree. It’s like people telling you how much they won at the casino. You never hear how much they have left at the casinos over time.

[CoachKandSportsguy]

Buybacks

good or bad? it depends. . .

Extremely bad example: BBBY, (Bed Bath and Beyond) authorize a HUGE buyback, and were executing on it, and now they are out of cash, and vendors have stopped some shipments. That may be the sole reason for a bankruptcy filing in the near future.

There are two primary uses of stock buybacks:
To fund executive pay with restricted stock units or for option incentive packages exercises,
and second, to assist in executive compensation plans where there is an earnings per share (EPS) compensation metric. Tyco CEO who went to the pokey increased his EPS through acquisitions of other companies, so as the old saying goes: want to understand the company behavior is to review the compensation plans, as you get what you pay for.

The first takes shareholder's cash and gives it directly to insiders. . I have benefited from these plans, but on a very small scale in the old days, the late 90's.
The second helps ensure that executives make their compensation plan. However, if the purchased shares stay in the treasury, then there is some shareholder benefit for a higher earnings per share, making the company slightly more valuable. Many executives siphon cash off and there are several egregious examples, such as a previous CEO of Boeing.

So at the end of the day, the effectiveness depends upon the net share change, although even the second really is financial engineering for insider pay. So when you hear analysts talk about only the share repurchase from a lack of other investment theory, you are listening to someone covering for the CEO's incentive plans. . . and being paid for it most likely.

The key to offsetting this is the proxy vote to approve the ceo and others' pay packages. if I recall, Jamie Dimon's of JPM most recent pay plan was vetoed. However, reading all the fine print and going over the 10K and 10Qs and proxy statements should give you a good idea of which companies are egregious. And if you study a bit of CEO history, Jack Welsh was the leader in giving egregious pay packages at GE, which justified his own pay package. . . I have worked with JW wannabes from the GE days, and I totally dislike their lack of big picture focus, and their standard headcount reduction strategies. .. headcount turnover strategies. don't ask if you don't want to know

and yeah, I have an MBA as well, but also have experience with the compensation plans from an insider point of view. And I have seen colleagues with $M options and stock plans not get anything or sometimes get about 50% of the high value due to stock market selloffs.

So ignore the theory of corporate bull****, and assume its legal insider greed.

And if you watch "The Big Short, and read the book, you will understand why some people are radicalized against corporatism, and will be silenced by the paid off shills, especially when the executives bankrupt the company and employees lose their jobs.

future former finance guy

[CoachKandSportsguy]

Just some thoughts...

PE at 15... why? That might be an assumption for the market of yesteryear. Lots of things have changed. 18 and 21 are common numbers. At $4200 is 21.

6 month projection... Why? TOTV readers are long-term investors. And the market is forward looking one to five years.

Don't count on stock buy backs. The Brandon Bill taxes buy backs. Businesses will change their behavior.

I never did understand relying on charts of past data. Business is always evolving and very much moves on emotional behavior, especially in the short term. Maybe that behavior is reflected in past charts, I don't know. I really think the biggest pressure on the market right now is expectations for the upcoming election.

I am an MBA and MSIB (MS International Business)... not looking to argue, but explore ideas.

just because the fed has been in easy monetary mode with liquidity pushing P/E's higher for many years, doesn't mean that without the fed support, the p/e won't regress to the mean. don't be an Irving Fisher.

One of the problems in today's markets is passive investing, which is very large percentage of the population in 401K plans. The problem is that the purchases are price/outlook insensitive, just buy the index' stocks and you will match the market performance. As the higher the percentage of passive investment goes, the lower the active management trading float, and active management now starts to control prices with 1/2 the float. That increases volatility and the passive sit and go along with it, because they just can't sell part of the index.

TOTV are not long term investors, they are short term investors as compared to the employed population. retire at 65 and you have no supplemental income to replace any lost income if the investments go bad. if retirees expenses are greater than their social security plus minimum IRA distributions, due to unforeseen circumstances, they have to take from assets. Not the same with employed people, and with average longevity declining, say 80 years old, that's a 15 year horizon from which you will be drawing down your income source. It would not be smart to assume one can keep the same long term mix as a 30 or 40 year old with income and promotion potential

Past behavior gives clues to investor's fear or greed sentiment. short term movements do have some emotion to it, but I would argue that the amount of monthly 401K contributions which are monthly contributions with no emotion completely overwhelm any short term behavior, as well as the active management for pension plans, etc.

The problem is that the scenario is different each time, but investor behavior doesn't change, did you read the link about how price changes sentiment? As an investor, your sentiment has to be the opposite of price.

The higher the price, the closer to the top.
The lower the price, the closer to the bottom.

Trend following by definition is 100% invested at the top
and 0% invested at the bottom. . but Buy Low and Sell High profitability requires the opposite investment behavior.

good luck

[jimjamuser]

Buybacks

good or bad? it depends. . .

Extremely bad example: BBBY, (Bed Bath and Beyond) authorize a HUGE buyback, and were executing on it, and now they are out of cash, and vendors have stopped some shipments. That may be the sole reason for a bankruptcy filing in the near future.

There are two primary uses of stock buybacks:
To fund executive pay with restricted stock units or for option incentive packages exercises,
and second, to assist in executive compensation plans where there is an earnings per share (EPS) compensation metric. Tyco CEO who went to the pokey increased his EPS through acquisitions of other companies, so as the old saying goes: want to understand the company behavior is to review the compensation plans, as you get what you pay for.

The first takes shareholder's cash and gives it directly to insiders. . I have benefited from these plans, but on a very small scale in the old days, the late 90's.
The second helps ensure that executives make their compensation plan. However, if the purchased shares stay in the treasury, then there is some shareholder benefit for a higher earnings per share, making the company slightly more valuable. Many executives siphon cash off and there are several egregious examples, such as a previous CEO of Boeing.

So at the end of the day, the effectiveness depends upon the net share change, although even the second really is financial engineering for insider pay. So when you hear analysts talk about only the share repurchase from a lack of other investment theory, you are listening to someone covering for the CEO's incentive plans. . . and being paid for it most likely.

The key to offsetting this is the proxy vote to approve the ceo and others' pay packages. if I recall, Jamie Dimon's of JPM most recent pay plan was vetoed. However, reading all the fine print and going over the 10K and 10Qs and proxy statements should give you a good idea of which companies are egregious. And if you study a bit of CEO history, Jack Welsh was the leader in giving egregious pay packages at GE, which justified his own pay package. . . I have worked with JW wannabes from the GE days, and I totally dislike their lack of big picture focus, and their standard headcount reduction strategies. .. headcount turnover strategies. don't ask if you don't want to know

and yeah, I have an MBA as well, but also have experience with the compensation plans from an insider point of view. And I have seen colleagues with $M options and stock plans not get anything or sometimes get about 50% of the high value due to stock market selloffs.

So ignore the theory of corporate bull****, and assume its legal insider greed.

And if you watch "The Big Short, and read the book, you will understand why some people are radicalized against corporatism, and will be silenced by the paid off shills, especially when the executives bankrupt the company and employees lose their jobs.

future former finance guy
In my opinion Jack Welsh was a total sleaze ball. He bought unrelated companies for the sole purpose of expanding GE and making himself look good. he was probably the model for the concept of"greed is good". After Welsh retired, GE sold of all those unrelated companies - probably at a loss. Vertical integration of companies makes sense, but Welsh's horizontal acquisition strategy was just accumulation for accumulation's sake. And under Welsh the GE stock price stayed basically constant. Basically, I did NOT like him!

[jimjamuser]

just because the fed has been in easy monetary mode with liquidity pushing P/E's higher for many years, doesn't mean that without the fed support, the p/e won't regress to the mean. don't be an Irving Fisher.

One of the problems in today's markets is passive investing, which is very large percentage of the population in 401K plans. The problem is that the purchases are price/outlook insensitive, just buy the index' stocks and you will match the market performance. As the higher the percentage of passive investment goes, the lower the active management trading float, and active management now starts to control prices with 1/2 the float. That increases volatility and the passive sit and go along with it, because they just can't sell part of the index.

TOTV are not long term investors, they are short term investors as compared to the employed population. retire at 65 and you have no supplemental income to replace any lost income if the investments go bad. if retirees expenses are greater than their social security plus minimum IRA distributions, due to unforeseen circumstances, they have to take from assets. Not the same with employed people, and with average longevity declining, say 80 years old, that's a 15 year horizon from which you will be drawing down your income source. It would not be smart to assume one can keep the same long term mix as a 30 or 40 year old with income and promotion potential

Past behavior gives clues to investor's fear or greed sentiment. short term movements do have some emotion to it, but I would argue that the amount of monthly 401K contributions which are monthly contributions with no emotion completely overwhelm any short term behavior, as well as the active management for pension plans, etc.

The problem is that the scenario is different each time, but investor behavior doesn't change, did you read the link about how price changes sentiment? As an investor, your sentiment has to be the opposite of price.

The higher the price, the closer to the top.
The lower the price, the closer to the bottom.

Trend following by definition is 100% invested at the top
and 0% invested at the bottom. . but Buy Low and Sell High profitability requires the opposite investment behavior.

good luck
US average longevity IS declining, but that is confusing because the US has large numbers of immigrants with lower life spans. The US also has a large number of drug overdose deaths, which is driving the average lifespan down. Switzerland and the Scandinavian countries have less of those problems.

True that average longevity would have a big effect on stock buying habits.

[CoachKandSportsguy]

Mike "Mish" Shedlock twitter @MishGEA investment economist
----------------------------------------------------------------------------

Hello Recession Doubters

New home sales are down a whopping 38.5 percent since January!

When have we seen housing data this week when the economy was not in recession?

Number ONE 1yr, 5yr and 10 yr market timer tracked by Hulbert Digest, went from long to cash over the weekend
Fari Hamzei if you want to research. Expects 6 weeks of downward pressure, but that is an expectation

The future is always uncertain, sometimes more uncertain than at other times.

good luck

[Boomer]

C'mon, guys, pay attention. The CEO who messed up GE was Jack Welch not Jack Welsh. (It was not a pretty sight from what I hear from people who worked there.)

On another note for anyone interested: The Investment Education Club will meet this Thursday, 8/25, at 3:00, at Seabreeze Rec. This meeting will be a group discussion of investing for dividends and income. The announcement said to please come with some dividend equity ideas.

Boomer

[CoachKandSportsguy]

C'mon, guys, pay attention. The CEO who messed up GE was Jack Welch not Jack Welsh. (It was not a pretty sight from what I hear from people who worked there.)

On another note for anyone interested: The Investment Education Club will meet this Thursday, 8/25, at 3:00, at Seabreeze Rec. This meeting will be a group discussion of investing for dividends and income. The announcement said to please come with some dividend equity ideas.

Boomer

didn't he start some fruit juices also? :oops:

Would love to attend, when I become permanent!

Thanks!

[Ski Bum]

Because I want to ask you a pertinent question, I must ignore the fact that you could not resist dragging your politics into this with that knee-jerk, dog-whistle routine you did.

Here goes.......

Because of your claimed ed cred, it seems like you are the perfect person to ask for a clear explanation that I have been looking for......

Although I know my holdings have benefited quite nicely from stock buybacks, I still do not understand how they are a good thing......

Sure my share prices go up and, obviously, buybacks are really good for high level execs running those companies. But how are buybacks, especially under the 2017 corporate tax law change, not just plain greed in action at the taxpayers' expense?

I know much of the corporate tax cut money was used for buybacks, instead of investing it in cap improvements and employees.

While some investors, who think they're hot stuff, subscribe to that old, "Greed is good" routine, I always say, "Unrestrained greed is bad economics" -- and all those buybacks could be taking us small investors ridin' for a fall. (Should those buybacks have been restrained in the first place when the corporate tax cuts were unleashed?)

I really do want to know what you have to say about buybacks and how they are of actual benefit to the real business of business and not just playing with easy money.

I hope you will take my question seriously and explain the justification for buybacks helping the big picture -- not just making the big-time execs' net worth a whole lot higher -- and lulling us small investors into a false sense of what ours is really worth.

For small investors who are heavy traders, maybe they are having a good time with these buybacks. For me, it feels like buybacks create phantom wealth and that makes a longterm buy and holder like me a little skittish.

I tend to think big picture, and I have not been able to get my head around how all these recent stock buybacks are good for our big picture economics.

Thanks in advance for your explanation of how I am wrong about my concern over buybacks creating phantom wealth.

I remain,
Buy 'n' Hold Boomer

First, a question for everyone, how do I know if someone has responded to my reply? Do I really have to scroll through the thread again to check? Thus the late reply.

Brandon's bill will tax buy backs, don't know how that is political. I use the name Brandon to clearly state my position. Like the saying goes, know where someone sits, before listening to how they stand. And because the story behind how Biden got that nickname is hilarious.

I don't believe I ever took a stand in favor of buy backs, but am glad to discuss. Corporate Officers are tasked with the optimization of profits for their shareholders, period. Does that mean for example, that they can pollute the planet in the name of profit? Or abuse their workers? Of course not, mainly because that would certainly hurt profits over time. So one big discussion is about the pressure on Corporate Officers to show quarterly profits. Public companies are required to report quarterly. There are ideas that would change that to yearly, 5 years, or something else. But that's enough on that topic.

As you know, stock buy backs decrease the number of shares in the market, which should increase the value of individual shares. The number of shares available for buy/sell in the market is called the "float". Shares held by the corporation and even mutual funds, are not in the float. That's how meme stocks can move so violently. A small number of people on the internet can target stocks with small floats. So stocks with small floats, like those that have big buy backs, are riskier and should reflect that in their stock price.

So on to corporate tax policy. Tax policy is friction in the market. If government introduces that friction and a corporation reacts with their primary goal in mind (to maximize profits), I wouldn't blame the corporation. The problem is with the tax policy. So what happens? The Government skews the market with regulation, then they propose to fix it with more regulation, like taxing stock buy backs. It's nuts!

Last, after the Tax Cuts and Jobs Act of 2017, there was increased revenue to the Federal Government. A tax rate cut does not mean lower revenue. In fact, it's always higher. Revenue crashed from $370B in 2007 to $138B in 2009, and didn't recover until 2015. Look at tax policy during that time for your answers. Talking corporate tax revenue numbers here. Although revenue from individuals mirror these numbers.

[Ski Bum]

just because the fed has been in easy monetary mode with liquidity pushing P/E's higher for many years, doesn't mean that without the fed support, the p/e won't regress to the mean. don't be an Irving Fisher.

One of the problems in today's markets is passive investing, which is very large percentage of the population in 401K plans. The problem is that the purchases are price/outlook insensitive, just buy the index' stocks and you will match the market performance. As the higher the percentage of passive investment goes, the lower the active management trading float, and active management now starts to control prices with 1/2 the float. That increases volatility and the passive sit and go along with it, because they just can't sell part of the index.

TOTV are not long term investors, they are short term investors as compared to the employed population. retire at 65 and you have no supplemental income to replace any lost income if the investments go bad. if retirees expenses are greater than their social security plus minimum IRA distributions, due to unforeseen circumstances, they have to take from assets. Not the same with employed people, and with average longevity declining, say 80 years old, that's a 15 year horizon from which you will be drawing down your income source. It would not be smart to assume one can keep the same long term mix as a 30 or 40 year old with income and promotion potential

Past behavior gives clues to investor's fear or greed sentiment. short term movements do have some emotion to it, but I would argue that the amount of monthly 401K contributions which are monthly contributions with no emotion completely overwhelm any short term behavior, as well as the active management for pension plans, etc.

The problem is that the scenario is different each time, but investor behavior doesn't change, did you read the link about how price changes sentiment? As an investor, your sentiment has to be the opposite of price.

The higher the price, the closer to the top.
The lower the price, the closer to the bottom.

Trend following by definition is 100% invested at the top
and 0% invested at the bottom. . but Buy Low and Sell High profitability requires the opposite investment behavior.

good luck

When I say TOTV readers are long term investors, well... I can see the confusion, sorry about that. A long term investor would have a riskier portfolio because time is in their side. They are (or should be) risk adverse, conservative, whatever term you like. Short term investor may be accurate, but again confusing.

[sail33or]

I am from Texas and sold a few Oil Wells. Bought houses in The Villages years ago and they have doubled in value.

Stock Market movement is based on Money Supply. Big spending bills put money in circulation and Companies will get their share of it. Restrict money and no profits, no revenue, falling stock values.

Also, when ELITES buy price goes up, when they sell price goes down.

That is pretty much it.

By the way, like in 2008, when things CRASH, everything crashes. Gold, Bonds, Real Estate, etc. all crash at the same time.

[Two Bills]

Wife and I are spending our savings, not still trying to be the richest pair in the cemetery!