Trading the stockmarket (NO Referrals)

Its been mentioned before but PE as a bench mark is shifting, in recent years there has been an explosion of retail investors into the market enabled by fee free, fractional share trading apps. Whilst fundamental metrics don't change equity markets are just that markets, supply and demand and there is just greater demand now, so buying that share in a company will get more expensive.
 
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200sols said:
Future returns are often dictated by valuation. The expected future (earnings) returns are already in the price so at high valuation you are setting a higher bar for performance. There are many studies out there using historical data, when valuation is high future returns over the long term is historically lower.

Handy chart although its a little out of date, valuation is higher now.
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The problem is it is not so use to look at CAPE values from the past, e.g. CAPE values from 2015 were near peak of the Great 1929 crash. Part of the differences is companies can grwo faster and generate prrofit faster, So the CAPE ratio itself is not use as it is based on prior 10 years. This is compounded if we believe AI and technology in general will increase productivity. And putting it into such a graph doesn't help, it doesn't have predictive value. It includes peak and trough that will then give the impression of a trend, but there is no way to predict when the next peak will be ad at what valuation.

EDIt sources:

Implications​

Most practitioners probably feel that CAPE changed in the 1990s. It has been above its 1900 to 1989 mean value of 14.1 a remarkable 99.8% of the time since the start of that decade. That elevated CAPE is associated empirically with lower returns is unsettling. But empirical regularities may not be reliable for forecasting if underlying relationships are unstable.



blogs.cfainstitute.org

CAPE Is High: Should You Care? - CFA Institute Enterprising Investor

A simple analysis shows that Robert Shiller's cyclically adjusted price-to-earnings ratio changed in the 1990s and that mean-reversion concerns may be misplaced. If CAPE changed three decades ago, however, there is nothing preventing it from doing so again.
blogs.cfainstitute.org blogs.cfainstitute.org
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D.P. said:
The problem is it is not so use to look at CAPE values from the past, e.g. CAPE values from 2015 were near peak of the Great 1929 crash. Part of the differences is companies can grwo faster and generate prrofit faster, So the CAPE ratio itself is not use as it is based on prior 10 years. This is compounded if we believe AI and technology in general will increase productivity. And putting it into such a graph doesn't help, it doesn't have predictive value. It includes peak and trough that will then give the impression of a trend, but there is no way to predict when the next peak will be ad at what valuation.
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There is some justifcation, or reasons for higher valuations now compared to history. But not this level of valuation, its getting extreme really.

I was just pointing out when you said valuation doesn't matter, historically it has mattered a lot. You say 'new normal', I say that's what people say in every bubble. It will be interesting to revisit this post in a decade.
 
dacads said:
What holdings do you have in your pie? I currently have the Vanguard S&P500 and all world. Is it worth adding NVIDIA, AMD etc.? I'm in it long term ofc not looking to make a quick buck, even though that would be nice :p
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I don't have a pie, I just have two ETFs, VWRP and VEUA, split about 70/30 respectivley.
 
200sols said:
There is some justifcation, or reasons for higher valuations now compared to history. But not this level of valuation, its getting extreme really.

I was just pointing out when you said valuation doesn't matter, historically it has mattered a lot. You say 'new normal', I say that's what people say in every bubble. It will be interesting to revisit this post in a decade.
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The only certainties is the SM will crash and you cannot predict when. If you 70+ you will want to make sure you have income to survivie with drawing stock d
stocks in a crash, otherwise time in market.
 
D.P. said:
The only certainties is the SM will crash and you cannot predict when. If you 70+ you will want to make sure you have income to survivie with drawing stock d
stocks in a crash, otherwise time in market.
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Yep, you slowly 'de-risk' as you approach retirement is pretty standard advice - so if there is a market crash you're not so exposed when you need to cash out.
Basically you sacrifice theoretical gains for more actual certainty.
 
JPM: "today will be the fifth time that the Fed cuts rates with the S&P 500 at all-time highs. All prior instances the S&P 500 was higher a year later with an average return of 20%. The worst one-year return was a 15% gain which occurred last year."
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Ok.. learnt some lessons....lol.

1) don't rush in when day trading. I had sold a stock, and was looking to invest and rushed but didn't study the price first.
2) don't think you can wait it out and hope in comes back up. Take the small loss and move on.
3) don't then sit on that stock hoping that because you think it should come back up and minimize heavy losses, doesn't mean it will lol.

If you don't have time to pay attention to such things don't bother putting your money in.
 
Nasher said:
Seems like a lot of people start with "day trading", but it's probably the hardest method tbh.

Most people lose money at the start. But finding something good and leaving it in there long term is far less risky.
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Lets face it most people are day trading in a market that is like a snowball rolling uphill. You could throw darts and win in this game, although a few in here manage to fail :p:cool:(Diddums)
 
Nasher said:
Seems like a lot of people start with "day trading", but it's probably the hardest method tbh.

Most people lose money at the start. But finding something good and leaving it in there long term is far less risky.
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Most day traders make a loss and you also really need to do it full time constantly watching your stocks and look for the next buys.


finding a food single stock take a lot of time but is less risky.

buying an indexe ETF is easy and has the lowest risk
 
200sols said:
Lets face it most people are day trading in a market that is like a snowball rolling uphill. You could throw darts and win in this game, although a few in here manage to fail :p:cool:(Diddums)
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indeed, i think when a crash happens people in this thread will be very upset, yet for a day trader ot doesn't make a difference as they should be having options and shorts on stock falls in equal measure.
 
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I'm up 10% in a week just holding.

how much are the day traders up by? should be a lot more since they are taking more risks and less likely to be spread across multiple stocks?
 
radderfire said:
Paul Tudor Jones' (legendary trader) view of the market:

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all the comments say its an old interview
probably a month old looking at the btc price listed on screen in the video.

200sols said:
I was just pointing out when you said valuation doesn't matter, historically it has mattered a lot. You say 'new normal', I say that's what people say in every bubble. It will be interesting to revisit this post in a decade.
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interesting that you need such a long time frame with plenty of hindsight.

even if the stock market had a major crash today I'd still be green and not worried about it.

people should be more worried about the 3-10 years of stagnating stocks just staying as a flat line that will follow.

especially if your relying on gains as additional income.
 
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arknor said:
interesting that you need such a long time frame with plenty of hindsight.

even if the stock market had a major crash today I'd still be green and not worried about it.

people should be more worried about the 3-10 years of stagnating stocks just staying as a flat line that will follow.

especially if your relying on gains as additional income.
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Well you need a long timeframe to analyse what is possible. The discussion was about expected future returns, that doesn't have to mean a meltdown. Its not just me saying it, Goldman, Vanguard etc all have forecasts out indicating what is possible. Anyway the main point was people saying valuation doesn't matter, TLDR = it does.
 
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Fed FOMC interest rate decision later today. I'm just chuckling to myself a bit when commentators say how will they do it when they don't have official government data because of the government shutdown. As if they base their decisions on that!! It has been one massive fudge fest for the last few years.
 
for those who are over 80k in the portfolio... how are you dealing with it?
Just let it ride and hope that the platform you are using don't go Sam Bankman-Fried? or do you have it on separate platforms?

What if one of your accounts pearks over the threshold? do you transfer it over to another institutions?
 
slinxy said:
for those who are over 80k in the portfolio... how are you dealing with it?
Just let it ride and hope that the platform you are using don't go Sam Bankman-Fried? or do you have it on separate platforms?

What if one of your accounts pearks over the threshold? do you transfer it over to another institutions?
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For ISA/SIPP's - those using a platform are fine.

Investments are held separately: For instance - AJ Bell acts as a platform, and your investments (like shares and funds) are held in a separate nominee company. This means they are not owned by the company itself and would be protected from creditors if the platform failed.

Are my investments protected if something goes wrong? | AJ Bell

Every so often, you may hear a story of a financial institution shutting down and leaving customers in limbo to get their money back.
www.ajbell.co.uk www.ajbell.co.uk
 
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