Markets and bubbles, a thread for investors.

[Jackalope]

(This thread is intended for members who have skin in the game, but of course all are welcome.)

So what do you think the current environment has in stock for smaller investors?

I find the broad US markets to be way overbought, and there *will* be a significant correction (say at least 15%) within the next two years. The P/E ratios of all the major indexes are in the stratosphere (in laymens terms what this means is buyers are paying a huge premium for future earnings).

Earnings how to come up *way* higher than the most optimistic outcome of the new tax law in order to justify those multiples by historic measures.

I've seen this before, in 1999. My portfolio lost at least a third of it's value when the bubble burst in 2000. This, this feels like "irrational exuberance" that Greenspan correctly warned against.

2008 was different but I weathered that by going 40% to bonds. I didn't suffer the kinds of losses that people fully invested in equities did. They got shellacked.

Still, the markets are going up and I'd be fool to pass up this bull market while it lasts.

In October 2016 I was 100% in equities, except to the extent that any fund manager might incidentally hold cash, bonds, or derivatives). November 2016 I went to about 80/20 equity/bond, then 70/20/10 equity/bond/cash, then ditched most of the bonds for cash, and finally I moved most of the cash into conservative lower risk mutual funds and the rest into international mutual funds. japanese and Euro stocks are trading at much more reasonable multiples.

What are you doing? Where do you think the market is going?

[Minimalist]

We are long overdue for a market correction at best or a recession at worst.

http://www.businessinsider.com/4-charts-...on-2017-12

Recession is already overdue

The current economic expansion is now the third-longest since World War II. It’s also the weakest. Here’s a chart I showed last summer.

The yellow line is the current recovery that began in 2009. Only the 1960s and 1990s growth periods went on longer—and both had much higher growth.

So, just by length of time, we’re already due or overdue for recession. Yes, the economy could improve further from here… but probably not for long.

[brewer]

I was under the impression that you worked for an investment firm. If yes, what are they telling you? If no, pardon my error.

My investment guy expects a correction of between 20% to 30% happening during the Trump years (next 3). I'm sitting about the same as you, 65/25/10. Equities are spread thru 30 different companies.

[Fireball]

I'm looking at this and feeling a bit exposed. I have some higher risk stuff, but most of it is low to moderate. I'll have to go over this shortly with my money people. I am letting it grow and living on SS and my pittance of a retirement (the piece I couldn't cash out, like I was able to do with the legacy retirement from before the company got bought out), plus my wife is still working.

[Brian37]

(This thread is intended for members who have skin in the game, but of course all are welcome.)

So what do you think the current environment has in stock for smaller investors?

I find the broad US markets to be way overbought, and there *will* be a significant correction (say at least 15%) within the next two years.  The P/E ratios of all the major indexes are in the stratosphere (in laymens terms what this means is buyers are paying a huge premium for future earnings).

Earnings how to come up *way* higher than the most optimistic outcome of the new tax law in order to justify those multiples by historic measures.

I've seen this before, in 1999.  My portfolio lost at least a third of it's value when the bubble burst in 2000.  This, this feels like "irrational exuberance" that Greenspan correctly warned against.

2008 was different but I weathered that by going 40% to bonds.  I didn't suffer the kinds of losses that people fully invested in equities did.   They got shellacked.

Still, the markets are going up and I'd be fool to pass up this bull market while it lasts.

In October 2016 I was 100% in equities, except to the extent that any fund manager might incidentally hold cash, bonds, or derivatives).  November 2016 I went to about 80/20 equity/bond, then 70/20/10 equity/bond/cash, then ditched most of the bonds for cash, and finally I moved most of the cash into conservative lower risk mutual funds and the rest into international mutual funds.  japanese and Euro stocks are trading at much more reasonable multiples.

What are you doing?  Where do you think the market is going?

Your words "While it lasts"

People get stuck on the short term day to day thinking, so yea, the markets are strong, but only after 8 years of recovery, and if you look at the relatively minor dips between WW2 and Reagan, they never got bad to the point of a depression or a great recession. SURE the markets look attractive now, but our long term GOP economic policies are simply allowing more short term bad betting.

I think it is simply long term going to end up like Bush Jr or worse, if we don't boot the GOP out.

I have insured investments, and savings account, I think the quick fix climate with bullshit like day trading and expanding the online trading to laypeople are bad regulations that simply convince, like a gambling addict, that they don't need professional guidance, but if you expect to do it right, the reality is everything takes time long term. But we have McDonalds market quick fix which really only ends up benefiting the professional investors and the average layperson ends up footing the bill after the bubble bursts.

We cant think one year, or one decade, our policies need to be about 50 years and 100 years. Otherwise we will keep having crashes every decade.

---

I was under the impression that you worked for an investment firm. If yes, what are they telling you? If no, pardon my error.

My investment guy expects a correction of between 20% to 30% happening during the Trump years (next 3). I'm sitting about the same as you, 65/25/10. Equities are spread thru 30 different companies.

What is the difference between an "equity" and an "annuity".

I have a fixed annuity that is paying down and out over the next 4 years like a paycheck.

I have another annuity my banker is telling me to leave in until I am forced to cash it out in 5 years. But he is telling me the interest will pay between 2 and 3% per year for the next 5 years.

Then I have two FDIC insured accounts.

Point is, I always here "diversify" so that if there is a dip you don't get hurt long term.

[Aegon]

We are long overdue for a market correction at best or a recession at worst.

http://www.businessinsider.com/4-charts-...on-2017-12

Recession is already overdue

The current economic expansion is now the third-longest since World War II. It’s also the weakest. Here’s a chart I showed last summer.

The yellow line is the current recovery that began in 2009. Only the 1960s and 1990s growth periods went on longer—and both had much higher growth.

So, just by length of time, we’re already due or overdue for recession. Yes, the economy could improve further from here… but probably not for long.

I swear if the market tanks right as I graduate...

[Shell B]

We're mostly low-risk, but I worry. We invest a healthy percentage of our income. I'm paranoid, so I'd rather buy gold bars and bury them in the backyard. Anyway, I'm dumb and have nothing to contribute to this conversation.

[Minimalist]

Others are noticing.

https://shareblue.com/trumps-disastrous-...-year-low/

Trump’s disastrous presidency crashes job growth to 6-year low

Apparently, even the WLB has noticed!

[brewer]

My guy was talking about over valuation and a reset prior to Trump.

[Minimalist]

Wait until the shitballs who voted for him find out that the stock market only matters if you own stock.  I doubt that too much of the Trailer Trash is in that category!