On a EV/S and EV/EBITDA basis, this is the most expensive market in history except for 1999. The spread between the lowest decile of valuation and the highest decile of valuation is the lowest it has ever been including 1999. Those are the facts. We have exceeded 2007’s overvaluation on virtually every metric. Credit quality is higher this time around but don’t delude yourself into thinking this market makes any sense.
What I pointed out was that “the market run” has only been a return , from a self-inflicted collapse. If you want returns going forward you need to collapse again, then the media can again say “the S&P500 has outperformed the world, up 300% since 2008!”. 
I agree with last post from Iteracom.
Also we should all be fighting over scraps of meat in the street since like 2010 according to Zero Hedge, but the final global collapse never happened.
I mean obviously there are deep structural (monetary, currency, sovereign debt, China, etc.) issues but I don’t think that it will unwind and blow up in our faces at once.
Anyways, in my view the relevant question is what then ? If the stock market is a fools’ play, what should we be doing ? What are the alternatives ? Bonds ? Agricultural land ? Precious metals ?
I, for one, will keep on being happy with my 2,5 % dividend yield from rock solid companies that I buy and hold, any capital gain on top is welcome but not expected.
Anyone going to play the vix soon? Itm calls may be a good play come friday/monday
aint ev/ebitda like 12x or something? i actually never checked historical data for ev ebitda so i have no context. kno any good sites? prolly makes sense though rates at an all time low. people are adding debt for share repurchase too. yea haha. i think i found my next exercise. should be interesting.
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here seems to be a good point for me to jump into this. i have no clue how someone can reliably make money on the stock market. seems there are too many risks to account for – fundamental, capital flows, flash crashes, robot traders – it’s a huge fucking minefield IMO.
I like playing where there is less competition for assets and compelling fundamentals. I’m buying assets with a 10% unleveraged income return (leveraged to a 15) with extremely reliable cash flows. real assets that people need to live and no one else is out bidding my prices up to ridiculous levels. the only potential landmine is that you have to be disciplined enough not to over leverage.
real assets bros. real assets.
^^^^^^^^^^
I disagree on the flash crashes and “robot traders” part. These things matter not for a long term investor.
Also, IMO if you are disciplined, not to greedy and buy and hold, there ARE reliable ways to have a very good chance of making decent money (say, between 5 and 8% return) in stocks.
I am curious : what real assets that people need to live give you a reliable 10 % cash income ?
real estates yo
i think i’m more bewildered by active management, trying to time the market or stock picking for shorter term holds. sure i have some money in the market index but anything else feels like gambling. don’t know maybe people who live the market every day and have better informartion know how to play it.
They don’t.
I don’t think so. After accounting for the lack of diversification (imagine buying 10 stocks for 5K€ each vs 50K€ in an appartment), paperwork, lack of liquidity, headaches, and let’s admit it, RE is pretty fn’ boring, I am not sure that RE is such a great investment.
Unless you buy where you live, of course.
Lots of people have gotten extremely rich off real estate, partly as a result of institutional capital realizing that the headaches/issues you listed are worth it.
“There are two kinds of investors, be they large or small: those who don’t know where the market is headed, and those who don’t know that they don’t know. Then again, there is a third type of investor - the investment professional, who indeed knows that he or she doesn’t know, but whose livelihood depends upon appearing to know.”
William Bernstein - The Intelligent Asset Allocator
That’s the Trump card!
Well, there’s almost certainly a fair amount of insider dealing going on. Occasionally someone gets caught, but most people are just in the information loop and work to generate plausible deniability.
The other thing that happens is that many market players just have more staying power because they are less risk averse. So rumblings happen and people with less staying power get shaken out and people with more staying power collect cheap eats. Knowing your own risk tolerance (particularly if you’re correct about it being higher than your competition) is something that can play to your advantage.
RE can be a great investment because you can lever it in a way that you can’t (prudently) with stocks because of the underlying cash flow predictability.
The stock market is a great vehicle to generate wealth over time. The problem is people are so f’in stupid and short-term oriented that they usually lose money. If you bought 50-100 high quality, statistically cheap stocks that are attached to real businesses that produce cash flow, and then don’t look at them for 3 years, you will do fine. What kills people is the daily quote and doing dumb stuff like investing in absurdly speculative momentum crap and then trying to sell before other people sell.
The real problem with the stock market is that people lose their mind over the liquidity potential and daily quote. Compounding this problem, investors want monthly numbers with no lockup, so managers are forced to do dumb stuff to try make the numbers or they face redemptions. Get a quality LP base with a multi-year lock and don’t worry about day-to-day. It’s much easier to figure out why a company will earn more 2-3 years from now and what that implies for the price than what’s going to happen to a specific price or the market in the next 2-3 weeks.
tl;dr people are dumb and short-term and so the market is dumb and short-term
funny and sad, cuz that quote is true. haha
I like real estate because it’s not rocket science yet there are plenty of opportunities to make very good returns. Once you learn how to identify good locations in good markets, it’s fish in a barrel. Neither of those things changes very rapidly which makes it easier. Probably the biggest benefit of real estate is you hold a potentially valuable purchase option on every deal. I’ve done deals where I had a year to decide if I wanted to close at the price I secured a year ago. That is a tremendous hidden benefit.
Dude, are these the 10 % cash yielding assets that you are talking about ?