also, he didn’t say “i love well diversified portfolios or a portfolio consisting of stocks in a specific index”, he said “i love an index which tracks the performance of various companies”. that’s like me saying “i love my favourite team’s stats page far more than the team itself”.
Welcome to the nitpickers of AnalystForum!
The sentence in context was very clear, over 50-70yrs the index members change, but you can just own the index.
Not necessarily. Companies can be private without being in a stock index. But the large companies can be demolished, or their future prospects become so gloomy that anything publicly traded and has debt goes bankrupt. Or they get nationalized shortly before the war ends because things go so badly.
Or revolution does away with private property, as with Eastern Europe after WWII and Russia after WWI.
Anyway, my point was that indexes only go to zero in pretty extreme and uncommon situations, whereas individual stocks can go to zero far more often.
S&P 500 fair level? …my advanced secret analysis tells me 2142 as of 12:22 EST on 10/20. I can certainly keep you guys updated in the future if you’d like…
yes please
no prob…been slaving away updating the model since lunch…new output says… 2142!
i need 2 decimal places
I don’t have the technology for that type of detail
lol sillyhead. You’re pickier than my mom when she goes out to a restaurant “Do you have some cilantro and pumpkin seeds you can add to this salad?” Mom, it’s a friggen Denny’s.
mom knows best.
How many people need to come out and say the obvious? It’s a dead end for American equities…
Are investors in denial about how dim the outlook is for American businesses? “Asset valuations are extreme; returns are poor, the probability of losses is high and the ability to recover any losses quickly is low”.
http://www.bloomberg.com/news/articles/2016-10-21/why-corporate-america-s-debt-is-a-major-risk
I was having some Denny’s earlier tonight with my mom actually, it’s really not that bad. I mean, the food is a little bit grungy, but it’s always been that way. They’re grungy, but they’re consistently grungy. I can respect that.
On a more related note, I don’t think this Trump rally will last very long. There might be a new president, but nothing else really changed (yet). The economic situation is just the same as it was last week. I had to remind myself of that after these last couple days.
Yup. And nothing global macro has changed, we still are where we are in the business cycle.
But a big change could be made that would impact valuations, like cutting corporate taxes to zero. The gov is about creating schemes that show improvement on paper, and this is Trump’s specialty. I’m on the lookout for those…
The market isn’t valued based on the current economic situation. The market value is based on the expected economic situation a year or two into the future. The elections impacted the probabilities of various economic outcomes, due to changing odds of fiscal stimulus, government regulation, etc. If I had to explain the market move, I’d attribute it to people trying to nail down what these changing odds are
are you saying the market knew 2 years ago that trump will win?
You got it exactly rawraw. Markets are forward looking. The day after the election, financials and healthcare stocks were soaring while the rest were negative or negligible. So without knowing anything about what the Trump presidency means for business (which for me is almost the case) we could say that the market was betting that the ‘odds’ suddenly ‘changed’ in these sectors.
More or less, what I was saying is that the low growth environment we’re in hasn’t changed magically just because Trump got elected. This comments on today’s economy, but is also a forward looking statement as well.
What if the Fed raises interest rates at the same time? The Fed is out of the control of the government right?
That’s what I’ve been thinking about. The Fed is owned IMO. Coordinated effort; Fed raises rates, and Trump launches fiscal stimulus, so the markets don’t crash. Although how do they pay for stimulus? There are those in the republican party (Bannon) who want to deal with the fiscal gap, and a bunch of irresponsible spending doesn’t help. What a cluster, who know what these guys are going to do.
Whatever is going to happen, it’s going to happen bigly.
Yeah it’s totally going to be BIGLY.
This crew if guys, with near total power, just a few “checks of balances” in their way?