GHung wrote:KaiserJeep wrote:On Friday Oct 13:
DJIA 22,871.72, +30.71
NASDAQ 6,605.90, +14.29
S&P500 2,552.17, + 2.24
Pretty soon the DJIA will break 23,000.......and my former employer HP led the "gainers" at +6.42% for the day.
I don't think it's a bubble, I think the big boys are lining up the little lambs for the slaughter, a "correction conniption" will chop off their heads, and then the gains will continue with all the little guys working as hot dog venders and bicycle messengers.
Any time that debts levels and markets are rising much faster than GDP and inflation, I see an imbalance growing. Just my take.
Re the stock market, that's correct, if you mean GDP plus inflation. Over the long run, the stock market tends to reflect growth in the underlying economy, and factor in inflation. Since 1929, when reliable, accurate numbers started being consistently kept (per what I've read in multiple books) the US stock market has had total growth in the area of 9%. And that's not too far off the total rate of GDP plus inflation.
In the short run (which can run well over a decade for stock market trends), there is a lot of overall public enthusiasm (or angst) which can drive the stock market well above or below long term averages -- and that trend can persist for quite a few years. Eventually things will regress to the mean, but good luck trying to predict the timing of that.
The highly respected Jack Bogle of Vanguard Funds did an excellent job of explaining this in one of his widely acclaimed books, "Common Sense on Mutual Funds", near the beginning of the book, with an excellent supporting chart.
His main thesis, which is accurate in that index funds beat active funds over time is: You can't time the market, but since the market beats inflation over time, just efficiently invest in the market (via long term index funds), and be done with it.
So while you're right, if your intent is to out-time this period of market exuberance: again, good luck with that.
Unfortunately, experienced investors who know this don't have good interest rates to collect while keeping money on the sidelines (as I earned during my entire career, since I didn't want to be anywhere near 100% in the stock market, as I like sleeping at night). So now, given bond prices, the prudent investor who wants to be out of the stock market has choices like cash, earning a roughly 1.2% rate in a "high yield" FDIC insured savings account, or roughly half that in the better government money market mutual funds.
So part of the rise of the stock markets (it's more or less an overall global phenomenon for 2017, when I checked a month or so ago) might be people taking more risk going for return, since long term bond markets have super high risk, given the paltry bond yields.
That's another key concept -- with investments over the long run, you're being PAID to assume the risk of the underlying volatility in the market. No pain, little gain. It doesn't mean the world is heading for financial doom -- but there is no free lunch in the long run.
(Re debt, I don't know. What I do know is that 35 years ago when I started paying attention, there were plenty of paid purveyors of financial imminent doom (via financial newsletters) claiming the US was doomed from too much unsustainable debt, we were headed for hyperinflation and destruction of the dollar, and stocks should be avoided at all costs. (This was roughly 1982). And here we are -- plenty of short term turmoil, but with the doom purveyors saying the same thing, etc. So I'll deal with the risk via asset allocation and rebalancing instead of declining a lifetime of investment returns.)
Meanwhile, US stocks via the S&P has gone from about 335 in Oct. 1982 to over 1550 now. And that doesn't include dividends (the regular S&P 500 charts are showing market capitalization). And Gold, which many of the doomers were actively hawking, went from about $1060 in Oct. 1982 to about $1300 today. (A TERRIBLE result, considering inflation).
http://www.macrotrends.net/2324/sp-500- ... chart-datahttp://www.macrotrends.net/1333/histori ... year-chartBy the way, I don't make market forecasts, because I readily admit - I have no damn clue. I just don't think the published doom purveyers have any more clue -- and in fact, their obvious bias has historically made their advice disastrous over time.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.