[quote=harvey]
There’s a gazillion metrics that can be used to predict the market – all of them are correct sometimes and incorrect other times. But ultimately price to earnings must be reconciled. By that measure, the market is expensive.[/quote]
Yeah, the market is expensive,… but what is the alternative (since we are all in the same “metaphorical” boat)?
[quote] Pension Funds’ Dilemma: What To Buy When Nothing Is Cheap?
…The goal of most pension funds is to pay for future benefits by earning 7% to 8% a year. After the 2008 financial crisis, many funds tried to hit those marks by lowering their holdings of bonds as interest rates dropped, and by turning to real estate, commodities, hedge funds and private-equity holdings.
These so-called alternative investments rose to 26% of holdings at about 150 of the biggest U.S. funds in 2016, according to the Public Plans database, compared with 7% more than a decade earlier.
…The biggest public pension in the U.S., known by its abbreviation Calpers, has been backing away from alternative investments as a way of reducing complexity and fees. In December, directors considered a 34% allocation to equities,…
…No matter which move Calpers made, it faced challenges. Scaling back Calpers’ equity investment would have reduced the fund’s projected 7% return at a time when the fund has just 68% of the assets needed to pay for future benefits. That would have meant higher contribution costs for local governments across California.
FWIW IMHO the market averages are high because the average number of shares outstanding is now lower that it was 20 years ago (because of M&A and share buy backs),… then there is the simple fact that various central banks have printed lots of money in the hopes it some how will boost economic activity BUT the unintended consequence is lots of money is out there, chasing fewer shares
just sayin’ it kinda makes sense why the market “averages” are expensive (by recent historical standards)
next,… looking at the history of bucket shops,… the interest in alternative investments like bitcoin, the interest in shorting the VIX, etc. tells me as crazy as it sounds, things mostly likely will continue to surprise people (on the up side),… BUT at the end of the cycle I’d say, only the the paranoid survive (w/ a little bit of “luck” AND “skill”)
