Shiller PE Ratio above 30

[phaster]

[quote=burghMan]
…what I’m asking is a market timing question, which is something I know the “experts” say we should never try to do, but I cannot help but try and do it anyway. It seems to me like buying stocks today is much like buying real estate in 2002 or so. Not insanely expensive, but certainly expensive by historic data. Which means a big decline is a real possibility and upside is limited.
[/quote]

as I read the tea leaves (to try and get the big picture) the market is going up because there is a giant pool of money, pushing up prices

[quote]
Public Pension Plans Continue to Shift Into U.S. Stocks
Nov. 5, 2019

As the bull market enters its 11th year, state and local pension plans are piling on risk, as they try to make up shortfalls.

…State and local pension plans have about $4.4 trillion in assets, according to the Federal Reserve, $4.2 trillion less than the value of promised future benefits.

http://www.wsj.com/articles/public-pension-plans-continue-to-shift-into-u-s-stocks-11572955200
[/quote]

BUT as they say what goes up,… eventually must come down

a story in the back pages of the newspaper caught my eye about the CA state auditor raising a red flag about the fiscal health of this city

[quote]
AUDIT: SAN DIEGO’S FISCAL HEALTH

San Diego is the most fiscally troubled city in San Diego County, according to the California State Auditor.

…That poor ranking appears to be driven by the city’s large amount of long term debt, more than $3.3 billion, and its failure to set aside adequate funding to meet the demands of its pension and other post-employment benefit obligations, according to the dashboard.

San Diego also received the worst rating when came to the amount it has set aside in its financial reserves, an issue the auditor specifically highlighted during her press conference.

“The city of San Diego really only has a couple of months of reserves set aside,” said Howle. “This should be a warning flag for city officials and the city of San Diego, that this is an area officials need to focus on.”

http://www.sandiegouniontribune.com/news/politics/story/2019-10-25/state-auditors-ranks-fiscal-health-of-471-cities-mixed-bag-for-san-diego-region
[/quote]

this is related to a front page story that appeared in the UT (where I noticed the UT watchdog missed a few key facts)

http://www.TinyURL.com/13thCheck

basically looking at the issue as an investor

http://www.TinyURL.com/InvestorWarning

at some point because of all the debt obligation(s) not just here in this city

[quote]
PBGC Projections: Multiemployer Program Insolvent in FY 2025
May 31, 2018

WASHINGTON – The Pension Benefit Guaranty Corporation’s Multiemployer Insurance Program continues to face insolvency by the end of fiscal year 2025, according to findings in the FY 2017 Projections Report. The agency’s insurance program for multiemployer pension plans covers over 10 million people.

The new projections show a narrower range of years for the likely date of insolvency of the Multiemployer Program. The likelihood that the Multiemployer Program will run out of money before the end of FY 2025 has grown to over 90 percent, and there remains a significant chance the program will run out of money during FY 2024. The likelihood the program will remain solvent after FY 2026 is now less than 1 percent.

http://www.pbgc.gov/news/press/releases/pr18-02
[/quote]

pretty certain there will be lots more people forced to be between a rock and a hard place because politicians have no financial sense AND the courts don’t want to address “the California rule” (which legally implies the taxpayer is the financial backstop for mismanaged pension debt obligations???)

[quote]
Calif. High Court Avoids the ‘California Rule’ in Pension Benefits Change Decision
March 22, 2019

In its much-anticipated ruling in Cal Fire Local 2881 v. California Public Employees’ Retirement System, the California Supreme Court avoided opining on the long-standing pension rule, known as the “California Rule,” which is a state court interpretation of constitutional law that prohibits reduction of pension benefits unless they are offset by comparable new benefits.

http://www.law.com/therecorder/2019/03/22/calif-high-court-avoids-the-california-rule-in-pension-benefits-change-decision/
[/quote]

doing a little more digging, seems all is not right in the SFR housing market,… ever hear of “shadow inventory” held by big financial institutions? using a “special purpose entity” seems its possible to keep assets off balance sheet,… this is useful because it makes the financial position of big financial institutions, look better than it really is

[quote]
Why the 2008 Housing Crisis Recovery Is Just an Illusion (w/ Keith Jurow, MarketWatch RealEstate)

http://www.youtube.com/watch?v=GFkkN2M3Y3c
[/quote]

and some of the smart money players who noticed things were not kosher in w/ subprime loans and made smart bets against derivatives,… are at it again

[quote]
Citing climate risk, investors bet against mortgage market

NEW YORK (Reuters) – David Burt helped two of the protagonists of Michael Lewis’ book The Big Short bet against the U.S. mortgage market in the run-up to the 2008 financial crisis. Now he’s betting against the market again, but this time, the risk is not from underwater subprime mortgages, it’s from homes sinking under water.

As he did then, Burt has given up his full-time job to make that bet. He left his role as a portfolio manager at the $1 trillion Wellington Management last year to start an investment firm, DeltaTerra Capital, which aims to help clients manage climate risk, and, where possible, take advantage of ways the market has not yet priced in that risk. His first investment strategy is targeting residential mortgage-backed securities, or RMBS, with exposure to climate hot spots like Texas and Florida.

In doing so, Burt is joining the ranks of a small number of investors who have become worried that climate risk is underpriced in these securities, which are pools of home loans sold to investors.

“The market’s failure to integrate climate science with investment analysis has created a mispricing phenomenon that is possibly larger than the mortgage credit bubble of the mid-2000s,”

http://www.reuters.com/article/us-climatechange-mortgages/citing-climate-risk-investors-bet-against-mortgage-market-idUSKBN1WE0D3
[/quote]

if you want to know what kind individual one is up against (and is anecdotal evidence why it seems we are headed for eventual market turbulence),… this kinda guy (using NSFW “language”) is basically the archetypal character type that sees no problem w/ the mortgage market says banks understand managing risk,…

http://www.youtube.com/watch?v=NjlC02NsIt0&t=3m15s

[quote=burghMan]
…How long can the bull market go on?
[/quote]

in general people find good news more credible than bad news,… so this human nature (i.e. psychology) will drive the market forward up until the point various market players have a sudden loss of confidence in the system

so the trick w/ timing IMHO is keep one eye on the fundamental valuations and the other eye on the mindset of the other various market players,… IOW when fundamental valuations suck and when various market players have a sudden loss of confidence in the system, that is when we have a big crash like in 1929 and 2007/2008

[burghMan]

Is ‘melt up’ the new euphemism for bubble?

Why Wall Street sees the stock market on the verge of a ‘melt-up’

https://www.marketwatch.com/story/why-wall-street-sees-the-stock-market-on-the-verge-of-a-melt-up-2019-12-16?mod=home-page

[Coronita]

You mad for missing out, bro?

if you’re mad now, you might get even madder in 2020.

[burghMan]

[quote=flu]You mad for missing out, bro?

if you’re mad now, you might get even madder in 2020.[/quote]

from the guy that has been getting trolled by Brian for over a decade of his life, and still will be here years from now doing the same

lol, you are Brian’s bitch

so fucking lame

[Coronita]

Lol. Seems like I struck a nerve. What was that thing you said about being trolled? Easy there. Don’t want to be responsible for a heart attack or stroke with your expletive tirade. Maybe your 201k will look more like a 401k next year. Good luck!

Oh and if your trying to be a progressive political refugee here to rant on politics, in that case, make sure your prescription to your heart medication is up to date and fully stocked. you’ll need them.

The funny part is I don’t even like Donald Trump. But apparently, pretending to be on a real estate blog appears to trigger people to go batshit crazy. That’s just entertaining and why it’s so fun to do.

[FlyerInHi]

Flu, you are the only one bringing Trump into everything. You seem quite fixated. And on the Trump impeachment thread, you deflect by ranting about California.

[henrysd]

Professor Shiller, the creator of CAPE, is in bull camp for stock 2020:

https://www.cnbc.com/2019/12/22/robert-shiller-trump-effect-could-drive-record-rally-through-2020.html

[Coronita]

November 18 S&P 500 tracker SPX closes at 3122
December 23 SPX is around 3226

I’ll take the 3% 1 month gain over the less than 2% 1 year CD or 1.88% money market fund and diversify into something else at year’s end. Makes even more of a case for some slow and steady drip investment plan of a small fraction of ones net worth instead of random guesses as to when the next downturn will be.

Merry Christmas Doomsayers.

[Coronita]

https://www.marketwatch.com/story/why-higher-stock-prices-a-strong-economy-and-trumps-re-election-are-likely-in-2020-2019-12-23?siteid=yhoof2&yptr=yahoo

[The-Shoveler]

U.S. New-Home Sales Rise to Cap Best Three Months Since 2007

https://finance.yahoo.com/news/u-home-sales-rise-capping-150001012.html

[Myriad]

[quote=henrysd]Professor Shiller, the creator of CAPE, is in bull camp for stock 2020:

https://www.cnbc.com/2019/12/22/robert-shiller-trump-effect-could-drive-record-rally-through-2020.html%5B/quote%5D

LOL, now that he’s in the bull camp, probably means there will be a 20% correction in sometime in 2020

[Rich Toscano]

[quote=Myriad][quote=henrysd]Professor Shiller, the creator of CAPE, is in bull camp for stock 2020:

https://www.cnbc.com/2019/12/22/robert-shiller-trump-effect-could-drive-record-rally-through-2020.html%5B/quote%5D

LOL, now that he’s in the bull camp, probably means there will be a 20% correction in sometime in 2020[/quote]

He’s not in the “bull camp” – that’s a ridiculous characterization by CNBC (this is not a criticism of henrysd, who was just posting what CNBC said).

Paraphrasing the quotes in the article, he basically said “valuations are very high, but sure, the boom could continue for a while.” Simply acknowledging the possibility of short-term upside does not put one in the “bull camp.”

His framework is largely that valuations predict long term returns, but nobody has any idea what will happen in the short term. So to the extent there is any forecast implied by his comments, it’s a negative one. (And I’d be very surprised if he expressed belief in a 1-year forecast regardless of direction).

Just a super bad take by CNBC.

[phaster]

[quote=burghMan]Is ‘melt up’ the new euphemism for bubble?

Why Wall Street sees the stock market on the verge of a ‘melt-up’

https://www.marketwatch.com/story/why-wall-street-sees-the-stock-market-on-the-verge-of-a-melt-up-2019-12-16?mod=home-page
[/quote]

perhaps a better way of looking at the issue is to ask the question what is the “investment” alternative (given the big picture)

…when I mention big picture I’m thinking about over all debt level, what is the demographic trends, what are politicians thinking, what is the press reporting, etc.

WRT debt,…

[quote]
Record high global debt of $250 trillion ‘could curb efforts to tackle climate risk,’ report warns

The global debt ballooned to a record high of more than $250 trillion and shows no sign of slowing down, according to a new report from the Institute of International Finance (IIF), which warned that this massive debt could impact international efforts to mitigate climate change.

Worldwide debt surged by $7.5 trillion in the first half of 2019, urging researchers to predict that the global debt would exceed $255 trillion by the end of the year.

…The bulk of the global debt – or more than 60% – is from the U.S. and China, the report released on Thursday found.

…Hidden debt and other “poorly understood contingent liabilities” can create additional uncertainty, the report said, “and could leave some sovereigns struggling to source international and domestic capital – including to combat climate change.”

https://abcnews.go.com/Business/record-high-global-debt-250-trillion-curb-efforts/story?id=67042801
[/quote]

so then the question becomes where does an investor put their savings,…

[quote]
Bond World Is Backing Away From All That Negativity as 2019 Ends

It’s been the year that turned bond-market logic on its head, yet 2019 is ending with some hope that the worst of the negative-yield drama is over.

The global stock of debt with sub-zero yields has fallen to $11 trillion, the least since June, as a thaw in U.S.-China trade tensions brightens the world economic outlook. Earlier this year, a third of all investment-grade bonds—$17 trillion—had rates below 0%, meaning that buyers holding the securities to maturity are guaranteed to make a loss.

http://www.bloomberg.com/graphics/negative-yield-bonds/
[/quote]

since this this forum got its start looking at RE, what ya all might find interesting is my own take on the local market

basically because of various RE holdings, I am on the short list of individuals here in town that gets pitched rentals, so what I hear is hey I’ve got a deal for you about apts in north park, bankers hill, city heights, etc.

to get a feel for the market I play along and ask questions to evaluate the deal,… long story short all too often seems like sub-prime deja vu, in that older rental stock is being flipped and the financing in place (to put the makeup on a pig-sty of a property) is short term bridge loans,… so have to conclude the trend of the past few years of ever increasing prices for rentals is unsustainable!!!

Apartment Rents Fall in Seattle, Southern California, New York, Oakland, San Jose, Chicago, Honolulu

…looking at the big three investment classes (i.e. RE vs BONDS vs EQUITIES) the only alternative is EQUITIES because it has a low barrier to entry (meaning ya don’t have to have a large pool of money needed to buy in, like ya do w/ RE) and has some chance of yield/upside return (unlike bonds),… AND given the economic idea of supply and demand, the giant pool of money out in the world today is trying to purchase a smaller supply of “stock”

IOW looking at the number of companies listed on stock market back in 1999 vs today is lower,…

https://money.cnn.com/2015/07/09/investing/stock-market-shrinking/

AND the number of outstanding shares in various corporations is declining due to share buy backs

http://www.theatlantic.com/magazine/archive/2019/08/the-stock-buyback-swindle/592774/

BOTTOM LINE it should not be news to anyone who claims to be an investor, that prices of equities is increasing (i.e. a ‘melt up’)

[Coronita]

a lot of short sellers got totally buttfked this year.

I’m not long or short on Tesla, but how much are shorts in the red?

Good.

[phaster]

[quote=flu]a lot of short sellers got totally buttfked this year.
[/quote]

As Keynes said in the 1930s: “Markets can stay irrational longer than you can stay solvent”

basically an investor can be right that a market or sector is overvalued but wrong on the timing

[Author]

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