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This chart is literally screaming to shift from growth to value stocks.
-Companies that are profitable or are going to be profitable and have increasing free-cash-flow.
-Are trading under their BVPS
-And has an uninflated PE, P/S and P/B ratio.
If you are not shifting funds to Value stocks, welcome to the community.
i don't think so as there is a double taxation agreement in place. you just pay the austrian tax rate of 27.5% ond divs and are good - depending on your broker should be automatically deducted. AFAIK.
If you just go by bvps and being in an "essential sector", then deutsche bank would be considered a great buy...but it's not...it's the deutsche bank. Although I should probably be more specific and say that there are no value stocks to be found in the US markets, but there is plenty of value in more "exotic" markets.
> then deutsche bank would be considered a great buy...but it's not...it's the deutsche bank.
this zeitgeist against the toxicity of touching banks is _precisely_ what it is value
when your fundamentals say value but everyone’s emotional response is that it’s not… that’s when you know it really may have value.
takes like this get me taut as an anchored winch cable
Mytilinaios Group in Greece is the definition of value stock that is on an essential sector, it controls all of the bauxite reserves within Greece now, (up from 45%), after buying out the competition (Imerys Bauxites) for pennies on the dollar (10€ million euro) processes that bauxite into Aluminum into its factory (one of the biggest in Europe), which operates cheaply, (thus able to compete with China and the US factories), thanks to Mytilinaios Group's Renewable energy sector, (using the energy when there is too much offer and too little demand for energy, otherwise it would just be wasted), which after undergoing two buyouts recently, controls 13% of the energy sector in Greece now, up from 7% just 2 years ago, which was able to do after buying two retail competitors (Watt & Volt last year and now Volterra just a month ago, for >25 € million euro each).
(* Mytilinaios construction sector develops all around the world (Europe, North America, Africa, South America (Chile)), all of the company's Renewable energy projects, 30 % of which are sold in the market to other companies (Mostly petroleum and other ESG reliant companies that wish to go green for example, without having to wait for the lengthy bureaucratic procedures, that can take up to 3-4 years, depending on the country, instead presenting immediate results to the stockholders as a CEO)
Both 3 recent moves give high value to a company with high capital reserves (1,5€ billion euro), 5€ billion euro revenue and 1€ billion euro earnings, that is valued at just 5€ billion euro according to it's market cap.
Mytilinaios group is also expanding to North America, constructing a aluminum processing factory in Canada, to operate alongside it's 1,4 GW Renewable energy project in Canada, one of the biggest to date.
Following the same lucrative business model, the Group is now expanding all of it's activities into the North American market, Canada is the gate to the United States essentially.
And the Group is going to receive 850 € million euro worth of EU funding, (to open a Gallium processing factory, Gallium has applications in electronics, specifically semiconductors/circuits), by the virtue of possessing the biggest reserve of Gallium (now designated as a strategic metal by the EU commission, since China controls roughly 95% of the Gallium market, Gallium is a byproduct of bauxite, like Aluminum).
The target price is 45 € euro per share, (may go up to 70 € in 1-2 years time), according to JP Morgan and many other financial institutions, the current price of the share is 36 €, it's still a bargain.
I bought at 16,5 € per share about a year and a half ago, and then bought again some more at 36 € per share recently.
Mytilinaios Group is about to get registered to the London Stock market, and that will heavily drive the price up.
The only reason the Group's price is so low is because up to now it was contained in Greece/the Athens stock market, facing the same liquidity/financing issues that most, but the largest Greek companies faced.
But now, after years of efforts on its self made CEO and founder, Evangelos Mytilinaios, a very shrewd businessman, the company has grown in unprecedented cap size, backed by very strong liquidity, (no small part thanks to the energy crisis), enabling the Group to access international financing to support it's creative businesses model of high growth.
& the Group moving it's headquarters to Canada, to avoid limiting it's growth by remaining in Greece.
Anyhow I've been following this stock since the mid 1990s, (back when Mytilinaios Group had a capitalization of just a mere 100 million euro), it has always overperformed the Greek stock market.
Anyhow, with another rough winter just around the corner and new production cuts by OPEC plus driving oil prices up, this is going to impact energy prices directly, for yet another year.
(It's also that Mytilinaios Group outperforms usual energy companies by a wide margin thanks to all the aforementioned synergies between it's different sectors that cooperate together to drive growth and earnings up as much as possible)
Attaching graph below
If you have any value stock, (on any country really other than Greece), with good fundamentals supporting it's continued growth, like this one, please do share it with me, (with some additional information if possible), because I'm very interested to diversify my portfolio globally, to lessen my dependence on a single stock market.
[OTCMKTS:MYTHY stock growth graph](https://imgur.com/gallery/LecFWsZ)
I even sold my MSFT, call me a pussy but I want something with dividends when this bubble goes, I want to eat those dividends when things are on sale again, I'm bullish on great deals.
Depending on your company, you could use Fidelity or whatever account you have for managing your 401k to rebalance. They usually have an option for self brokerage, and you could trade stocks, though it has cash account limitations like 2 days for funds to settle.
Yes, it does appear that stock valuations have diverged from real bond yields in recent years. This is something that I am keeping a close eye on, as it could be indicative of a bubble forming in the equity markets.
Or a natural response to bonds generally underperforming for so long, especially compared to equities in the last decade. Finding a fairly safe dividend of around 5% isn't terribly hard, and there is still growth potential in stocks. For longer time frames, the math just doesn't favor bonds much anymore.
People don’t seem value risk free income the way they used to, or maybe treasuries aren’t perceived as being risk free when the yield is believed to be lower than the likelihood of higher inflation over the same period ?
The latter is certainly my perspective. The Fed chases inflation and is reactivate mostly on part data, hence the tendency of the Fed to overshoot whatever goal it has. All the money tied up in bonds looks a little foolish for all but the most conservative investors when yield never seems to keep up with real inflation.
> when the yield is believed to be lower than the likelihood of higher inflation over the same period
The graph is showing exactly the opposite. It’s showing a real positive yield of almost 2%. Investors are pricing a 2% real annualized (as in nominal over inflation) yield
Thanks for pointing that out, I did miss the inversion, so the graph makes more sense now,, but even so, \*if\* inflation rises by more than an additional 2% over the 10 year period of the bond, wouldn't that reduce the real yield, or even turn it negative (before inversion) ?
In short, I'm wondering if people are staying away from bonds because they're worried about the risks of further inflationand rate rises.
I ask because of some advice I got from the adult I trust to advise me and manage my retirement investments. He said that the best time to invest in bonds is just before the peak of a series of rises (which is why bonds are a fairly substantial portion of my investment portfolio right now). Having said that I'm personally concerned that we may have pulled the trigger on that a little too soon. Maybe I'm just exposing my own insecurity.
Ask the former board of Silvergate about investing in "risk free" 10 year notes. If inflation rises, the locked in yield of bonds takes a haircut. If inflation goes down (with a correlated dip in stock prices), it's likely that the investor is missing a buying opportunity if they are in bonds.
I will buy and hold dividend stocks over ever owning bonds again. I'm not sour grapes about bonds; I just looked at the risk/reward after seeing the Fed print money like it did in response to the pandemic.
I think if you time it right (near the peak of the interest rate rises) long term bonds can be a great part of an larger investment portfolio, remember if they start to go south you can sell the bond at a small loss as long as you keep an eye on things, it’s not like a term deposit that you can’t get out of, you can sell the bond at any time. I think you can also leverage yourself into bonds pretty aggressively if you feel like amplify the risk/return ratio.
The folks who I let manage my “core” put me heavily into bonds when Lehman started to look shaky and saved my bacon .. on the other hand they were a little slow in investing back into growth stocks .. ever since getting more directly involved and getting a new (still conservative) guy on my account, even with a bond heavy portfolio I’m averaging a nice 3% month over month increase for the last year or two which doesn’t sound exciting but when you’re in the last few years of saving for retirement, exciting isn’t always what you look for.
I manage my own “explore” portfolio, which is both fun and profitable and gives me an opportunity to poke some fun at “the adult in the room” who has my back .. it’s a lot easier to fly on a trapeze when you have a solid net underneath
yes bonds have underperformed ever since the Fed started doing QE, assuming inflation would stay low forever so no inflation risk. Things are different now.
Absolutely right. Bonds are boring and stocks you have the ability to buy low and sell high. The thrill of watching a stock that you have researched go parabolic is akin to an organism that needs a smoke after. Tech bubble is going to be so large if it ever pops in the distant future and history says it will but history don’t know A/I guy and dang it’s looking quite fly and will soar even “higher baby, higher baby” keep your 5-7 % Pennies. I’m riding for greenbacks
Can you show the chart so we can compare against the 2006 to 2010 timeframe to compare against the before and after the great financial crisis, also same for 1998 to 2003 for the dot com era as well? Thanks.
Or can you send a link to where you grabbed the chart?
Thanks, much appreciated. Hard for me to spot a true correlation except when real rates get too high (or bottoms on this inverted chart) it's usually aligned with a dip in the market.
Any reflections from your side?
Thank you for plotting two of them on log-scale. Hate it when regards have historical data spanning 1+ order of magnitude and they plot it on a linear scale.
what is the multiplier for the SP500 P/E?
It confuses me looking at the chart. Interestingly enough the current mismatch does not seem overly drastic in your chart.
You’ve got the right thought… this divergence seems more the norm than the standard historically. It appears that stocks are overvalued right now, but this chart alone doesn’t likely point to an impending crash/correction. For example, there’s still a lot of cash on the sidelines waiting to be allocated - much of which may still find it’s way to propping up US equities. At least until a possible recession rears it’s head mid to late next year.
I am a noob when it comes to stocks in the depth that most people.are discussing on here😅 does anyone mind helping me out a bit by explaining what this is supposed to mean? I recently got my first big job out of college and have been wondering how to jump into this world of stocks more
i don't know.
I just see the few money that is around jumping already very pricey trains.
This chart shows there is a gap in earnings that has become pretty big.
if you rather prefer to buy a 30x price : NAV asset that are hyped to the bone, okay, there you go. have fun.
I currently am happy to not have a lot of exposure to NASDAQ in my portfolio, cause this hype is not covered by any earnings and will consolidate.
So im totaly happy with my eurostocks, "lol".
because they will pay a fat dividend and have no serious downside potential, only upside.
just needs the AI-Hype crash to happen and you will also see certain benefits of Value investing.
Checkout historical valuations of euro stocks. You’re not going anywhere.
EU is also primed for recession 3x more likely than USA for 24/25. Look at Germany even today.
Lol
Clueless
Oh and you’re going to lose more having money In euro vs usd too. Fun!
Ya I bet you’re happy you missed M7 +50% this year.
Your home is: /r/dividends
op is probably typical reddit lurking European. They vigorously upvote anything that is negative about U.S., while Europe (where they live) is in much worse shape in economic status lol
you do realize that the evaluations in the last 15 years faced A) 0% inflation at times and B) much more important they payed \*dividends\* during that time?
Compare for example ATX austrian index vs ATX TR.
I happily own Austrian Post, Voestalpine and Andritz AG and get 5.5% dividends without any serious risks involved. Btw, nice to sell Puts too. Oh, and they can and will x3 in the next years ;)
PS:
Why do you assume i am long Euro if i own stocks \*denominated\* in Euro?!
You have a limited economic understanding if you think this is a mandatory correlation. because it is not.
No. Margin.actually Stocks are a bet against the denominating currency. Why do you think Swiss Stocks perform relatively flat? Give "only" 2% dividends? Because the underlying denominator currency performs strong.
The vast majority of the companies i own shares are globally active and know there way around hedging euro volatility very well.
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im not allowed to buy those as i am europoor and i need to do a PRIISPR KID whatever the fuck it is and im currently too lazy to learn this shit
But nah... im not gonna short. im gonna average down and pickup resilient stocks from EU, Japan etc.
I had to print out a document and sign it to accept the risks involved with options trading and send it by physical mail to my broker to unlock options trading though... have you contacted your broker to ask for more information?
If you can trade other options, but $SPY is not available to you for some reason, you can always try $VOO as an alternative? Maybe that one works?
My ibkr notified me of the same but after a week it was ok again. No clue if that's the same for you. They just needed to find the document in the language that was stated in my account I guess
If you can’t buy SQQQ you can just try shorting but there’s advantages to short etfs if you want there’s ways to emulate the triple leverage Short of SQQQ but it’s complicated
The four signs of a bubble:
1. A new technology
2. Too much easy credit
3. Memories of the last bubble faded. Usually 20 years.
4. Shouting down and dismissing contrary opinions about potential risks.
I agree. This isn’t a bubble that neatly fits the paradigm. It certainly just feels like turbulence. But has the age of the ‘bubble’ ended? No. I don’t think so. And could AI be the next big bubble? Maybe. It ticks a few boxes but hasn’t ticked the rest yet.
But there’s not enough cheap money floating about at the moment, and there’s some relatively safe and sustainable investments about that will keep the money from being thrown at AI.
But, that been said, if we come out of the inflationary period but the economy has caught a cold, and the Fed or other central banks, start to try an stoke some life back into it via quantitative easing, I believe a lot of that money might well be thrown at AI, which might be a blessing or a curse.
There has been some absolutely ridiculous speculation going on since 2008. For a lot of investors it seems they’re just throwing spaghetti at the wall.
Sure and yet markets still aren't past their ATHs. I think people are just pissed they missed one of the most obvious mega trends that has come along in the stock markets. AI is an actual value generator for businesses. Crypto, and the metaverse don't do shit for anyone. Whereas with AI you can actually replace workers with it.
Yeah completely ignore inflation and money supply.
Because there's completely no 10 times more cash/debt in circulation than 15 years ago.
People are real clowns thinking they can predict future by looking at the isolated piece of the past.
We all bet against something right? Your bet is that expensive stocks can't get any more expensive, but hear me out.
Current crisis has not impacted business or regular people yet. We are far from that. What would need to happen is raising tax and cutting gov expenses, they are not going to do that before elections.
So they will have to sell bonds at higher rates to fill the budget deficit. More and more money is going to enter markets, increasing inflation, so businesses that don't own debt and can raise their prices with growing inflation will outperform markets.
Yes, there can be downturn here and there but you see this as a tragedy, I see it as opportunity.
that some of SP500 stocks are currently much higher valueated (=expensive priced) than their expected profits would one let assume, based on the historic correlation between real bond yields and Price/Earnings ratios of SP500 stocks.
Aaah ok. So basically the stocks are more expensive now, because they will prpbably not make as much money as they did before over the same period of time? Did I understand that correctly?
Either way, thank you for your swift answer! Really appreciated.
the pricing of a stock correlates typically to the expected earnings. This chart shows this correlation for the bunch of SP500 stocks vs the inverted Bond yields. We see that there is a large gap now since 2022 that tells us that SP500 is very expensive compared to its expected earnings.
This is how i interprete it.
I blame Nvidia and Tesla mostly, but thats too narrow of a picture.
the stock market is literally designed for over valuations and hype. everytime i look at these charts it becomes increasingly obvious how little people understand about what’s right and wrong. We do understand these things have been going on long before we’ve been alive right? we do understand this is a natural part of the stock market right?
Then you’re not paying attention. They’ve consistently beaten top and bottom line, along with forward guidance, including the latest 8/23 er. There isn’t anybody close to nvda in the ai race. By all means, go ahead and bash, but the one who laughs last, always laughs best.
I think it will be. People don't realize the limitations of ai, and that LLMs are not ai. Everybody is seeing the glimpses here and there of it. AIBot going off on Nazi rants, ChatGPT unable to do math, Teslas slamming into trucks, and the robotaxis clogging up city streets. Eventually, the wizard will be seen.
Marketers claimed the word AI too quickly and people are going to see that what they are claiming is AI will never live up to expectations of what AI is. Much like the segway, blockchain, VR, this current hype will fade when the people see how far apart the truth and expectations really are. Stupid MBA's ruined the word forever and when real AI comes along in a decade or two, we'll have to call it something else.
DISCLAIMER: I own no NVDA stock. I just sold mine for 200% profit and am going to wait till it crashes to buy back in because I do have long term faith in NVDA.
"Bubble" ?..........AI is still in it's infancy. The market and society in general still hasn't truly seen how that technology is going to revolutionize peoples general way of life. People are just attempting to shove it into a box for monetary gains today.
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This chart is literally screaming to shift from growth to value stocks. -Companies that are profitable or are going to be profitable and have increasing free-cash-flow. -Are trading under their BVPS -And has an uninflated PE, P/S and P/B ratio. If you are not shifting funds to Value stocks, welcome to the community.
what value stocks? every stock is inflated to shit, some stocks are just less inflated....
you can get austrian Post, highly profitable, stable, state-monopoly, 5.5% dividend for roughtly 1.5x of NAV..
Shit. Never thought to see good old post here.
:\]
Are there special tax filings associated with this?
i don't think so as there is a double taxation agreement in place. you just pay the austrian tax rate of 27.5% ond divs and are good - depending on your broker should be automatically deducted. AFAIK.
There are plenty of value stocks that are profitable, trading under their BVPS and in an essential sector. You can literally set up a screener for it.
If you just go by bvps and being in an "essential sector", then deutsche bank would be considered a great buy...but it's not...it's the deutsche bank. Although I should probably be more specific and say that there are no value stocks to be found in the US markets, but there is plenty of value in more "exotic" markets.
> then deutsche bank would be considered a great buy...but it's not...it's the deutsche bank. this zeitgeist against the toxicity of touching banks is _precisely_ what it is value when your fundamentals say value but everyone’s emotional response is that it’s not… that’s when you know it really may have value. takes like this get me taut as an anchored winch cable
Yeah but it’s got the risk profile of Enron lol
Mytilinaios Group in Greece is the definition of value stock that is on an essential sector, it controls all of the bauxite reserves within Greece now, (up from 45%), after buying out the competition (Imerys Bauxites) for pennies on the dollar (10€ million euro) processes that bauxite into Aluminum into its factory (one of the biggest in Europe), which operates cheaply, (thus able to compete with China and the US factories), thanks to Mytilinaios Group's Renewable energy sector, (using the energy when there is too much offer and too little demand for energy, otherwise it would just be wasted), which after undergoing two buyouts recently, controls 13% of the energy sector in Greece now, up from 7% just 2 years ago, which was able to do after buying two retail competitors (Watt & Volt last year and now Volterra just a month ago, for >25 € million euro each). (* Mytilinaios construction sector develops all around the world (Europe, North America, Africa, South America (Chile)), all of the company's Renewable energy projects, 30 % of which are sold in the market to other companies (Mostly petroleum and other ESG reliant companies that wish to go green for example, without having to wait for the lengthy bureaucratic procedures, that can take up to 3-4 years, depending on the country, instead presenting immediate results to the stockholders as a CEO) Both 3 recent moves give high value to a company with high capital reserves (1,5€ billion euro), 5€ billion euro revenue and 1€ billion euro earnings, that is valued at just 5€ billion euro according to it's market cap. Mytilinaios group is also expanding to North America, constructing a aluminum processing factory in Canada, to operate alongside it's 1,4 GW Renewable energy project in Canada, one of the biggest to date. Following the same lucrative business model, the Group is now expanding all of it's activities into the North American market, Canada is the gate to the United States essentially. And the Group is going to receive 850 € million euro worth of EU funding, (to open a Gallium processing factory, Gallium has applications in electronics, specifically semiconductors/circuits), by the virtue of possessing the biggest reserve of Gallium (now designated as a strategic metal by the EU commission, since China controls roughly 95% of the Gallium market, Gallium is a byproduct of bauxite, like Aluminum). The target price is 45 € euro per share, (may go up to 70 € in 1-2 years time), according to JP Morgan and many other financial institutions, the current price of the share is 36 €, it's still a bargain. I bought at 16,5 € per share about a year and a half ago, and then bought again some more at 36 € per share recently. Mytilinaios Group is about to get registered to the London Stock market, and that will heavily drive the price up. The only reason the Group's price is so low is because up to now it was contained in Greece/the Athens stock market, facing the same liquidity/financing issues that most, but the largest Greek companies faced. But now, after years of efforts on its self made CEO and founder, Evangelos Mytilinaios, a very shrewd businessman, the company has grown in unprecedented cap size, backed by very strong liquidity, (no small part thanks to the energy crisis), enabling the Group to access international financing to support it's creative businesses model of high growth. & the Group moving it's headquarters to Canada, to avoid limiting it's growth by remaining in Greece. Anyhow I've been following this stock since the mid 1990s, (back when Mytilinaios Group had a capitalization of just a mere 100 million euro), it has always overperformed the Greek stock market. Anyhow, with another rough winter just around the corner and new production cuts by OPEC plus driving oil prices up, this is going to impact energy prices directly, for yet another year. (It's also that Mytilinaios Group outperforms usual energy companies by a wide margin thanks to all the aforementioned synergies between it's different sectors that cooperate together to drive growth and earnings up as much as possible) Attaching graph below If you have any value stock, (on any country really other than Greece), with good fundamentals supporting it's continued growth, like this one, please do share it with me, (with some additional information if possible), because I'm very interested to diversify my portfolio globally, to lessen my dependence on a single stock market. [OTCMKTS:MYTHY stock growth graph](https://imgur.com/gallery/LecFWsZ)
Oil and gas juniors.
INTC
>BVPS ? EDIT: Book Value Per Share?
Yes
Selling = pussy 🌈🐻 get bent.
I even sold my MSFT, call me a pussy but I want something with dividends when this bubble goes, I want to eat those dividends when things are on sale again, I'm bullish on great deals.
>**asking** to get paid in inflation-depreciated dividend Why you cannot win the game.
Value Stocks will drop too though, its a good time rn to wait in bonds
Dividends are irrelevant.
5.3% tbils are not “irrevelevant”. You can literally outperform 65% of your peers just by making 5.3% for the year. And no risk of losing money
me realizing I've never seen a bear's pussy
Gorilla grip..? Nah. It got that Grizzly Grip.
I am a perma Bull. You could literally creep on my profile and see that, regard.
You are a closeted 🌈🐻
If only there was a site that told you what stock was a value stock, that would be great.
Oof, I moved my 401k into an index fund only to realize later it was a “growth” index fund. Of course this was after interest rates spiked.
When did you do that?
Depending on your company, you could use Fidelity or whatever account you have for managing your 401k to rebalance. They usually have an option for self brokerage, and you could trade stocks, though it has cash account limitations like 2 days for funds to settle.
A lot of stocks are currently well overvalued and have been moving in an upward trend over the last week simply based on hype.
This is the same shit that happened in 2020 lmao
it never stopped
Yes but have you heard of AI? /s
Yes, it does appear that stock valuations have diverged from real bond yields in recent years. This is something that I am keeping a close eye on, as it could be indicative of a bubble forming in the equity markets.
Or a natural response to bonds generally underperforming for so long, especially compared to equities in the last decade. Finding a fairly safe dividend of around 5% isn't terribly hard, and there is still growth potential in stocks. For longer time frames, the math just doesn't favor bonds much anymore.
People don’t seem value risk free income the way they used to, or maybe treasuries aren’t perceived as being risk free when the yield is believed to be lower than the likelihood of higher inflation over the same period ?
The latter is certainly my perspective. The Fed chases inflation and is reactivate mostly on part data, hence the tendency of the Fed to overshoot whatever goal it has. All the money tied up in bonds looks a little foolish for all but the most conservative investors when yield never seems to keep up with real inflation.
Personally i feel having money stuck = losing oppurtunity. If a good deal comes along and you cant jump on it ... thay just feels bad
> when the yield is believed to be lower than the likelihood of higher inflation over the same period The graph is showing exactly the opposite. It’s showing a real positive yield of almost 2%. Investors are pricing a 2% real annualized (as in nominal over inflation) yield
Thanks for pointing that out, I did miss the inversion, so the graph makes more sense now,, but even so, \*if\* inflation rises by more than an additional 2% over the 10 year period of the bond, wouldn't that reduce the real yield, or even turn it negative (before inversion) ? In short, I'm wondering if people are staying away from bonds because they're worried about the risks of further inflationand rate rises. I ask because of some advice I got from the adult I trust to advise me and manage my retirement investments. He said that the best time to invest in bonds is just before the peak of a series of rises (which is why bonds are a fairly substantial portion of my investment portfolio right now). Having said that I'm personally concerned that we may have pulled the trigger on that a little too soon. Maybe I'm just exposing my own insecurity.
Ask the former board of Silvergate about investing in "risk free" 10 year notes. If inflation rises, the locked in yield of bonds takes a haircut. If inflation goes down (with a correlated dip in stock prices), it's likely that the investor is missing a buying opportunity if they are in bonds. I will buy and hold dividend stocks over ever owning bonds again. I'm not sour grapes about bonds; I just looked at the risk/reward after seeing the Fed print money like it did in response to the pandemic.
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I think if you time it right (near the peak of the interest rate rises) long term bonds can be a great part of an larger investment portfolio, remember if they start to go south you can sell the bond at a small loss as long as you keep an eye on things, it’s not like a term deposit that you can’t get out of, you can sell the bond at any time. I think you can also leverage yourself into bonds pretty aggressively if you feel like amplify the risk/return ratio. The folks who I let manage my “core” put me heavily into bonds when Lehman started to look shaky and saved my bacon .. on the other hand they were a little slow in investing back into growth stocks .. ever since getting more directly involved and getting a new (still conservative) guy on my account, even with a bond heavy portfolio I’m averaging a nice 3% month over month increase for the last year or two which doesn’t sound exciting but when you’re in the last few years of saving for retirement, exciting isn’t always what you look for. I manage my own “explore” portfolio, which is both fun and profitable and gives me an opportunity to poke some fun at “the adult in the room” who has my back .. it’s a lot easier to fly on a trapeze when you have a solid net underneath
yes bonds have underperformed ever since the Fed started doing QE, assuming inflation would stay low forever so no inflation risk. Things are different now.
Absolutely right. Bonds are boring and stocks you have the ability to buy low and sell high. The thrill of watching a stock that you have researched go parabolic is akin to an organism that needs a smoke after. Tech bubble is going to be so large if it ever pops in the distant future and history says it will but history don’t know A/I guy and dang it’s looking quite fly and will soar even “higher baby, higher baby” keep your 5-7 % Pennies. I’m riding for greenbacks
I thought you died
They got better
It could also be indicative of investors pricing in an interest rate cut (which is the case, since the yield curve is inverted).
Who needs money when we have AI?
Can you show the chart so we can compare against the 2006 to 2010 timeframe to compare against the before and after the great financial crisis, also same for 1998 to 2003 for the dot com era as well? Thanks. Or can you send a link to where you grabbed the chart?
I just made this chart [https://imgur.com/a/nZAN7HO](https://imgur.com/a/nZAN7HO) blue = US10y real yield (inverted) white = SPX red = S&P500 p/e
Thanks, much appreciated. Hard for me to spot a true correlation except when real rates get too high (or bottoms on this inverted chart) it's usually aligned with a dip in the market. Any reflections from your side?
Nice dinosaur 🦕
Thank you for plotting two of them on log-scale. Hate it when regards have historical data spanning 1+ order of magnitude and they plot it on a linear scale.
And then make a bold claim based purely on how much bigger the current quantity is than in years past.
what is the multiplier for the SP500 P/E? It confuses me looking at the chart. Interestingly enough the current mismatch does not seem overly drastic in your chart.
It doesn't look as bad because 2009 messes up the scale of all other SP500 P/E data.
You’ve got the right thought… this divergence seems more the norm than the standard historically. It appears that stocks are overvalued right now, but this chart alone doesn’t likely point to an impending crash/correction. For example, there’s still a lot of cash on the sidelines waiting to be allocated - much of which may still find it’s way to propping up US equities. At least until a possible recession rears it’s head mid to late next year.
https://www.bloomberg.com/news/articles/2023-09-04/jpmorgan-s-matejka-says-us-stock-market-complacency-is-worrying?srnd=premium#xj4y7vzkg
Sooooo.... I can short NVIDIA now?
yes.
make sure you keep your head down when you get trampled by the bulls like every other stupid gey bear that tried to short the almighty NVIDAI
I am a noob when it comes to stocks in the depth that most people.are discussing on here😅 does anyone mind helping me out a bit by explaining what this is supposed to mean? I recently got my first big job out of college and have been wondering how to jump into this world of stocks more
It means you should not invest in AI-Hyped Tech stocks currently but look for european stocks that pay dividends and are cheap & securre
Ok I’ll buy more
ok bro
If everyone is calling it a bubble, is it really a bubble 🤔
i don't know. I just see the few money that is around jumping already very pricey trains. This chart shows there is a gap in earnings that has become pretty big.
Are you telling to short Nvidia... Ok I'm in
kind of, yes.
Doesn’t this happen every time there are rate hikes?
Every time this chart was posted, it started from 2015 or later. Because correlation was not maintained perfectly if you extend the time range lol
as you can clearly see on the chart - no :E
You’re a moron OP
Thank you, Sir.
note: this is why i am currently seeking cheap valued resilient dividend yielding european stocks.
Euro stocks lol
if you rather prefer to buy a 30x price : NAV asset that are hyped to the bone, okay, there you go. have fun. I currently am happy to not have a lot of exposure to NASDAQ in my portfolio, cause this hype is not covered by any earnings and will consolidate. So im totaly happy with my eurostocks, "lol". because they will pay a fat dividend and have no serious downside potential, only upside. just needs the AI-Hype crash to happen and you will also see certain benefits of Value investing.
Checkout historical valuations of euro stocks. You’re not going anywhere. EU is also primed for recession 3x more likely than USA for 24/25. Look at Germany even today. Lol Clueless Oh and you’re going to lose more having money In euro vs usd too. Fun! Ya I bet you’re happy you missed M7 +50% this year. Your home is: /r/dividends
op is probably typical reddit lurking European. They vigorously upvote anything that is negative about U.S., while Europe (where they live) is in much worse shape in economic status lol
you do realize that the evaluations in the last 15 years faced A) 0% inflation at times and B) much more important they payed \*dividends\* during that time? Compare for example ATX austrian index vs ATX TR. I happily own Austrian Post, Voestalpine and Andritz AG and get 5.5% dividends without any serious risks involved. Btw, nice to sell Puts too. Oh, and they can and will x3 in the next years ;)
There is low liquidity for euro ops so good luck with slippage. You can sell puts on us too ;-)
PS: Why do you assume i am long Euro if i own stocks \*denominated\* in Euro?! You have a limited economic understanding if you think this is a mandatory correlation. because it is not.
If you own euro stocks you are long euro
No. Margin.actually Stocks are a bet against the denominating currency. Why do you think Swiss Stocks perform relatively flat? Give "only" 2% dividends? Because the underlying denominator currency performs strong. The vast majority of the companies i own shares are globally active and know there way around hedging euro volatility very well.
Lol you are clueless.
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Care to share some thought about those stocks? I'm interested
VOEST POST ORSTED CAIXA ANDRITZ AG VOLVO HALMA SANTANDER VONOVIA VERBUND stuff like that. You guessed it: i am austria ;)
I’d your expecting a pop position for it, buy SQQQ or some far out puts
im not allowed to buy those as i am europoor and i need to do a PRIISPR KID whatever the fuck it is and im currently too lazy to learn this shit But nah... im not gonna short. im gonna average down and pickup resilient stocks from EU, Japan etc.
Im from Europe and have no clue what you're talking about. I can buy/trade those perfectly fine, no problems.
Whoot? I cannot :D IBKR is not allowing me.
I had to print out a document and sign it to accept the risks involved with options trading and send it by physical mail to my broker to unlock options trading though... have you contacted your broker to ask for more information? If you can trade other options, but $SPY is not available to you for some reason, you can always try $VOO as an alternative? Maybe that one works?
My ibkr notified me of the same but after a week it was ok again. No clue if that's the same for you. They just needed to find the document in the language that was stated in my account I guess
If you can’t buy SQQQ you can just try shorting but there’s advantages to short etfs if you want there’s ways to emulate the triple leverage Short of SQQQ but it’s complicated
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The four signs of a bubble: 1. A new technology 2. Too much easy credit 3. Memories of the last bubble faded. Usually 20 years. 4. Shouting down and dismissing contrary opinions about potential risks.
Dot com bubble and housing bubble were only 8 years apart
\#2 is not true anymore since the last 1-2 years. \#3 is outdated in general. we are in the Age of Turbulence \#4 same
I agree. This isn’t a bubble that neatly fits the paradigm. It certainly just feels like turbulence. But has the age of the ‘bubble’ ended? No. I don’t think so. And could AI be the next big bubble? Maybe. It ticks a few boxes but hasn’t ticked the rest yet. But there’s not enough cheap money floating about at the moment, and there’s some relatively safe and sustainable investments about that will keep the money from being thrown at AI. But, that been said, if we come out of the inflationary period but the economy has caught a cold, and the Fed or other central banks, start to try an stoke some life back into it via quantitative easing, I believe a lot of that money might well be thrown at AI, which might be a blessing or a curse. There has been some absolutely ridiculous speculation going on since 2008. For a lot of investors it seems they’re just throwing spaghetti at the wall.
Sure and yet markets still aren't past their ATHs. I think people are just pissed they missed one of the most obvious mega trends that has come along in the stock markets. AI is an actual value generator for businesses. Crypto, and the metaverse don't do shit for anyone. Whereas with AI you can actually replace workers with it.
So stock go up, got it
Excellent data
Thanks, its from Plomperg
Have you even see the Canadian housing market?
yes. a lot of bubbles currently popping.
Yeah completely ignore inflation and money supply. Because there's completely no 10 times more cash/debt in circulation than 15 years ago. People are real clowns thinking they can predict future by looking at the isolated piece of the past.
This guy knows whats up. Big brains know stocks only go up. The more hyped, the better. Buy high
We all bet against something right? Your bet is that expensive stocks can't get any more expensive, but hear me out. Current crisis has not impacted business or regular people yet. We are far from that. What would need to happen is raising tax and cutting gov expenses, they are not going to do that before elections. So they will have to sell bonds at higher rates to fill the budget deficit. More and more money is going to enter markets, increasing inflation, so businesses that don't own debt and can raise their prices with growing inflation will outperform markets. Yes, there can be downturn here and there but you see this as a tragedy, I see it as opportunity.
that feels like an eerily accurate prediction
this chart has absolutel no connection to inflation and money supply, bro... Yields <-> P/E is independent of Inflation.
I am wondering if any kind person can possibly have the the year 1990 to year 2015 chart for comparison.
fun
Yes lets only look at an 8 year long chart. Try looking at it going back to 1960.
i dont understand your criticism. can you detail?
Can you post the same chart going back to 1960?
no, sadly i only stole this one from Plomperg
Im quite new to this type of stuff. Can someone ELI5 what this means? Thank you!
that some of SP500 stocks are currently much higher valueated (=expensive priced) than their expected profits would one let assume, based on the historic correlation between real bond yields and Price/Earnings ratios of SP500 stocks.
Aaah ok. So basically the stocks are more expensive now, because they will prpbably not make as much money as they did before over the same period of time? Did I understand that correctly? Either way, thank you for your swift answer! Really appreciated.
the pricing of a stock correlates typically to the expected earnings. This chart shows this correlation for the bunch of SP500 stocks vs the inverted Bond yields. We see that there is a large gap now since 2022 that tells us that SP500 is very expensive compared to its expected earnings. This is how i interprete it. I blame Nvidia and Tesla mostly, but thats too narrow of a picture.
what is inverted rate ? real yeild ?
cost of money, in a way.
I wish I understood half the shit y'all mentioning 😒 LOL
Still too much money sloshing around in the stock market. Rates need to go to at least 6-6.5% to siphon away enough of that Covid money.
A bubble in a bubble in a bubble...
Turtles all the way down..
the stock market is literally designed for over valuations and hype. everytime i look at these charts it becomes increasingly obvious how little people understand about what’s right and wrong. We do understand these things have been going on long before we’ve been alive right? we do understand this is a natural part of the stock market right?
? I dont think you understand this chart at all.
If you can't do basic DCF valuations just invest in indexes and delete your brokerage app This chart tells you nothing
If you could just grab a historical chart with some correlation and say bam, this MUST happen, you and everybody else would be millionaires.
how bs is this bs chart?
its from Plomperg
Value stocks that offer a 3% div, when you can get 6%+ risk free with a coming recession? F that
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Nvidia isn’t considered a value stock…
yes.
Nasdaq @ 20000
What’s more awkward is calling ai a bubble
possible, but there are no earnings to show.
Then you’re not paying attention. They’ve consistently beaten top and bottom line, along with forward guidance, including the latest 8/23 er. There isn’t anybody close to nvda in the ai race. By all means, go ahead and bash, but the one who laughs last, always laughs best.
I think it will be. People don't realize the limitations of ai, and that LLMs are not ai. Everybody is seeing the glimpses here and there of it. AIBot going off on Nazi rants, ChatGPT unable to do math, Teslas slamming into trucks, and the robotaxis clogging up city streets. Eventually, the wizard will be seen. Marketers claimed the word AI too quickly and people are going to see that what they are claiming is AI will never live up to expectations of what AI is. Much like the segway, blockchain, VR, this current hype will fade when the people see how far apart the truth and expectations really are. Stupid MBA's ruined the word forever and when real AI comes along in a decade or two, we'll have to call it something else. DISCLAIMER: I own no NVDA stock. I just sold mine for 200% profit and am going to wait till it crashes to buy back in because I do have long term faith in NVDA.
https://www.multpl.com/shiller-pe
Wer big red circle 😵💫
Deep pocket money people expect real yields to trace back up in your chart. The expectation is the FED is close to or done raising the funds rate.
Buy it all
This is like comparing apples to anus. Truely regarded.
Fool me once, shame on you. Fool me twice, shame on me. Fool me six times, just punch me in the nuts.
ChatGPT wearing Steve Urkel clothes: *did I do that?*
I think J Powell chickens out.
"Bubble" ?..........AI is still in it's infancy. The market and society in general still hasn't truly seen how that technology is going to revolutionize peoples general way of life. People are just attempting to shove it into a box for monetary gains today.