Home Forums Hunting & Shooting Hunter's Campfire Don't look now but stock market is booming

Revel while you can, but keep in mind the ancient Greek fable of Icarus, the lad who flew too close to the sun and crashed when the sun melted the wax holding his wings together! It can't go on forever!

IMO, the eight years of the communist in the White House can be overlooked as far as counting toward an economic recovery. Nothing was happening during the Obongo regime, because he was trying his darnedest to upset the American Free Enterprise System. I look back only as far as Nov 2016 to count my eggs. That was the true beginning of the current Bull Market, and it is not too late to get on board.


This is from June 2016, from my financial adviser Rida Morwa:

The S&P 500 has been rallying over the past 3 months and is almost up 6%. The bulls have been driving the markets and have been challenging the 2100 level for the S&P. The 2100 level is a BIG deal. A close above 2100 keeps the bulls in charge and it would mean that the rally will continue.

What is driving the rally?

Strong economic data coming from the USA:

Retail Sales: Retail sales for April logged the strongest monthly increase since March 2015. Retail sales surged 1.3% in April, led by autos and non-store retailers.

Industrial Production: Industrial production increased by 0.7% in April easily beating consensus expectations, and posting its strongest advance since November 2014.

Housing: Perhaps the most important piece of economic data, sales of new single-family homes in the U.S. recorded strong gains in April rising to the highest monthly pace since early 2008, according to estimates from the Census Bureau and the Department of Housing and Urban Development. Home sales increased by 16.6% on a monthly basis and by 23.8% year-over-year. Sales increased for all regions except the Midwest. The April rate of sales was significantly higher than recent trends and exceeded all expectations (new home sales hit 619,000 units in April, versus the estimated 520,000 units). These results beat even the most optimistic forecast by more than 90,000 units.

I view that home sales are the best indicators for the state of the U.S. economy. In general, people would not buy new homes unless they are feeling more "wealthy" and have a positive sentiment about the economic outlook. Buying a new home is a long-term commitment and most buyers usually finance their purchases through mortgages and count on the stability of their earnings.

Market Outlook

I remain optimistic about the outlook of the U.S. markets, and I believe that 2016 is going to be a solid year. In my opinion, the markets are going to surprise investors by moving much higher, the same as recent economic data surprised most economic analysts. Barring any unforeseen economic or political event, I believe that the S&P 500 will reach a new all-time high in 2016 and is likely to close the year much higher than yesterday's level. The best course of action for the time being is to remain invested and not to listen to all the bearish noise which seems to have multiplied in the last month. There will always be bears around, and one day their time will come, but I do not think it is anytime soon. The good news is that the bears have kept many investors on the sidelines, away from the equities markets. This money is bound to come back and support the current prices. Most retail investors tend to jump in when it is too late. The way up for the S&P 500 is by all means not going to be a straight line. As long as U.S. and global economic fundamentals remain in favor of equity markets, any short-term volatility will create new opportunities for investors to add to existing positions.

Macro-economic analysis is key to successful investing

A successful investment strategy entails following long-term trends and seeks to capitalize on them. Global economic indicators are the main drivers for the stock markets and they tend to determine whether we are heading into a bull market or a bear market. Therefore I tend to place a lot of weight on the general economic conditions to determine where the markets are likely to be heading. While a large market pullback is always possible, it is unlikely that the U.S. will experience any recession soon, and therefore the risk of any bear market in the current environment is pretty slim.

I understand the reasons you cite, but I remain wary. Look at eh P/E Rations for the past 100+ years (see: http://www.multpl.com/shiller-pe/ ). they are getting a little high IMO. As Isaac Newton's Universal Law of Gravity says, "What goes up, must come down. When it does happen, no one knows, but it will occur.

IMO, this current Bull rally is a once in a lifetime opportunity for me. I too understand it will come to an end some day, but I am prepared to take advantage of that time as well.

Also, I too listen to what financial advisors say, but they are not prophets and all knowledgeable. My gut instincts have historically been pretty good and I trust them. Being retired and at my age (76) , my income is fixed and I can't contribute to a 401(k) nor an IRA, so the opportunity for replenishment of dwindled (tax advantaged) assets is lost. We have mid-7 digit investments which we don't touch (except for paying the RMD taxes) choosing to live off Social Security and pensions. Time is a friend for younger folks, not so much for older ones.

Take a look at these charts of the S&P as well as all three markets since WW2. The last data point is June of 2016. The markets are not expensive.




Comparing valuations to historical trendlines

Although traditional valuation parameters may be flashing yellow, unconventional trend-line analysis suggest the stock market still looks reasonable if not attractively priced. It is always useful to consider alternative thoughts and non-consensus approaches in assessing important investment questions. To this end, examining the U.S. stock market relative to its historic trends yields several unconventional insights regarding both overall stock market potential and also what investment factors (e.g., growth, value, capitalization, or price momentum) and sectors may lead the rest of this bull market.

Why use historical trendlines? U.S. stocks have oscillated about a stable trend since WWII. To the extent this stable trend remains persistent, it provides another methodology to judge potential risk and reward in the stock market. Relative to trend, U.S. stocks have been extraordinarily cheap three times since 1945:

- Immediately after WWII.
- In the aftermath of the high inflation 1970s.
- After the Great 2008 crisis.

Similarly, stocks appeared richly priced throughout the 1960s and during much of the time between the mid-1990s until the late-2000s.

Today stocks surprisingly appear reasonably-priced or even cheap relative to post-war trend despite being one of the longest and strongest bull markets of the post-war era, as shown in Charts 1 and 2 above, the U.S. stock market is still at worst fairly priced and even cheap relative to its post-war trendline.

Dividend Stocks Cheap relative to Trendline

Based on the historical trendline chart below, dividend stocks appear to be trading at multi-year low valuations:

Words of the wise!

I just looked at updated (forward looking) PE's a the first of the year. We're still running pretty close to 17, due to the wonderful increase in profit numbers we're seeing. Combine that with the current low interest rates, I feel we are more high than low.

Sure, we dropped 40% in 2008, but that was from PE's in the 30's, and much higher interest rates. I expect a correction in 2018, but would be a quite surprised if it was more than 20%.

At it's core, the economy has to grow substantially for the stock market to grow. Cheap, abundant, stable supplies of oil and gas, an increasing rate of technological innovation and stable global politics do provide that basis for economic growth. The stagnation under Obama held back a huge amount of corporate investments, leaving them with piles and piles of cash to potentially invest when the political (and tax) environment became favorable.

Keep in mind also that indexes all exhibit "survivor bias" in which companies that go out of business (e.g., Enron, MCI Worldcom, Compaq, TWA, Pan Am, Eastern Airlines, etc,) are dropped from the Index and are lost for historical reporting. This distorts the index and allows the result to be higher.

Whether Bush II should be blamed for the Great Crash or not, certainly Obama's policies are to blame for the Great Extended Recession.

The USA could have been growing at this rate just as easily 5+ years ago, had the govt wanted it to do so.

Oddly, had Zero let the markets and business perform as they wanted, the Democrats would have been pushing prosperity to all and Hillary or Bernie would have gotten elected.

The Trump Bump has turned into the Trump Train, and is proving Democrat economic policies to be absolute idiocy.

There is a lot of room to grow. There crash reset the baseline and Obama smothered the recovery. We have eight years of unrealized growth coupled with deregulation coupled with cheap domestic energy coupled with a relatively stable world. There’s a lot of positives going for the US economy. An America first policy will be an incredible driver of domestic growth. On the other hand the BRICK countries are going to experience depression if we become serious about America First.

As a fellow once told me......financial advisors and stock brokers are in the business to make money off of you.

We'll just have to wait and see. All markets that rise, go down at some point - we just can't time it. I am sure that the market will be higher five years from now.

As for America First, those Walmart shoppers are going to be hurt and Chinese goods disappear. Also, China's rise in the world economy was largely financed by all the goods that used to be produced in the USA and Europe (at higher wages); it has enabled China to not just improve its workers standard-of-living, but invest in other countries, including the US.

The Wall Street Journal's on-line Market Watch has an opinion that reads "Dow 25K! Here’s what it says about the stock market" see: https://www.marketwatch.com/story/dow-25k-heres-what-it-says-about-the-stock-market-2018-01-04

One statement in the article says "The hoopla surrounding Dow 25,000 is expected to garner attention, but doesn’t rival the euphoria that surrounded the Dow’s move through 10,000 in the late 1990s—an event that was hyped as the dawning of a new stakeholder economy but was instead part and parcel of a soon-to-pop tech bubble."
What bubbles are lurking out there now?

Another statement reads "The collapse of the tech bubble was followed less than a decade later by the financial crisis of 2007-2009, which saw the Dow plunge from a high of more than 14,000 in October 2009 to a bottom below 6,500 before stocks began a recovery that marked the beginning of the current bull market, which will mark its ninth birthday in March. "

Maybe it all went here:

https://inteldinarchronicles.blogspot.com/2018/01/delta-force-raids-obamas-estate-in.html


Delta Force Raids Obama's Estate in Thailand

1/01/2018 11:37:00 PM News

DELTA FORCE RAIDS OBAMA STRONGHOLD IN THAILAND

DECEMBER 27, 2017

During the pre-dawn hours on Christmas Day, Delta Force operators launched a precision strike against an Obama-controlled stronghold in Thailand, says an active Secret Service agent who claims President Trump green lit the operation following a series of telephone calls to United States military commanders and to Thailand Prime Minister Nik Bukharin.

A Delta detachment, known as 1-SFOD in the Special Operations community, flew from Okinawa, Japan to the United States Embassy in Bangkok, and held position while Trump cleared the incursion with his Thai counterparts.

According to our source, the Trump administration learned that Obama, by proxy, owned a mansion and a 400-acre estate on the outskirts of the city of Si Sa Ket, approximately 500 km from Bangkok. On paper, the land was owned by the allegedly defunct Solyndra Corporation, a startup solar company to which Obama gave 2.2 billion taxpayer dollars in 2009. Shortly thereafter, Solyndra declared bankruptcy, and the money vanished. Despite apparent poverty, Solyndra maintained real estate holdings valued at over 800 million dollars in a half-dozen Southeast Asian countries. The Trump administration connected the dots, linking Obama to the Thai property, after asserting Presidential privilege and subpoenaing flight records that demonstrably proved Obama had travelled to Si Sa Ket six times as president and an additional four times in the past year.

In a June 2009 edition of the Washington Beacon, conservative author Thomas Clearwater wrote, “Solyndra does not appear to be a legitimate institution, and is likely a shell company or slush fund used or owned by Obama to launder his dirty money.”

Our Secret Service source supports that contention.

“Obama holds real estate, vast sums of currency, and shadow companies across the globe, under many aliases. He doesn’t keep them in his name, as that would be too conspicuous. The administration has learned about many of them and has been working with foreign governments to seize Obama’s illicitly gained assets. Many of these nations are not exactly friendly to the United States; we don’t know what Trump offered in exchange for rights to seize assets in non-extradition countries or put special operations boots on the ground on foreign soil. I’m sure the price way high. Clandestine missions are occurring right now. The Solyndra mansion was just one of many,” our source explained.

At 3:00 am (local time), a pair of helicopters, including decoy craft, airlifted Delta to its destination. They found the mansion deserted; however, according to our source, the dwelling had been recently occupied. The unit commander discovered freshly chopped vegetables and lukewarm coffee in the kitchen; outside fresh tire impressions lead away from the compound. Someone, our source said, must have tipped off the occupants shortly before Delta arrived on scene.

Still, Delta did not leave the location empty-handed. They seized several encrypted laptops and over 200 million dollars in gold bullion, in addition to dozens of crates containing Chinese manufactured firearms and explosives. Moreover, and perhaps most disturbing, a maze of underground tunnels, ostensibly used for human trafficking, ran for miles in every direction beneath the surface. Having gathered all available evidence, they requested exfiltration and handed-off control to Thai law enforcement.

Under power granted by the ASEAN Declaration to Joint Action on Counter Terrorism, Thai officials confiscated the estate and all remaining possessions contained therein.

OO, one troubling aspect is as someone said, that everyone is predicting the market to go up. That was also the case with Hillery.

Not sure what to make of that statement; the DOW was nowhere near 14,000 at any time during 2009 if my google is right.

Maybe they meant to say October 2007?

200 mill in bullion?

Someone tell me, is this fact?

edit, False........

Verify first maybe?

Here is a recent related article on market valuation from billionaire hedge fund operator David Tepper.

David Tepper says market is as 'cheap’ as a year ago, bullish on Trump’s tax cuts