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44.95

174.194.203.101

Posted on June 9, 2021 at 11:14:06
tweaker456
Audiophile

Posts: 2377
Location: SF Bay Area
Joined: June 20, 2020

The stock market is now essentially at it's all time high in terms of being overvalued based on PE ratio. This exist solely because of interest rates at a 200 year low. Now I admit that my predictions of a major stock market and real estate downturn have been incorrect so far but it is because this situation is essentially unique in our history. Now I ask you, would you purchase business if it took 44.95 years of earnings to break even as to what you paid for it? Take a close look at the graph.



Get your facts first, then you can distort them as you please- Mark Twain

 

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What do you make of this one?, posted on June 9, 2021 at 11:27:19
Sondek
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Posts: 6761
Location: Fort Worth
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Contributor
  Since:
April 5, 2002
Inflation adjusted S&P 500.

 

RE: 44.95, posted on June 9, 2021 at 11:41:24
LtMandella
Audiophile

Posts: 1612
Location: CA
Joined: May 27, 2019
break even?

Who cares if you are technically in the red when you pay yourself an exorbitant yearly salary and bonus?

In fact it is better to be in the red, so you don't pay business taxes!
. I judge any sound system by how tiring it is to listen to.
Linkwitz

 

So, if you're able to buy the business with borrowed money..., posted on June 9, 2021 at 13:27:45
Jay Buridan
Audiophile

Posts: 8166
Location: Michigan
Joined: January 21, 2004
The answer is yes.

"Horse sense is the thing a horse has which keeps it from betting on people. "
― W.C. Fields

 

RE: So, if you're able to buy the business with borrowed money..., posted on June 9, 2021 at 16:51:55
tweaker456
Audiophile

Posts: 2377
Location: SF Bay Area
Joined: June 20, 2020
So if you could borrow the money you would by a pizza shop with a profit of 50K a year for 2.2475 million dollars? If so, you'd be cryin'. I can tell you that!


Get your facts first, then you can distort them as you please- Mark Twain

 

Sell, sell, sell Tweaker says so., posted on June 9, 2021 at 17:21:22
srdavis2000
Audiophile

Posts: 7389
Location: Deep South
Joined: January 11, 2003
I think I'll stay the course and listen to professionals who have degrees that are pertinent - kind of like I do with medical advice.

 

RE: Sell, sell, sell Tweaker says so., posted on June 9, 2021 at 18:29:42
tweaker456
Audiophile

Posts: 2377
Location: SF Bay Area
Joined: June 20, 2020
Which professionals, the ones that say stay the course or the ones that say to get out?


Get your facts first, then you can distort them as you please- Mark Twain

 

RE: So, if you're able to buy the business with borrowed money..., posted on June 9, 2021 at 20:30:38
Rod M
Web Geek

Posts: 13631
Location: So. California
Joined: March 1, 1999
Contributor
  Since:
March 1, 1999
None of you guys have half a clue on business and accounting.

A pizza shop that pays the owner $50K isn't worth more than 3-4X, usually less, maybe $150K.

-Rod

 

RE: So, if you're able to buy the business with borrowed money..., posted on June 9, 2021 at 20:57:35
tweaker456
Audiophile

Posts: 2377
Location: SF Bay Area
Joined: June 20, 2020
That is correct, that's my point or part of it. Why would someone buy a company's stock at a PE of 44 when you would not for the most part by a business at more than a 3-5 PE ratio. Apparently it's because of the lowest interests rates in history and professional investment advice. I think the average PE ratio of the stock market is about 18.



Get your facts first, then you can distort them as you please- Mark Twain

 

You'd be what they call heavily leveraged, posted on June 9, 2021 at 23:38:53
Jay Buridan
Audiophile

Posts: 8166
Location: Michigan
Joined: January 21, 2004
It works on Wall Street because there's no debtor's prison. Bankruptcy court-issued frequent flyer passes. But seriously, there is the approach of accumulating debt as a form of capital formation with the goal of dying in as much debt as possible, owning a gold-plated private 757 jet,etc.

I'd love to be heavily leveraged but I don't know how to get there from here :)

"Horse sense is the thing a horse has which keeps it from betting on people. "
― W.C. Fields

 

Agreed, isn't that tweak's point about 44.95?, posted on June 10, 2021 at 00:42:49
Jay Buridan
Audiophile

Posts: 8166
Location: Michigan
Joined: January 21, 2004
Speculators are borrowing money to acquire overvalued stocks. Same happened before the Crash of '29.

"Horse sense is the thing a horse has which keeps it from betting on people. "
― W.C. Fields

 

AKA "House of Cards"..., posted on June 10, 2021 at 02:16:07
dark_dave56
Audiophile

Posts: 3677
Location: Ohio
Joined: August 29, 2019
...borrow as much as you can, yet still make the minimum payments. I know people with "perpetual mortgages"--they could have paid-off their homes years ago, but they refinance every time they have any significant equity and rates are favorable. They'll have a mortgage payment, and still be deep in debt the day they die, but they just keep drawing and spending against their homes.


"So I talk to the night, I head for the light, try and hold it on the road. Thank God for the man who put
the white lines on the highway"--a very dear friend for decades Michael Stanley (Gee)--RIP

 

RE: AKA "House of Cards"..., posted on June 10, 2021 at 08:16:06
tweaker456
Audiophile

Posts: 2377
Location: SF Bay Area
Joined: June 20, 2020
The USA is not an individual home owner. It can borrow forever in a reasonable manner. It isn't a house of cards unless it gets out of hand or their is a large shift in the US position in the world. Not saying it can't get out of hand. The house is collateral and the US government and society as a whole are collateral which includes the government's printing of money. As Rod pointed out inflation may go a long way to eroding things. It seems to be rearing it's ugly head. The last thing I expected with 20 million people losing their jobs in the US and the world in economic crisis from Covid-19, with huge numbers of jobs lost or put on hold, was inflation. Inflation with the Fed saying it won't raise interest rates and high unemployment and under employment. Stock market basically at an all time high overvaluation with a pandemic going on. We, IMHO, are in uncharted territory.

Get your facts first, then you can distort them as you please- Mark Twain

 

tweak, it's been charted many times including the Roaring Twenties, posted on June 10, 2021 at 09:37:31
Jay Buridan
Audiophile

Posts: 8166
Location: Michigan
Joined: January 21, 2004



And in Germany after Versailles. And there's a classic book about many previous chartings.

"Horse sense is the thing a horse has which keeps it from betting on people. "
― W.C. Fields

 

He doesn't!, posted on June 12, 2021 at 15:13:10
E-Stat
Audiophile

Posts: 31564
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Contributor
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April 5, 2002
and likely has not enjoyed the consistent growth over a long space of time.

Fortunately, wifey and I have. ;)

 

RE: He doesn't!, posted on June 12, 2021 at 16:24:30
tweaker456
Audiophile

Posts: 2377
Location: SF Bay Area
Joined: June 20, 2020
Is there ever a time to sell and take profits and limit risk? 44 not high enough for you, hows about 45, maybe 50, 60, 70. Of course maybe profits will start growing to make some sense out of this? This situation is as a result of a unpredictable and long period of historic low interest rates. People who have held on to this point are lucky. Never to take profit, which is the whole point of stock market investing doesn't seem to make sense to me.





Get your facts first, then you can distort them as you please- Mark Twain

 

RE: He doesn't!, posted on June 12, 2021 at 16:35:56
E-Stat
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Posts: 31564
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Contributor
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April 5, 2002
Is there ever a time to sell and take profits and limit risk?

Not for me. I'm not a speculator.

Rather, a long term investor who accepts blips in the road experienced over the decades I've been in the market. The value curve returns to trend line.

 

tweak, you should ignore E-Stat who is abusive, posted on June 12, 2021 at 17:23:21
Jay Buridan
Audiophile

Posts: 8166
Location: Michigan
Joined: January 21, 2004
Nothing constructive will come from engaging with him.

"Horse sense is the thing a horse has which keeps it from betting on people. "
― W.C. Fields

 

RE: tweak, you should ignore E-Stat who is abusive, posted on June 12, 2021 at 17:45:51
tweaker456
Audiophile

Posts: 2377
Location: SF Bay Area
Joined: June 20, 2020
+1 but there are likely others who read my posts. Otherwise I wouldn't think of engaging these types.


Get your facts first, then you can distort them as you please- Mark Twain

 

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