The move lower that we will see is not a correction
on the way down this may turn into a -20-35% changepoint, but as this settles out I'm guessing -20%.
Its not a penalty, it doesn't mean that anything is "wrong", especially as it relates to "old world" technology, it simply means that normalized fair market
value is lower than the current prices.
Just as bond prices will move lower as a consequence of normalized interest rates, equity prices will move lower as a result of normalized
economic realities. JMO, but in the real life business world, I bet this turns out to be true.
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Perhaps, but, if real dollar price is falling, what bearing does nominal price have?
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Interesting point... consider this... i read the other day that almost 40% of US securities are foreign owned... I think the data was describing the US equity market and its easy to understand why that matters... if the dollar drops dramatically vs other currencies AND you see a wholesale drop in the value of US equities, the net loss to foreign investors is further leveraged by the drop in currency exchange, an exodus away from the dollar AND US equities which is disproportionate to other markets can further ensue. [breathlessly stating the obvious I know...]
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Can’t explain it but an elephant got it all figured out. Got it.
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I get that you are saying that if the cost of debt is geometrically lower then the affordability index is all that matters and I think that is a good point ~ and why the potential rise in interest rates is the key metric and maybe that is so. I'm not trying to paint a picture of doom, [i don't feel that way], just bringing up the potential issues
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@DawgsCanDance , as I read your prediction, a reval of US equities to rationally reflect corp. earnings means you think markets will start reflecting reality and the era of market and economy decoupling is/will be behind us.
Probably in everybody's best long-term interest for that to happen.
What do you think will be the catalyst? A critical mass of investors sidelining like @Baseman described in his post? Something else?
How do you think the expected economic euphoria post COVID (I assume we all agree this will end eventually) will affect markets? -
The stock market is a voting machine, a current snapshot of values. I hope the market takes a shit so I can buy more.creepycoug said:@DawgsCanDance , as I read your prediction, a reval of US equities to rationally reflect corp. earnings means you think markets will start reflecting reality and the era of market and economy decoupling is/will be behind us.
Probably in everybody's best long-term interest for that to happen.
What do you think will be the catalyst? A critical mass of investors sidelining like @Baseman described in his post? Something else?
How do you think the expected economic euphoria post COVID (I assume we all agree this will end eventually) will affect markets?
Google, Amazon, and Dominos pizza are close to undervalued now if you take a long term view.
Facebook on fundamentals and projected growth is a buy. Potential regulation, however, gives me pause. -
A convergence of factors loom as potential catalysts... take your pick, and there are always previously unseen factors that evolve so who knows? I'm not predicting the following, just saying where triggers could come from...
* Covid virus mutations means that economies are stuck for another 1-2 year period
* Middle east disturbance of oil distribution such as bombing the terminals and causing long term infrastructure damage
* rapid sell off in the bond market causes equity investors to head for the exits
* government income, capital gains and corporate taxation policies damage the business environment and reduce business and household discretionary spending
* rising level of US interest rates creates debt affordability issues which decreases disposable income
* the dollar loses it's sovereign status as the method of paying for oil around the world [this is already happening]
* we don't see the hoped for rebound in service related US business which is 60% of US business
* the tech bubble bursts [and takes everything with it] because even though the growth rate is fabulous, the valuation is 50% too high even given the most optimistic long term assumptions -
these are the two that jump out at me. don't know enough about the oil trade to comment on the dollar, but domestically, those two things concern me the most and seem most likely.DawgsCanDance said:A convergence of factors loom as potential catalysts... take your pick, and there are always previously unseen factors that evolve so who knows? I'm not predicting the following, just saying where triggers could come from...
* Covid virus mutations means that economies are stuck for another 1-2 year period
* Middle east disturbance of oil distribution such as bombing the terminals and causing long term infrastructure damage
* rapid sell off in the bond market causes equity investors to head for the exits
* government income, capital gains and corporate taxation policies damage the business environment and reduce business and household discretionary spending
* rising level of US interest rates creates debt affordability issues which decreases disposable income
* the dollar loses it's sovereign status as the method of paying for oil around the world [this is already happening]
* we don't see the hoped for rebound in service related US business which is 60% of US business
* the tech bubble bursts [and takes everything with it] because even though the growth rate is fabulous, the valuation is 50% too high even given the most optimistic long term assumptions
tech has proven how essential they are during the pandemic ... I could well be wrong. a tech burst would hurt right now. -
"tech has proven how essential they are during the pandemic ... I could well be wrong. a tech burst would hurt right now."
Yep, the business of tech everything and anything is going gangbusters now and will continue... the question is what the Tech revolution valuation is really worth, and does that mean a pullback of size in the tech valuation which drags the rest of the market down with it ~ which is really what is actually happening now. -
I'd love to see a pull down -- 50% or more would be awesome. Half off sale on Google, Amazon, Starbucks, Dominos Pizza, Union Paciifc, Berkshire, the SP and QQQ?DawgsCanDance said:"tech has proven how essential they are during the pandemic ... I could well be wrong. a tech burst would hurt right now."
Yep, the business of tech everything and anything is going gangbusters now and will continue... the question is what the Tech revolution valuation is really worth, and does that mean a pullback of size in the tech valuation which drags the rest of the market down with it ~ which is really what is actually happening now.
Hell Yes!
