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      03-23-2019, 11:24 PM   #67
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dsad1, thanks for the comments. Are you saying the market is too highly valued now?

Here is an SP500 p/e chart over time. Today's market is valued in the same range as the 1990s. Seems not too scary. Do you agree?

https://www.multpl.com/s-p-500-pe-ratio
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      03-24-2019, 12:07 AM   #68
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Here is an SP500 p/e chart over time. Today's market is valued in the same range as the 1990s. Seems not too scary. Do you agree?
The stock buyback may distort the PE ratio if compared to past PE ratio. One thing we should be concerned is that the market has been so sensitive to FED rate change. It's like if a person is so sensitive to changes in the weather, then he may not be in good health - just like the market is probably not in good shape.

As mentioned previously, people have been talking about corporate debt - including Janet Yellen and also in Powell press conference last week. Nobody really know how sensitive they are to market down turn.

I feel like a lot of the so called "gig economy" companies don't really make any money and I would assume they have a lot of debts. And a lot of these companies rely on the "cloud" and software companies and if they fall it will lead to a domino affect that is hard to predict. There have been a lot of hype on the so called "software" companies.

After last Friday market fall, it will be interesting to see what will happen next week.
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      03-24-2019, 09:01 AM   #69
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Originally Posted by chassis View Post
dsad1, thanks for the comments. Are you saying the market is too highly valued now?

Here is an SP500 p/e chart over time. Today's market is valued in the same range as the 1990s. Seems not too scary. Do you agree?

https://www.multpl.com/s-p-500-pe-ratio
My fear is more in the high valued companies that are not public yet but still control a big part of our economy. A good example would be We Work. They have a ton of debt and a ton of rent, and they are barely paying both. It isn't going to take much for them to really be in crises mode. Wework could probably get itself out of it by selling some of its holdings. The issue here is that We Work has tens of millions of square feet that they currently lease, if they gave back only a quarter of that it could really handicap areas/cities.

We have become dependent on companies that are not as financially secure as they should be, and that to me is scary.
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      03-24-2019, 09:41 AM   #70
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Thanks dsad1. wework has 5,000 employees. How does it control a big part of the economy? Do you mean the US economy, or another economy? How does it exert the control?
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      03-25-2019, 08:58 AM   #71
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Thanks dsad1. wework has 5,000 employees. How does it control a big part of the economy? Do you mean the US economy, or another economy? How does it exert the control?
It doesn't have much employees but it is probably the biggest lessee of office space in the world. They have a big impact on the real estate market in major cities. I know the real estate market is just a small share of the economy, but these are class A buildings that are mostly owned by big REITs. You start getting a few hundred thousand to a million square feet back in some of these buildings, it starts taking a toll on the whole market. WeWork was just one example though, it was easiest for me to reference off the top of my head since I work in real estate.

Last edited by dsad1; 03-25-2019 at 09:35 AM..
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      03-25-2019, 10:21 AM   #72
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Had a 20% take profit on tvix today...took 3 trade days to hit. Had bought more shares right before it jumped but I didn't think it would tp so quick. I'm surprised to see the market doing had. Both of my companies are selling tons of jobs so it still looks sunny here.
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      03-27-2019, 11:48 AM   #73
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Back in Nov. when the yield inverted, people were saying not to worry but then we had the Dec. crash. Now, it's the same that people are saying no to worry.

The last few tradings show some weakness in the market. I think the market thinks that unless the FED lower rate, the market will go down from here.

Market rarely goes side way. It either goes up or goes down. It seems to be on a downward trend now.

Fcked if I know.
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      04-11-2019, 08:18 PM   #74
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Everybody I've heard thinks that the market will hit new highs this year. So if everybody thinks so, the question is will it happen? If everybody is on the same trade ... !
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      05-28-2019, 02:00 PM   #75
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The S&P 2800 seems to be the support level. If we break that, that would be real bearish. The risk of recession is rising. I looked at AAPL and their total debt is about 112B which seems fairly high compared to other FAANG stocks. With all the talk about Tesla going bankrupt, its debt is only about 13B with a revenue of about 22B last quarter which is about half. AAPL revenue last quarter is about 250B so its debt is about half as well.

In order to grow, companies have to take on more debts which are already at fairly high level historically, so I am not sure where the growth will be. I don't think more debts will be the answer.

Interesting enough, the China trade war may be the answer. If companies are looking real hard at moving production away from China, they have to invest on production to other South East Asia countries which means they have to spend more money. There will be a F1 race at Hanoi, Vietnam next year which is unthinkable just a few years ago.
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      05-31-2019, 07:16 PM   #76
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Originally Posted by WestRace View Post
The S&P 2800 seems to be the support level. If we break that, that would be real bearish. The risk of recession is rising. I looked at AAPL and their total debt is about 112B which seems fairly high compared to other FAANG stocks. With all the talk about Tesla going bankrupt, its debt is only about 13B with a revenue of about 22B last quarter which is about half. AAPL revenue last quarter is about 250B so its debt is about half as well.

In order to grow, companies have to take on more debts which are already at fairly high level historically, so I am not sure where the growth will be. I don't think more debts will be the answer.

Interesting enough, the China trade war may be the answer. If companies are looking real hard at moving production away from China, they have to invest on production to other South East Asia countries which means they have to spend more money. There will be a F1 race at Hanoi, Vietnam next year which is unthinkable just a few years ago.
Iím seeing some indicators of an economic top, and of course the tariffs arenít going to help a bit (may be needed for negotiation and/or political purposes, but the cost will be real). While most data remains positive, Iím seeing high values in some collectibles which to me is an indicator of (a) too much heat in the economy and (b) lack of other good investments. The fall in interest rates (10 yr Treas) is pretty dramatic and suggests the US is back as a haven, but lacks growth prospects which would require financing (low loan demand). Very close to moving out of equities and into cash equivalents, short-term maturities, etc.

Other views?
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      05-31-2019, 11:12 PM   #77
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Economic top or coasting? I see coasting for a couple of quarters, then the accelerator pedal gets gentle pressure again.
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      06-01-2019, 03:24 AM   #78
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longer the trade war goes on, faster the new China will pop up in Africa.. China was investing heavily on Africa in last 3-4 years already and making a new China in Africa is much cheaper than anywhere in Asia.. this psychological conflict already caused to melt down 15-20% tech companies in short time.. im not sure there ll be a winner but only lost banknotes more on US and China and then rest of the world..
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      06-07-2019, 06:59 PM   #79
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What happens this week is a bit scary. The DOW gains 1000 points in just four days. Will it be sell on the news? We don't even know if the FED will cut rates.

The question to ask is why you have below 4% emp and above 2% GDP and the FED has to cut rate? The only answer is a lot of that 4% and 2% probably due to overly leverage. This time it's the business that takes on too much debt to finance the growth. Just like the 2008 housing crisis.
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      06-07-2019, 10:30 PM   #80
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Quote:
Originally Posted by WestRace View Post
What happens this week is a bit scary. The DOW gains 1000 points in just four days. Will it be sell on the news? We don't even know if the FED will cut rates.

The question to ask is why you have below 4% emp and above 2% GDP and the FED has to cut rate? The only answer is a lot of that 4% and 2% probably due to overly leverage. This time it's the business that takes on too much debt to finance the growth. Just like the 2008 housing crisis.

Weird world.

Email 1 I get this am. "Dow futures down due to bad job reports"

Email 2 I get this am. "Dow futures up due to likelihood of fed rate cut due to bad job reports"

So the market goes up on the news that fed MIGHT cut rates next week thus confirming that all is not well?

It is bizzaro land isn't it???
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      06-08-2019, 12:56 PM   #81
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I'm shocked at the news of a potential rate cut. I thought this was the best economy America has ever seen??
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      06-08-2019, 04:45 PM   #82
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Originally Posted by other_evolved View Post
I'm shocked at the news of a potential rate cut. I thought this was the best economy America has ever seen??

I own two companies and can honestly say the last two years have been incredible for us. This year, so far, has been the best in our 15 year history. Every business owner I've talked to is having the same experience. Think what you want...
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      06-09-2019, 03:20 PM   #83
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WestRace, do you mind sharing what investment horizon you have? Are you retired or actively (full time) employed? Apologies for the question, but I think it relates to the questions you pose. You use the word "scary". Why are you scared, or why should others be scared?

Markets cycle. Economies wax and wane. Nothing new here.

WestRace, can you please point to data that supports excessive leverage at the business (corporate) or consumer level?

Full disclosure: I am engaged in full time employment in an industrial corporation. I do not see anything to be concerned about. If the economy softens, so be it. The country, the economy and firms will adapt and adjust and move on with life. Nothing scary here.
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      06-11-2019, 09:16 PM   #84
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Quote:
Originally Posted by chassis View Post
WestRace, do you mind sharing what investment horizon you have? Are you retired or actively (full time) employed? Apologies for the question, but I think it relates to the questions you pose. You use the word "scary". Why are you scared, or why should others be scared?

Markets cycle. Economies wax and wane. Nothing new here.

WestRace, can you please point to data that supports excessive leverage at the business (corporate) or consumer level?

Full disclosure: I am engaged in full time employment in an industrial corporation. I do not see anything to be concerned about. If the economy softens, so be it. The country, the economy and firms will adapt and adjust and move on with life. Nothing scary here.
I was saying it in a tongue in cheek sort of way. I meant scary to say a healthy market should not be so sensitive to head lines either going up or down side. Such violent moves usually only happen in a bear market.

As for corporate debt level, this is a chart I posted previously from CBS Market Watch. Previously that has resulted in a crash. But the other variable to consider is the FED QE which current is at about $4Til so a lot of those debts probably are sitting in the FED books so it's unlikely the FED will be calling to collect the debt. So even if the debt is at fairly high level, a lot of it probably is being backed up by the FED.



I was looking at AAPL, its total debt is 112B which seems unusually high compared to say Google, Amazon. FB only has a total debt of only $7B!. Tesla at $12B.

Last edited by WestRace; 06-11-2019 at 09:23 PM..
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      06-19-2019, 09:40 PM   #85
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Hi WestRace,

Thanks. Are you able to share your employment status and investment horizon?

What do you make of this chart, updated in June of 2019 by the Federal Reserve? It shows corporate debt to market value of equity at a decades low level. Is this good in your mind, or is it bad or scary?

https://fred.stlouisfed.org/series/NCBCMDPMVCE
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      06-27-2019, 03:19 PM   #86
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Quote:
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Hi WestRace,

Thanks. Are you able to share your employment status and investment horizon?

What do you make of this chart, updated in June of 2019 by the Federal Reserve? It shows corporate debt to market value of equity at a decades low level. Is this good in your mind, or is it bad or scary?

https://fred.stlouisfed.org/series/NCBCMDPMVCE
I suppose you could look at this two ways:

1. Corporate equities are artificially high because of the stock purchase buy backs.
2. Or debt is not an issue.

A better way to measure debt is using "as percentage of GDP" because corporate equities such as stock can fluctuate quite a bit. For example, if a corporation stocks for whatever reason falls by 35% (which could happen alot), it's debt to equity ratio can go up substantially.
US Steel corp. debt/market cap is somewhere between 100% to 50% during the past 12months because its stock has fluctuated a lot.

Also as I mention, because of QE, a lot of the corporate debts are effectively being held by the FED and the FED won't likely to go under. So the FED is not only being used as a "put" for the market but also a "backstop" for all our corporate debts.

Another variable to consider is a lot of US corporations are multi-national compared to the past. For example, most of the stuffs imported from China actually come from US companies. Using debt to US GDP ratio may not be accurate as vs. in the past. A lot of US companies generate quite a bit of GDP in other developing countries. So you have to take into account debt/GDP (US + non US GDP). A more accurate way is to measure debt to corporate revenue or profits or something that is not just US centric.

It's hard to know and usually we can only find out after the fact.

Last edited by WestRace; 06-27-2019 at 03:30 PM..
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      07-18-2019, 06:17 PM   #87
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Wall Street rises as Fed's Williams cements rate-cut expectations
https://www.reuters.com/article/us-u...-idUSKCN1UD1PD

LOL's. He did stop short of promising personally delivering diapers to the bankers.
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      08-12-2019, 01:51 PM   #88
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The market has been tanking lately and I love to hear all the scapegoats from Trump 10% tariffs to Kong Kong protests to some butterfly flapping its wings to whatever ...
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