Liquidate entire portfolio until virus is over?

Thrugelmir

m_c_s said:

It will be interesting to see how the markets react to the next US stimulus package which looks like it could be focussed on internal infrastructure investment. Democrats already indicating support and the level could be another $2 trillion. Will be quite an insight for economists to see what effect this combined with existing packages of stimulus will have on the medium and long term growth and inflation. 

Tomorrows US jobless figures may be an indication of what's to come. 

MaxiRobriguez

EdGasketTheSecond said:

bowlhead99 said:

Still, I would be interested if you could provide your analysis of, in what sense, prices of equities are (generalising) in an 'inflated bubble'.

I already gave you the evidence bowlhead99 in a previous post. You replied that you weren't going to waste 30 mins of your time on it!

If you want a quick answer as to why markets are inflated then compare the PE of markets now to their historical average. Compare house prices to average earnings, they are also in a bubble.

Maybe, but that doesn't mean there will be a crash or a flight to metals.

Cheap money means asset purchases, which inflates PEs. As long as there is cheap money, and a functioning economy, PEs are likely to remain elevated. Even if cheap money goes away, there's as much chance of asset prices simply holding as they are until PEs return to the mean, as opposed to a quick crash. 

People just need to invest according to the aims and emotional ability, as always. 

Thrugelmir

MaxiRobriguez said:

EdGasketTheSecond said:

bowlhead99 said:

Still, I would be interested if you could provide your analysis of, in what sense, prices of equities are (generalising) in an 'inflated bubble'.

I already gave you the evidence bowlhead99 in a previous post. You replied that you weren't going to waste 30 mins of your time on it!

If you want a quick answer as to why markets are inflated then compare the PE of markets now to their historical average. Compare house prices to average earnings, they are also in a bubble.

Maybe, but that doesn't mean there will be a crash or a flight to metals.

Cheap money means asset purchases, which inflates PEs. As long as there is cheap money, and a functioning economy, PEs are likely to remain elevated. Even if cheap money goes away, there's as much chance of asset prices simply holding as they are until PEs return to the mean, as opposed to a quick crash. 

People just need to invest according to the aims and emotional ability, as always. 

If companies are making less money. Using available cash to repay debt and fund pension deficits. Rather than pay dividends. Then cheap money alone may not drive prices up. 
Many companies are going to fail. In the process there'll be destruction of assets and non payment of debts.  This crisis is going to run for some time. 

bowlhead99

EdGasketTheSecond said:

bowlhead99 said:

Still, I would be interested if you could provide your analysis of, in what sense, prices of equities are (generalising) in an 'inflated bubble'.

I already gave you the evidence bowlhead99 in a previous post. You replied that you weren't going to waste 30 mins of your time on it!

If you want a quick answer as to why markets are inflated then compare the PE of markets now to their historical average. Compare house prices to average earnings, they are also in a bubble.

You gave a link to a video called the Hidden Secrets of Money where the author of a book called the Hidden Secrets of Money and another book called Guide to Investing in Gold and Silver will presumably tell us the Hidden Secrets of Money and why you should Invest in Gold and Silver.

The founder of goldsilver.com has proudly been "providing investors with both education and world-class bullion dealer services" for over a decade. His youtube videos are regurgitations of what he has put into his books, which are designed to drive customers to his website where he provides gold and silver sales and storage. However, excuse me if I didn't have 30 minutes available to spend watching the one you linked to find out which particular hidden secrets of money are revealed in episode 7 and why it is important that I hot-foot it to my local gold and silver merchant.  I do already understand economics.

If the markets were inflated in his opinion at the end of September 2016 when he made the video, and the Russell 3000 is up 10.5% since then (1420 yesterday vs 1285 then), some may think that they are even more inflated now. Certainly the purveyors of gold will always tell you that you should buy gold rather than stock market-based investments to protect yourself from the terrors of government intervention. However, debt is cheap and corporate earnings are not too bad, with the exception of corporate earnings over the next year which will be poor before they rebound.

Some of the changes in 'historic P/E ratios' can be accounted for by mix of companies within the indexes. For example if you go back x years you would see high weighting to 'traditional' big businesses which are valuable because they are giants of their industry late in their development cycle and 'cash cows'. Looking at indexes from a long way back, the original members of the DJIA for example were concentrated in commodities and materials processing. These days you still have large industrials like tobacco giants and big pharma and banks, but you also have companies like Alphabet or Facebook or Tencent taking high weightings and those sorts of businesses can deliver huge annualised growth percentages as they tap into billions of global consumers' and businesses' appetite for services in a way that some old auto manufacturer or chemicals company could not. People will pay a higher multiple of current earnings for a business with a demonstrable growth trajectory, and for companies such as Amazon which reinvests a lot of its revenues in pursuit of market share and brand loyalty, a high price/earnings ratio may be expected for the company, which is not necessarily conceptually 'wrong' (not wanting to get bogged down in company-specific detail or opinion here). 

Before we had so much globalisation and internet etc, high growth high P/E companies would be wallowing around at the lower end of the indexes with a few hundred million or billion of valuation. But now these higher P/E companies are simply larger than they have ever been in previous iterations of the index. If a larger proportion of an index is high-growth / high-P/E, and especially where earnings have grown exponentially in some businesses in recent years so that current earnings are much higher than average earnings over the previous decade,  things like CAPE as a measure of value may be telling you a story that things are valued too high, while the market considers them to be fine, because CAPE has some flaws.

While markets are fickle and investors can be short-termists, prices should essentially reflect an assessment of the present value of owning the companies forever, not just for the current year. If we are talking about the value that can be extracted from a productive business and its successors forever, rather than simply comparing price to corporate earnings this year or the average of some recent years, the current market prices may not be considered to be 'in a bubble' which requires popping. I doubt that if I were to watch the goldsilver.com founder's video I will get dramatic 'evidence' that they are in fact 'in a bubble' as you suggest. 

As mentioned, I have reduced my equity allocations recently and moved money between different instruments as a short term play compared to where they would usually be, and some of that is speculative because I can't claim to predict the future. I don't disagree that it might be cheaper to buy the global or US equity market, or certain companies within it, at a lower price later. I agree with Thrugelmir above that the crisis will run for some time.

However I am simply not going to invest my time in watching a video from a US bullion dealer that purports to tell me 'hidden secrets' about economics to drive traffic to his bullion store. Sorry about that. As you said in a previous post, you can lead a horse to water... so it's my own fault if I miss the amazing and unobtainable anywhere else advice to hoard silver and gold to guard against Weimar- style hyperinflation.

EdGasketTheSecond

Yes your loss; that's too bad.

I realise he has his own interests in gold but I don't think that is his primary driver in making the videos or that the information is skewed but if you don't want to watch you will never know. Mike Maloney has lectured all over the world. You know a lot bowlhead99 but you could still learn more from Mike, Peter Schiff, and George Gammon, who I'd say know a lot more than you.

EdGasketTheSecond

MaxiRobriguez said:

EdGasketTheSecond said:

bowlhead99 said:

Still, I would be interested if you could provide your analysis of, in what sense, prices of equities are (generalising) in an 'inflated bubble'.

I already gave you the evidence bowlhead99 in a previous post. You replied that you weren't going to waste 30 mins of your time on it!

If you want a quick answer as to why markets are inflated then compare the PE of markets now to their historical average. Compare house prices to average earnings, they are also in a bubble.

Maybe, but that doesn't mean there will be a crash or a flight to metals.

Cheap money means asset purchases, which inflates PEs. As long as there is cheap money, and a functioning economy, PEs are likely to remain elevated. Even if cheap money goes away, there's as much chance of asset prices simply holding as they are until PEs return to the mean, as opposed to a quick crash. 

People just need to invest according to the aims and emotional ability, as always. 

I don't disagree with that; prices could get inflated up with huge stimulus (aka money-printing) but that will eventually lead to inflation that the gov't won't be able to control. They are trying to do CPR on a flatlining corpse. Even with all the stimulus since 2008, the US economy has only grown on average by 2% pa.

Thrugelmir

EdGasketTheSecond said:

Yes your loss; that's too bad.

I realise he has his own interests in gold but I don't think that is his primary driver in making the videos or that the information is skewed but if you don't want to watch you will never know. Mike Maloney has lectured all over the world. You know a lot bowlhead99 but you could still learn more from Mike, Peter Schiff, and George Gammon, who I'd say know a lot more than you.

If an idea is highly profitable. Why commercialise it. Better to keep it to oneself. 

EdGasketTheSecond

Thrugelmir said:

EdGasketTheSecond said:

Yes your loss; that's too bad.

I realise he has his own interests in gold but I don't think that is his primary driver in making the videos or that the information is skewed but if you don't want to watch you will never know. Mike Maloney has lectured all over the world. You know a lot bowlhead99 but you could still learn more from Mike, Peter Schiff, and George Gammon, who I'd say know a lot more than you.

If an idea is highly profitable. Why commercialise it. Better to keep it to oneself. 

That depends if your only motivation is greed.

EdGasketTheSecond

US jobless claims 6.6 million last week from an average 350,000

From the BBC:

"In a Bank of America Global Research report on Thursday, analysts warned the US could see "the deepest recession on record", as the unemployment rate hits more than 15% and growth falls 10.4%."

Thrugelmir

EdGasketTheSecond said:

Thrugelmir said:

EdGasketTheSecond said:

Yes your loss; that's too bad.

I realise he has his own interests in gold but I don't think that is his primary driver in making the videos or that the information is skewed but if you don't want to watch you will never know. Mike Maloney has lectured all over the world. You know a lot bowlhead99 but you could still learn more from Mike, Peter Schiff, and George Gammon, who I'd say know a lot more than you.

If an idea is highly profitable. Why commercialise it. Better to keep it to oneself. 

That depends if your only motivation is greed.

Do these individuals operate as charities?