How much longer will this bear market go on for?

Apodemus

Type_45 said:

I'm sure someone will be along shortly to tell us how bullish this chart is for stocks...

That graph is actually quite interesting.  I am holding some long-dated Gilts - T45, which is 3.5% 2045.  Last week, they dropped below par, which is what you would expect from the graph above.  Traditionally the drop in Gilts would have been balanced by a rise in stocks, and vice versa but that of course is not the case at present. 

InvesterJones

Type_45 said:

I'm sure someone will be along shortly to tell us how bullish this chart is for stocks...

Can you explain what the graph is showing - it seems to be saying the yield curve is no-longer inverted. That's a good sign right?

masonic

It shows that low risk investors are probably due some more pain, thanks to the Truss tax. Lending tens of billions of pounds to energy companies while simultaneously trying to reduce taxation means this money will have to be borrowed on the gilt markets, which will push down prices, increase yields and weaken the pound. This will prolong and exacerbate high inflation, even if it reduces the size of the short-term peak.

Type_45

masonic said:

It shows that low risk investors are probably due some more pain, thanks to the Truss tax. Lending tens of billions of pounds to energy companies while simultaneously trying to reduce taxation means this money will have to be borrowed on the gilt markets, which will push down prices, increase yields and weaken the pound. This will prolong and exacerbate high inflation, even if it reduces the size of the short-term peak.

So commodity prices, such as gold, will increase in value relative to GDP and are therefore a hedge?

masonic

Type_45 said:

masonic said:

It shows that low risk investors are probably due some more pain, thanks to the Truss tax. Lending tens of billions of pounds to energy companies while simultaneously trying to reduce taxation means this money will have to be borrowed on the gilt markets, which will push down prices, increase yields and weaken the pound. This will prolong and exacerbate high inflation, even if it reduces the size of the short-term peak.

So commodity prices, such as gold, will increase in value relative to GDP and are therefore a hedge?

All non-sterling assets will protect an investor from a devaluing pound, but but obviously have the potential to fluctuate in value themselves. Gold is currently priced above its long term average, so there is plenty of scope for it to fall, as it has done over the last 6 months in USD. In GBP it has held up in value, but hasn't grown, and was an inferior investment to cash. Commodities are going to be highly sensitive to world events, which are not looking quite as glum now as they did in the recent past.

When your own currency is being turned into an emerging market currency, the traditional thing to do is get exposure to the global reserve currency, and the use of a short dated US treasuries or TIPS fund is an option. Or just hang in there in cash and wait to pick up some equities at an 80% discount within the next few months.

coastline

How much lower ? It's still SP 500 at 3650 the line in the sand. From my last post and the tea leaves I suggested it was nearing oversold around 3950 in the daily timeframe. Those same momentum indicators are showing signs of a rally , SP currently 4050 , and CPI figures out in the US Tuesday. Will they come in lower than last month ? If they do then there's a potential move higher on this news. It's what everybody wants lower inflation. Freight costs lower and Commodity Index lower.

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How much longer will this bear market go on for? - Page 62 — MoneySavingExpert Forum

$SPX | SharpCharts | StockCharts.com

August 31st

image_thumb_3.png (605×642) (equityclock.com)

9th September

image_thumb_3.png (605×642) (equityclock.com)

Earnings forecasts trimmed which will be a big hurdle . Now below $220 from $240. If SP was to rally to 4400 which is only points away then 4400/220 indicates forward P/E of 20. 

Earnings-Estimates-Through-2023-082422.jpg (879×541) (realinvestmentadvice.com)

History suggests it's a bit high.

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Under the bonnet shows many sectors slowing and the main driver Energy as expected. 

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newatc

How much longer will this thread go on for 

anonmoose

I am 80% certain the thread will either end suddenly or continue, I just don't know when. But you have been warned.

masonic

There's been a thread of this type running more or less continually for the last several years at least. The people promoting the view come and go, each certain that this time it's different. There will always be a range of views among a large group of people. Anyone treated to the delightfully extreme views expressed in certain other threads over the weekend will find this one rather bland. I'm sure all of us look forward to reflecting on the views expressed here after welcoming in the new year 2023. Not long to go now.

Prism

Just to join in with the short term nature of some of the posts made in this thread, my investments are all doing pretty well over this last week so I guess the crash is over.

Overall I'm pretty happy with overall recent performance.