Q: Why haven’t you asked for a meeting with the president?
A: I’ve never asked for a meeting with any president and I never will.
— Jerome Powell, Chair of the Federal Reserve
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RE: fax machines: I thought a good chunck of our COVID response relied on fax machines and good old fashioned scales…
I’ve seen places where, nowadays, faxes exist but are managed through an e-mail server (probably running on one of those unupdated 2012 machines), combining the worst of both worlds.
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As Abs said there’s some dip to buy, especially if you have a long term horizon.
Unclear if more dip is coming, though. Volume is fairly low, a lot of the dip was bought and sold already, so if you’re purposefully trying to time the market (I am) it appears to be late for that right now, with potentially big news coming up. Generally a good rule of thumb is not to trade 3-5 days around expected news.
If the supposed talks with China tomorrow get something good then the market will rip up. Trump again said “time to buy” yesterday, hopefully he’ll eventually go to jail for market manipulation and insider trading.
IMO, there was not so much of a dip to buy. Stocks just went from wildly over-valued to slightly less over-valued.
I also run an automated screener which has not yielded much the last months. Currently it shows only:
- PHM, NVR - Homebuilders I’d already sold out of and would look to falling into deeper value before buying
- QCOM
- PGR - I already have a full allocation to
20% on indices is a pretty solid dip!
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If stocks go up by 5x on the next Trump tweet tomorrow only to be proved it is false and drop back 50%, then that’s a 50% dip, but still 250% above today’s already high prices.
Comparing price history doesn’t show value. You have to relate the stock price back to fundamentals.
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I understand what you’re saying, and it’s fair, but that’s why I qualified with “indices”.
Looking at it from a different angle: we know the S&P500 has been overvalued for a long time, I don’t remember what number it should hit to be fairly valued, but maybe it’s around 3000-3500 (I really can’t recall)? With that perspective then yes, not much of a dip right now, but if the fair valuation is never reached then it was a decent dip.
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S&P 500 is not overvalued. Some people think it is overvalued, others think it is rightly valued.
There is a difference between high price vs. overvalued.
I think we should assume all markets are rightly priced & all will give similar long term returns minus costs & taxes.
Huh? If you remove the Mag7 it’s not overvalued, but they’re part of the index and bring its CAPE and P/E fairly deep into overvalued territory.
Edit: we can hypothesize, and I have before, that the CAPE and PE ratios will need to be adjusted upwards to account for a new normal; change is not bad, but with the current known metrics most seem to agree with, the S&P500 is overvalued.
Or to put it as my brother who’s a trader and far more numerate than me said back in 2023 “the market is pricing in everyone owning three Teslas, five iphones, all bought on amazon, all running googlemaps and with nVidia chips, posting on facebook and instagram 24/7”. Dunno where’s Microsoft in all that but you get the analogy!
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Well the point I am trying to make is that if we feel market is overvalued doesn’t always mean it is
It’s like saying we know more than everyone else when we actually don’t 
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That’s why I leaned on CAPE and PE, and noted they are historical metrics.
In sports there’s a common phenomenon where “everyone” says “XYZ can’t be done” (eg 100m sprint in 10 seconds), yet when someone breaks the record it’s common that more people follow to match their performance, at which point there is now a new normal.
Maybe that’ll happen and the big brainz will agree that PE of 25 is fair value, and look back and say “yeh the S&P500 was fairly valued in 2025”, but that’s retrofitting (as economics and finance are not sciences!).
To be honest, I am not sure if you and me don’t come from a different market with paradigmns that just no longer apply these days.
Historically, stocks were held by a combination of Investors that understood themselves to be entrepreneurs, plus banks and hedge funds that arbitrated away any anomaly. In such environment, stock prices were grossly correlated with EPS and Growth thereof.
With the shift to passive investing, the number of people that just don’t care about the entrepreneurial side of things has increased. By now, it probably just doesn’t matter anymore for something like 20-30% of investments. Especially in the US, the approach is that no matter where the stock market was, people as part of their 401 just invest every month. Valuations, EPS, RoE, … just doesn’t matter. At the same time, both Hedge Funds and Investment Banks got a bit of a beating. They are now in the situation where the can no longer dominate business - and they realize that the market was completely irrational. It doesn’t help when you know a share had zero intrinsic value, if the hords throught their index funds still buy it like crazy, the share will go up no matter what.
This leads to a situation where Shares overall become comparable to BTCish ponzy schemes. Just hope to find someone later on that buys (whatever it may even be) at a higher price later on. And this model works as long as people keep having a balance surplus that they can invest.
Investment Banks, Hedge Funds, … can probably surpriess shares for a few days and squeeze some money out of those people that sell. But latest after 1-2 months, they just can’t keep the downwards pressure anymore as they realize there was massive buying both from re-balancing of passive multi-asset funds as well as new inflows.
So what does this mean? Markets will keep going up no matter what, there may be some smaller dips that however proof to be “buy-the-dip” opportunities. These opportunities serve as a self-fulfilling prophecy so that there won’t be any crashes anymore. This continues until either of two things happens:
- we face a material recession with major unemployment and durress, so that joe sixpack no longer was a net buyer but became a net seller of shares (like in GFC or a prolongued stagflation)
- we face some systemic crisis that leads to massive bancrupcies and/or write-off of assets so that Institutionals need to massively sell their positions
If neither of this happens, and at the moment I don’t see any indications of this, we will have some short term volatility and maybe 10-20% over 2-3 months; but we won’t face a propper bear market. In these times, valuations can easily go to a PE of 200-300 for the entire S&P 500. Unless people are in distress and turn to net sellers at a large scale, PE’s will just keep going up and up and up.
What does this mean? Keep playing but do it in a multi-asset manner. This forces you to continuously realize some of these artificial, inflated gains in the market. So that when the inevitable happens (which could only be in 10-20 years)… you at least still keep some assets asside. The important thing is - keep your non-share assets in some other assets that don’t just get flodded by the stupid crowds.
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One thing that i learnt recently is that a lot of trades these days are made based on inflows data and not based on fundamentals. So basically if the money is pouring in the markets or going out is the key info to decide how to trade.
This is a bit worrisome because as @TeaGhost , it kind of becomes a ponzi scheme where real returns are becoming smaller but people still pay more for the stocks because they believe they can sell to someone else.
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yep, I didn’t articulate this propperely - was a bit in a rush, but I think we have as similar thinking here. If this hypothesis was actually true, we will now face shares that go to the moon. This until Joe Sixpack ends up in a big mess. No Joe Sixpacks beeing fired and queuing up for soup, stock market keeps going up. And in these times - it doesn’t help if you hold Value shares or whatever. Everything goes up, and once Joe Sixpack sells, everything goes down. This until prices are so ridiculously cheap that Investment Banks and large speculators take up debt to buy businesses for nothing. But they will need to have the conficende of doing this with debt because by this point in time, they will have no spare equity (unlike maybe BRKB)… so the thing is, Stock Buying time only comes once we are at a MARKET P/E of 5-8. But the question is if this will come in 6 months or 25 years. We just don’t know, and I don’t know if the havoc caused by Trump will be big enough to cause mass unemployment in major economies…
The man has said it: “you better go out and buy stock now, it will go straight up like a rocket ship”. What a timeline to be alive.
Constant media
High unemployment historically was an especially good time to buy stocks.
But then always was historically a good time to buy stocks.
My natural instinct would be run towards the opposite direction, and definitely my existing plan is to wait it out until at least end of June, or likely for a few months more months to get more solid clarity in the world, but the little devil in my ear tells me Trump capitulated very fast the first time the markets (the bond market specifically, with four arms, Friday 13th mask and baseball bat with nails) got spooked, where the “Trump put” may be a thing?
Jerome Powell would have a purple one 
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Personally I think all this is very bad for the US economy because the government is becoming ridiculous.
Is this really how the biggest economy of the world should operate?
Friends & family are given key posts
Meme coins to get dinners with president
Everyone around president just praise
Full propaganda for every small or big thing
I understand there is a bit of showmanship here but is this really a right person for this job?
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