Stock Market Prediction

[sammy the sage]

Originally Posted by reckless

So, far, this is the best analysis written on here recent weeks for making a stock market prediction -- while in the face of the bears and doomsayers.

So in THE end...why the FLAT year for THE entirety of 2018?

Figures do lie and liars figure....

Can tell you one BIG reason....When the boards & Ceo's of companies doing well create BILLIONS of stock options for THEIR benefit....there-by DILUTING the price artificially...

Again tho...what is your take on the FLAT year....???

[lamboguy]

Originally Posted by sammy the sage

So in THE end...why the FLAT year for THE entirety of 2018?

Figures do lie and liars figure....

Can tell you one BIG reason....When the boards & Ceo's of companies doing well create BILLIONS of stock options for THEIR benefit....there-by DILUTING the price artificially...

Again tho...what is your take on the FLAT year....???

housing is way down, and going to go down much further next year. Apple not selling that great now, oil dropping like a rock, and banks are all weak.. markets still going up!

but

there are big gaps underneath this market that need to be filled. the big question is WHEN? this chain letter going to end someday, whish i knew which day!

[Saratoga_Mike]

Originally Posted by reckless

So, far, this is the best analysis written on here recent weeks for making a stock market prediction -- while in the face of the bears and doomsayers.

Did you just quote yourself?

[reckless]

Originally Posted by sammy the sage

1--So in THE end...why the FLAT year for THE entirety of 2018?

2--Figures do lie and liars figure....

3-'Can tell you one BIG reason....When the boards & Ceo's of companies doing well create BILLIONS of stock options for THEIR benefit....there-by DILUTING the price artificially...

4--Again tho...what is your take on the FLAT year....???

Wow, 4 pitches right down the heart of plate.

1--To me, it's been a great year. In Feb. I picked up more Apple and Boeing when the geniuses, such as yourself and in the media, said that stocks were cratering due to Trump's trade war with China. Analysis and commentary too stupid to be funny. They were wrong and I posted it here when that happened.

Closed both of trades with a 60 point gain in Apple and a 25 point gain in Boeing. This year bought Discovery at 21 or so sold at 34. Also had/have 25 point gains this year in Accenture, Master Card and Visa.

Did I tell you I closed a decade old position in Netflix? Yes, the 2nd time it crossed $400, I got out at 415 or so. I even mentioned Netflix as a buy at 160 and you replied with a snarky comment at me. Will you ever learn you don't have the goods to be so snarky?

All these stocks were mentioned by me plenty of times over the years. Look it up.

And every time I generously offered this winning advice, YOU immediately criticised me in your typical snarky manner. What have you contributed to this site, btw?

So, I cannot explain the FLAT market in 2018 because the market wasn't flat at all.

2--Not sure what this means. FLAT market I guess? Well if you bought an ETF on 1-1-18, then it was flat. But if you were an investor who knew a thing or two about investing, crowd think, and media 'expertise' you'd have done better, way better.

I also was the lone contributor to this site that continuously warned all you guys to stay away from ETFs and ignore the media headlines. If you didn't, and you probably didn't, that explains the 'flat' year you claim.

3--Explain something... do you understand what you post? It doesn't seem like you do.

If all these CEOs are flooding the market with stock options, how does that dillute (?) prices 'artificially'?? If prices are dilluted, as you say, then prices should have collapsed, which they did not. I don't understand your logic, especially in the bull market we're in.

4--My take is the market is never up or down and never especially FLAT. Invest in companies and not ETFs and mutual funds, you'll be richer and in a better frame of mind.

Your welcome.

[reckless]

Originally Posted by Saratoga_Mike

Did you just quote yourself?

Yes, since most of you guys rarely ever comment when I post. Plus, my argument for a continuing bull market makes a hell of a lot more sense than what's been posted of late by the perma bears.

I did take my name off the quote since I figured it might annoy some. Did it annoy you?

[Saratoga_Mike]

Originally Posted by reckless

Yes, since most of you guys rarely ever comment when I post. Plus, my argument for a continuing bull market makes a hell of a lot more sense than what's been posted of late by the perma bears.

I did take my name off the quote since I figured it might annoy some. Did it annoy you?

I actually thought it was funny. By the way, congratulations on your many great stock selections over the past two years.

Let's discuss valuations on the S&P 500 by comparing now and 2007.

P/E now: 15x (published 2019 estimates)
P/E then: 15x

P/E is a crude valuation measure as it doesn't take into account leverage or reflect capital intensity. Corporate leverage has increased since 2007, while capital intensity is lower, which is good for free cash flow.

Price/book now: 3.1x
Price/book then: 2.4x

EV/EBITDA now: 11.2x
EV/EBITDA then: 8.9x

EV/sales now: 2.4x
EV/sales then 1.6x

Please note the 2006 metrics look very similar to 2007.

Given current interest rates, you might argue none of the current metrics look out of whack, but certainly not "cheap." But then you examine margins - operating margins now 16.6% vs 13.4% in 2007 and 2006. The 16.6% is a very, very high number (visit the St Louis' FRED database for a long history of OMs). In fact, operating margins have been elevated for a number of years now. In general, you want to pay a lower multiple for fuller margins. If wage gains continue, margins will be pressured (already happening).

While valuations are not predictive of near to intermediate-term stock market performance, if you look at S&P earnings in the context of the margin picture, it's hard to argue the market is "cheap." However, I believe you're a stock picker, and I'm sure you're finding cheap individual names. I wouldn't argue that point.

I believe investors should think about where Fed funds were in 2014, adjusted for QE (around negative 3% -- see Atlanta Fed for calcs). With a 25 bps Dec rate hike, Fed funds will have moved up north of 500 bps. That's a big headwind. It isn't the absolute level of interest rates, but the relative change (see 1957/8 slowdown--low rates moved up modestly and it resulted in a slowdown). Finally, the world's major central banks (on a collective basis) are now contracting their balance sheets for the first time in years. There's no good historical precedent, so who knows on that.

As for the US market, I would avoid companies with heavy EU or Chinese exposure, which takes a lot of companies out of play. And I'd monitor weekly claims, a great high frequency indicator (hooking very, very modestly higher recently), and junk credit, which usually leads claims.

[sammy the sage]

Originally Posted by reckless

Wow, 4 pitches right down the heart of plate.

1--To me, it's been a great year. In Feb. I picked up more Apple and Boeing when the geniuses, such as yourself and in the media, said that stocks were cratering due to Trump's trade war with China. Analysis and commentary too stupid to be funny. They were wrong and I posted it here when that happened.

Closed both of trades with a 60 point gain in Apple and a 25 point gain in Boeing. This year bought Discovery at 21 or so sold at 34. Also had/have 25 point gains this year in Accenture, Master Card and Visa.

Did I tell you I closed a decade old position in Netflix? Yes, the 2nd time it crossed $400, I got out at 415 or so. I even mentioned Netflix as a buy at 160 and you replied with a snarky comment at me. Will you ever learn you don't have the goods to be so snarky?

All these stocks were mentioned by me plenty of times over the years. Look it up.

And every time I generously offered this winning advice, YOU immediately criticised me in your typical snarky manner. What have you contributed to this site, btw?

So, I cannot explain the FLAT market in 2018 because the market wasn't flat at all.

2--Not sure what this means. FLAT market I guess? Well if you bought an ETF on 1-1-18, then it was flat. But if you were an investor who knew a thing or two about investing, crowd think, and media 'expertise' you'd have done better, way better.

I also was the lone contributor to this site that continuously warned all you guys to stay away from ETFs and ignore the media headlines. If you didn't, and you probably didn't, that explains the 'flat' year you claim.

3--Explain something... do you understand what you post? It doesn't seem like you do.

If all these CEOs are flooding the market with stock options, how does that dillute (?) prices 'artificially'?? If prices are dilluted, as you say, then prices should have collapsed, which they did not. I don't understand your logic, especially in the bull market we're in.

4--My take is the market is never up or down and never especially FLAT. Invest in companies and not ETFs and mutual funds, you'll be richer and in a better frame of mind.

Your welcome.

Pretty Sad commentary for some-one proclaimed to be so smart...

1st...2018 1/2/18...24824.01...now...24370.24...it's not only flat it's FRIGGIN down....this thread wasn't about your PERSONAL experiences...yah for you... ...you had a good year....congrats....answer THE question on a whole....you didn't....because you can't/won't....who knows...

2nd...if you've EVEN read ANY of my posts at all THE last...14 years....you''d know that I haven't been in the market for a decade...(not that I don't know about what's going...I just prefer real estate....never self touted that either)...so what you spouted/spewed about about etfs...ect...is DOESN'T pertain to question being asked or debated...just more chest beating on your part...whoopie do...by the way...years ago...I posted about avoiding ETF's as well...

3rd...wrong...they do it in a good market....so as to soak up the gains the every day investor should have been entitled too...again...see #1....if you don't comprehend...I can't help you...

4th...I'll actually agree with you here...if I was in the market...

So Sport...the ball's/call is in your court....why is the market Flat or even down over-all...forget the personal gains you made...

[reckless]

Originally Posted by sammy the sage

Pretty Sad commentary for some-one proclaimed to be so smart...

1st...2018 1/2/18...24824.01...now...24370.24...it's not only flat it's FRIGGIN down....this thread wasn't about your PERSONAL experiences...yah for you... ...you had a good year....congrats....answer THE question on a whole....you didn't....because you can't/won't....who knows...

2nd...if you've EVEN read ANY of my posts at all THE last...14 years....you''d know that I haven't been in the market for a decade...(not that I don't know about what's going...I just prefer real estate....never self touted that either)...so what you spouted/spewed about about etfs...ect...is DOESN'T pertain to question being asked or debated...just more chest beating on your part...whoopie do...by the way...years ago...I posted about avoiding ETF's as well...

3rd...wrong...they do it in a good market....so as to soak up the gains the every day investor should have been entitled too...again...see #1....if you don't comprehend...I can't help you...

4th...I'll actually agree with you here...if I was in the market...

So Sport...the ball's/call is in your court....why is the market Flat or even down over-all...forget the personal gains you made...

My god, what is your point in all this??

I do know that all my financial comments in the past were met with snarky, basically useless comments from you at me.

So for one more time, I cannot tell you why the market is flat in 2018 because I never look at the market as a whole. I actually invested in a few new companies this year ignoring the DOW and S&P being at or near record high levels.

I look at stocks on an individual basis and little else. If you don't do what I do, then good. People should make their own decisions based on their own analysis. I look for companies that are below their intrinsic value and when they hit that price I bite. No secrets, no magic, just good clear thinking and analysis and balls to pull the trigger.

But I'd never have called a person with differing views a dope or smarty pants like I have been called in all these years -- despite the fact that I have been emphatically correct since January 20, 2015 when first posted to buy Apple in the mid 80s. Or later Netflix at 160 and Microsoft at 40. Warren Buffett buys Apple at 50 and 100s points higher and Becky Quick is all beside herself. Thanks, Warren.

Also, I suggested to go all in in November 3, 2016 when the Dow was 17,600. Even if the perma bears are correct now and the Dow drops from 25,000 to 21,000 ... a 3,400 point gain in two years is still a great move. You're welcome.

I'd be god-dammned if I ever buy/sell a stock based on what Sara Eisen says or Joe Kernan says or anyone on business TV say about the direction of the stock market. I use these people as contrarian indicators and little else. They are basically dopes that are solely on TV simply because they are likable in one form or another.

The 1000 point daily swings and big drop in February this year was NOT due to the China/Trump trade war as they said all day every day... stupid and incorrect analysis equals buying opportunity.

I especially ignore those financial experts and gurus that are forced down our throats every day. Their own interests in what they say is usually in full contrast to the best interests of those lambs watching and listening, imo.

Why is all this so hard for you to understand? I have constantly said similar in almost all my posts, all the time, for chrissakes.

I don't proclaim myself to be so smart; it just seems that I am smarter than those that have called me a dope over the years, such as yourself.

So, you tell us, sport: why is the market down/flat in 2018?

[reckless]

Originally Posted by Saratoga_Mike

I actually thought it was funny. By the way, congratulations on your many great stock selections over the past two years.

Let's discuss valuations on the S&P 500 by comparing now and 2007.

P/E now: 15x (published 2019 estimates)
P/E then: 15x

P/E is a crude valuation measure as it doesn't take into account leverage or reflect capital intensity. Corporate leverage has increased since 2007, while capital intensity is lower, which is good for free cash flow.

Price/book now: 3.1x
Price/book then: 2.4x

EV/EBITDA now: 11.2x
EV/EBITDA then: 8.9x

EV/sales now: 2.4x
EV/sales then 1.6x

Please note the 2006 metrics look very similar to 2007.

Given current interest rates, you might argue none of the current metrics look out of whack, but certainly not "cheap." But then you examine margins - operating margins now 16.6% vs 13.4% in 2007 and 2006. The 16.6% is a very, very high number (visit the St Louis' FRED database for a long history of OMs). In fact, operating margins have been elevated for a number of years now. In general, you want to pay a lower multiple for fuller margins. If wage gains continue, margins will be pressured (already happening).

While valuations are not predictive of near to intermediate-term stock market performance, if you look at S&P earnings in the context of the margin picture, it's hard to argue the market is "cheap." However, I believe you're a stock picker, and I'm sure you're finding cheap individual names. I wouldn't argue that point.

I believe investors should think about where Fed funds were in 2014, adjusted for QE (around negative 3% -- see Atlanta Fed for calcs). With a 25 bps Dec rate hike, Fed funds will have moved up north of 500 bps. That's a big headwind. It isn't the absolute level of interest rates, but the relative change (see 1957/8 slowdown--low rates moved up modestly and it resulted in a slowdown). Finally, the world's major central banks (on a collective basis) are now contracting their balance sheets for the first time in years. There's no good historical precedent, so who knows on that.

As for the US market, I would avoid companies with heavy EU or Chinese exposure, which takes a lot of companies out of play. And I'd monitor weekly claims, a great high frequency indicator (hooking very, very modestly higher recently), and junk credit, which usually leads claims.

Mike, thank you for the thoughtful post. We need more of these posts but I understand that most are traders and not individual stock investors.

That OK and not a knock by me. It is what it is and we must all do what we like to do and do what we do best.

But, I lost track of time and I can't finish this now. I will later today or tomorrow.

Thanks again.

[sammy the sage]

Originally Posted by reckless

My god, what is your point in all this??

I do know that all my financial comments in the past were met with snarky, basically useless comments from you at me.

So for one more time, I cannot tell you why the market is flat in 2018 because I never look at the market as a whole. I actually invested in a few new companies this year ignoring the DOW and S&P being at or near record high levels.

I look at stocks on an individual basis and little else. If you don't do what I do, then good. People should make their own decisions based on their own analysis. I look for companies that are below their intrinsic value and when they hit that price I bite. No secrets, no magic, just good clear thinking and analysis and balls to pull the trigger.

But I'd never have called a person with differing views a dope or smarty pants like I have been called in all these years -- despite the fact that I have been emphatically correct since January 20, 2015 when first posted to buy Apple in the mid 80s. Or later Netflix at 160 and Microsoft at 40. Warren Buffett buys Apple at 50 and 100s points higher and Becky Quick is all beside herself. Thanks, Warren.

Also, I suggested to go all in in November 3, 2016 when the Dow was 17,600. Even if the perma bears are correct now and the Dow drops from 25,000 to 21,000 ... a 3,400 point gain in two years is still a great move. You're welcome.

I'd be god-dammned if I ever buy/sell a stock based on what Sara Eisen says or Joe Kernan says or anyone on business TV say about the direction of the stock market. I use these people as contrarian indicators and little else. They are basically dopes that are solely on TV simply because they are likable in one form or another.

The 1000 point daily swings and big drop in February this year was NOT due to the China/Trump trade war as they said all day every day... stupid and incorrect analysis equals buying opportunity.

I especially ignore those financial experts and gurus that are forced down our throats every day. Their own interests in what they say is usually in full contrast to the best interests of those lambs watching and listening, imo.

Why is all this so hard for you to understand? I have constantly said similar in almost all my posts, all the time, for chrissakes.

I don't proclaim myself to be so smart; it just seems that I am smarter than those that have called me a dope over the years, such as yourself.

So, you tell us, sport: why is the market down/flat in 2018?

So you've done well...we got that...in individual stocks....got that....but then you call for the market over-all to keep going up like a rocket....that part you WERE WRONG for the year... I just stated a FACT....that is all...

By the way...I gave my reason's and made my call way back in March/April on THIS VERY thread...was right too...good luck going forward....and I have no hard feelings... I

[Saratoga_Mike]

Originally Posted by reckless

Mike, thank you for the thoughtful post. We need more of these posts but I understand that most are traders and not individual stock investors.

That OK and not a knock by me. It is what it is and we must all do what we like to do and do what we do best.

But, I lost track of time and I can't finish this now. I will later today or tomorrow.

Thanks again.

I spend 95% of my time on individual stocks.

[Saratoga_Mike]

Originally Posted by sammy the sage

So you've done well...we got that...in individual stocks....got that....but then you call for the market over-all to keep going up like a rocket....that part you WERE WRONG for the year... I just stated a FACT....that is all...

By the way...I gave my reason's and made my call way back in March/April on THIS VERY thread...was right too...good luck going forward....and I have no hard feelings... I

While I vehemently disagree with the poster on Trump, I think you're way off base with him. Sure there's a little "I was right," (you've never done that? I've never done that?) but he seems like a fairly genuine, not-over-the-top poster.

You prefer real estate? Residential? Commercial? Why? I believe the board owner will be okay if we discuss real estate here. If not, I'm sure he'll just move your post and we can respond.

[Saratoga_Mike]

Just out --- Initial jobless claims for the week ending December 8 dropped by 27,000 to 206,000.


Very nice improvement after recent weakness, not sure if any one-time factors are impacting the number.

[Saratoga_Mike]

Here are some other interesting stats - percentages represent equity holdings as a percentage of household assets.


Peaks since 1965 are as follows:


1968: 53%

1999: 60%

2007: 52%

Now: 55%

Median since 1965: roughly 40%
Low since 1965: approx. 22% (early 80s)

I have a chart, not the source data, so all numbers are estimates.

Source: Haver Analytics

[sammy the sage]

Originally Posted by Saratoga_Mike

While I vehemently disagree with the poster on Trump, I think you're way off base with him. Sure there's a little "I was right," (you've never done that? I've never done that?) but he seems like a fairly genuine, not-over-the-top poster.

You prefer real estate? Residential? Commercial? Why? I believe the board owner will be okay if we discuss real estate here. If not, I'm sure he'll just move your post and we can respond.

I don't have a problem him with in general...I just don't like comparing apples/oranges...ie...individual vs market as whole...which is what the discussion was about...

I like to buy real estate just in front of an area that is going to expand...in a 2 to 5 year time frame...sometimes you get it....sometimes you don't...just like everything else...how-ever...good property is good property...and they ain't making any more....so it might take a bit longer than anticipated...sometimes...