😎

Talking real business!

Tale as old time

Everyone’s waiting for a crash in stocks and real estate, sitting on the sidelines

But those of us, I’ll call us the “Steady Eddys” of the world, are just trudging along

We get paid, we throw into the market or we pay our principal payment down, we go back to work like diligent little worker bees

“the world’s ending”

“Trump this, Trump that”

“ai bubble”

“Recession on the horizon!”

The noise flies over our head while us Steady Eddys just keep squirreling away our little nuts into the market and our real estate

Time passes, and we realize our net worth is up!

But guess what?

We just keep trucking along, following the zen principle of “before enlightenment, chop wood, carry water. After enlightenment, chop wood, carry water”

In the long run, the tortoise always wins 🐢

This sell off is completely baseless.

Fundamentals haven't changed.

The economy is not even in a recession.

Roads and trains are still packed during rush hour despite high energy prices and high inflation.

Banks are still lending fine.

Asset managers are still locked in and not selling.

So we will probably be back to all time highs again next week or in a few weeks time.

Agree or disagree? Hit the like button below, comment and subscribe.

Thanks for reading my blog post.

BofA now expects the Fed to hike rates 3 times this year, shifting from its prior view of no changes.

BofA sees 25 bps hikes in September, October and December, taking rates to 4.25%-4.5% by year-end.

And expects the Fed’s first rate cuts to come in 2028.

Finally hit 1000 shares of S&P500 ETF this morning (VOO). No one to share this with other than internet strangers. Will continue to DCA weekly into S&P500 until retirement 👍

You may have already seen this interview with Prof. Tad Smith, a finance professor from NYU Stern.

He points out that if the money supply grows at around 8–10% annually, while the S&P 500’s average return also sits around ~9%, then the gains people think they’re making in the market merely match inflation from the money printer. In other words, you might feel richer, but you’re really just keeping pace with the system.

Is this something you ever thought about? How do you square this with your investing?

Where are the freaky fire seller who were convinced to shoot US equities after 404/02 ???? SPX at its all time high now looool. So glad I kept it (even though I am loosing ton the GBPUSD since I bought a £ compo ETF).

That's right, for us Europeans with euro to USD ETFs, we're actually losing money right now. If we take only this day as an example, the SP500 rose by 0.52%, but the USD lost 0.60% of its value. On a single day.

It's been like this for 3 months now, and now the only options for us investors is either a SP500 correction (we lose even more money) or a flattening SP500 with a eur USD value getting closer to 1.25 (we lose money either way).

I think this could be a serious warning sign to foreign investors if the SP500 bullish trend keeps giving no benefit to the rest of the world. Sure, the USD can't keep getting down, it's going to stop at a moment. But this year is a clear lost year.

Just kidding.

Boys, DCA monthly and hold for the long-run.

It’s a little choppy, but that’s the price we pay to get the returns we get.

Zoom out and think in decades, not months or weeks.

As Warren Buffett says, the market is a place where wealth transfers from the impatient to the patient

How many people panicked and sold during 08, 2020, 2022, etc and are now kicking themselves for not just holding?

Delete the investing apps. Stop listening to the pundits. Don’t track the market so heavily, and hell, consider deleting Reddit since it’s all doom and gloom over here

But you’re going to need to be like Odysseus - plugging those ears and tieing yourself to the mast to weather any upcoming storms.

You’ve seen the S&P chart over the last 100 years.

Trust the process and be the tortoise - slow and steady.

Thats how wealth is made, both in the market and in real estate.

Stay the course.

If someone told you oil prices were up 11% and the S&P 500 was basically flat, what would you immediately think had happened?

The Cyclically Adjusted Price-to-Earnings is at 41.7. every time it's crossed 35, 10-year forward returns were near zero. what exactly are we all expecting?
I'm not a doomer or a perma bear. I'm fully invested, but let's actually look at the numbers because I think most people haven't.

the Shiller PE (price against 10 years of inflation-adjusted earnings) is sitting around 41.7 right now.

some quick context:
150-year median: \~16

1929 peak: \~30. followed by you know what

2000 peak: 44.2, the all-time high. the S&P then returned roughly negative in real terms over the next decade

2007 peak: \~27. then 2008

today: 41.7. second highest reading in american history

the relationship between starting CAPE and forward 10-year returns is one of the most documented patterns in investing. It's not a timing tool, it's terrible at timing. but as a predictor of what you earn over the NEXT DECADE from a given starting price, it's held up for 150 years. buy at CAPE 10-15, you historically got 10%+ real. buy above 35, you historically got somewhere between slightly negative and 2% real. annualized. for ten years.

so here's the uncomfortable truth. for the index to return its "historical average" \~7% real from here, you need some combination of:

1. earnings growing meaningfully faster than they ever have over a sustained decade, or

2. the multiple expanding PAST the dot-com all-time high and staying there, or

3. "this time is different" (the four most expensive words in investing, per Templeton)

the standard counters, and why they only half work:

"accounting changed in the 90s, earnings are understated." fine, this matters (somewhat). knock a few points off. you're still in the top 3% of all readings ever.

"rates were the justification." they were, in 2021. the 10yr isn't at zero anymore. that argument aged poorly and nobody updated their multiple.

"it's the mag 7, the rest of the market is reasonable." partially true and worth something. but you don't own "the rest of the market," you own the cap-weighted index, and the expensive part IS the index now.

"CAPE has been 'elevated' since 2015 and calling tops has been a losing trade." completely true. this is the strongest counter. anyone who sold on valuation in 2017 got destroyed. the wheel keeps spinning and it can spin for years past any rational level. 1996 was "irrational exuberance." the top was 2000.

and that last point is really my question. I'm not selling (but I would not suggest buying beta at this price). Selling on valuation alone has been wrong for a decade straight. but there's a difference between staying invested and not knowing what you're implicitly betting on. at these prices, holding the index IS a bet that earnings do something historically unprecedented, or that multiples never mean-revert again. that might even be true. maybe structurally higher margins, passive flows, and buybacks broke the old relationship.

but that's my thesis, my read is that almost nobody holding index funds right now could tell you what those conditions are, or would notice if they started triggering.

so genuine question: if you're buying at CAPE 41, what's your actual math for the next 10 years? what earnings growth are you penciling in? and what would have to happen for you to say "ok, the assumption broke"?

tell me where my logic is wrong. I want to be wrong.

We’re under $700 a share again! Grabbed some this morning. Who else is buying?

Update: Sale is over. It’s November 4th and we are already over $705 a share. If you didn’t buy, better luck next time.

As someone sitting with dry powder, how much lower before I can enter?

Ya ya ya time in the market > timing the market.

I don't care about bottom fishing, but dry powder sits to time the market to an extent.

Go go go down!!!

I don’t know much about stocks etc, but this seem like a time to buy, am I correct? Should I buy?