Fear & Greed

trysail · Aug 21, 2015

The ratio of market capitalization to GDP

As of 12/31/14
(S&P 500: 2058.90 )

http://research.stlouisfed.org/fred2/graph/fredgraph.png?g=1axv

4est_4est_Gump · Aug 21, 2015

What goes up, must come down...

Yellin and the Feds

trysail · Aug 24, 2015

With the dividend on the S&P 500 at $43.667, its most recent book value of $729.29 and normalized earnings of roughly $108, there's plenty of room for further declines.

That's not a prediction. I don't predict the stock market (or interest rates or petroleum prices). When you hear someone predict the future course of the stock market, run away as fast as possible— you're listening to someone who is either a fool or a crook.

In the 1970s, the S&P 500 traded at book value, at a dividend yield exceeding 6% and at close to 6× earnings.

LouCfer · Aug 24, 2015

didya read my SALT and OIL thread?

you would like it!

trysail · Aug 25, 2015

The Federal Reserve's artificial suppression of interest rates is irresponsible. It is distorting markets, encouraging excessive risk-taking and is punishing savers, the liquid and the prudent.

OMAHA, Neb., May 2 (Reuters) - Billionaire investor Warren Buffett said on Saturday that stock prices would look expensive if interest rates normalized from their ultra low levels.

"If we get back to normal interest rates, stocks at these prices will look high," said Buffett, speaking at the annual Berkshire Hathaway meeting of his sprawling conglomerate Berkshire Hathaway...

trysail · Aug 25, 2015

Code:

Current S&P 500:													
	1893.21												
													
Current S&P 500 Dividend:													
	$43.67 												
        Yield:	2.31%												
	Earnings Growth Rate:	6.00%	6.00%	6.00%	6.25%	6.25%	6.25%	6.50%	6.50%	6.50%	
													
  Current S&P 500 (Operating) EPS:			
                        2015	$97.45	$108.25	$115.01	$97.45	$108.25	$115.01	$97.45	$108.25	$115.01	Base Year
			2016	103.30	114.74	121.91	103.54	115.01	122.20	103.79	115.28	122.49	
			2017	109.50	121.62	129.23	110.01	122.20	129.84	110.53	122.78	130.45	
			2018	116.07	128.92	136.98	116.89	129.84	137.95	117.72	130.76	138.93	
			2019	123.03	136.66	145.20	124.19	137.95	146.57	125.37	139.25	147.96	
			2020	130.41	144.86	153.91	131.96	146.57	155.73	133.52	148.31	157.58	
													
        6 Year Pretax Total Return,													
	   if Terminal P/E is:							CAGR					
		18	------	6.0%	7.8%	8.9%	6.2%	8.0%	9.1%	6.4%	8.2%	9.3%	
		16	------	3.9%	5.7%	6.8%	4.1%	5.9%	7.0%	4.3%	6.1%	7.2%	
		14	------	1.7%	3.5%	4.5%	1.9%	3.7%	4.7%	2.1%	3.9%	4.9%	
		12	------	-0.8%	0.9%	1.9%	-0.6%	1.1%	2.1%	-0.4%	1.3%	2.3%

JohnnySavage · Aug 25, 2015

As the world's largest borrower, higher interest rates would be a disaster for the US budget.

The needs of the many outweigh the needs of the few. - Spock c. 2355

trysail · Aug 25, 2015

JohnnySavage said:
As the world's largest borrower, higher interest rates would be a disaster for the US budget.

The needs of the many outweigh the needs of the few. - Spock c. 2355

...In a higher phase of communist society, after the enslaving subordination of the individual to the division of labor, and therewith also the antithesis between mental and physical labor, has vanished; after labor has become not only a means of life but life's prime want; after the productive forces have also increased with the all-around development of the individual, and all the springs of co-operative wealth flow more abundantly—only then can the narrow horizon of bourgeois right be crossed in its entirety and society inscribe on its banners: From each according to his ability, to each according to his needs!

-Karl Marx

JohnnySavage · Aug 25, 2015

So even though the entire world is willing to loan the US Government money for nothing... the tax payers should chip in a few points? Very magnanimous of you.

Ishmael · Aug 25, 2015

JohnnySavage said:
So even though the entire world is willing to loan the US Government money for nothing... the tax payers should chip in a few points? Very magnanimous of you.

Yes they should. The government is NOT the economy and a robust economy is good for all parties. The Fed has shot it's wad, there is nothing left in their quiver and the market is going to adjust, and soon.

The Fed has abandoned sound economics in order to treat the markets, and the citizens, as lab rats in their grand theoretical experiments.

Ishmael

JohnnySavage · Aug 25, 2015

Taking money out of the pockets of the tax payers and putting it in the pockets of the "investor" class is a very Republican policy.

trysail · Aug 25, 2015

The Federal Reserve's artificial suppression of interest rates is irresponsible. It is distorting markets, encouraging excessive risk-taking and is punishing savers, the liquid and the prudent.

OMAHA, Neb., May 2 (Reuters) - Billionaire investor Warren Buffett said on Saturday that stock prices would look expensive if interest rates normalized from their ultra low levels.

"If we get back to normal interest rates, stocks at these prices will look high," said Buffett, speaking at the annual Berkshire Hathaway meeting of his sprawling conglomerate Berkshire Hathaway...

...and artificially inflating stock prices by suppressing interest rates isn't ripping off John Q?

...and artificially inflating housing prices by suppressing interest rates isn't ripping off John Q?

...and punishing savers (a/k/a the liquid and the prudent) by suppressing interest rates isn't ripping off John Q?

Ishmael · Aug 25, 2015

JohnnySavage said:
Taking money out of the pockets of the tax payers and putting it in the pockets of the "investor" class is a very Republican policy.

So which is it sparky? You can't have it both ways. The 'investor' class is getting hugely wealthy off the 'cheap' money policy that currently exists.

Ishmael

JohnnySavage · Aug 25, 2015

If the Fed can sell bonds for 1%, why should they sell them for 2, 3, 4 or more %????

That's the free market at work.

No charge for the basic economics lesson.

JohnnySavage · Aug 25, 2015

Is "sparky" some 1950s era insult

eyer · Aug 25, 2015

JohnnySavage said:
Taking money out of the pockets of the tax payers and putting it in the pockets of the "investor" class is a very Republican policy.

Taking money out of the pockets of the tax payers and putting it in the pockets of the single largest "abortion" provider in the nation is a very life-hating progressive policy.

eyer · Aug 25, 2015

JohnnySavage said:
If the Fed can sell bonds for 1%, why should they sell them for 2, 3, 4 or more %????

That's the free market at work.

No charge for the basic economics lesson.

You really should just stick in the Twatterville thread where you actually hold any relevance on this Board...

...perfesser.

trysail · Aug 25, 2015

JohnnySavage said:
If the Fed can sell bonds for 1%, why should they sell them for 2, 3, 4 or more %????

That's the free market at work.

No charge for the basic economics lesson.

Good lord.

You do know what the Fed funds target rate is, don't you?

You do know how that rate is established and maintained, don't you?

You do know about the Fed's open market operations, don't you?

You do know about the term structure of interest rates, don't you?

JohnnySavage · Aug 25, 2015

trysail said:
Good lord.

You do know what the Fed funds target rate is, don't you?

You do know how that rate is established and maintained, don't you?

You do know about the Fed's open market operations, don't you?

You do know about the term structure of interest rates, don't you?

You do know the Fed has no problem selling the instruments at the current rates, don't you?

Answer the question you quoted.

trysail · Aug 25, 2015

JohnnySavage said:
You do know the Fed has no problem selling the instruments at the current rates, don't you?

Answer the question you quoted.

The Federal Reserve has become a serial bubble creator.

OMAHA, Neb., May 2 (Reuters) - Billionaire investor Warren Buffett said on Saturday that stock prices would look expensive if interest rates normalized from their ultra low levels.

"If we get back to normal interest rates, stocks at these prices will look high," said Buffett, speaking at the annual Berkshire Hathaway meeting of his sprawling conglomerate Berkshire Hathaway...

Fed Funds Rate minus 12-month trailing rate of inflation (CPI) 1955-2015

https://research.stlouisfed.org/fred2/graph/fredgraph.png?g=1ABv

Fed Funds Rate minus 12-month trailing rate of inflation (CPI) 2000-2015

https://research.stlouisfed.org/fred2/graph/fredgraph.png?g=1GJr

Ratio of Market Capitalization to GDP

https://research.stlouisfed.org/fred2/graph/fredgraph.png?g=1AVG

JohnnySavage · Aug 25, 2015

I guess the question was too hard. Let me rephrase and simplify:

Why should the Fed pay a higher rate then the market demands?

trysail · Aug 25, 2015

JohnnySavage said:
I guess the question was too hard. Let me rephrase and simplify:

Why should the Fed pay a higher rate then the market demands?

Why do you find it so hard to comprehend that the Fed sets rates?

JohnnySavage · Aug 25, 2015

trysail said:
Why do you find it so hard to comprehend that the Fed sets rates?

And if the people/institutions refused to buy treasuries at the current rate, the Fed would have to bump up the rate. That's not the case, and it's a good thing for our budget.

Still no answer though... I think you just don't want to go on record as supporting government hand-outs in the form of unnecessarily higher interest rates. That's fine, but don't shy away from your position.

trysail · Aug 25, 2015

JohnnySavage said:
And if the people/institutions refused to buy treasuries at the current rate, the Fed would have to bump up the rate. That's not the case, and it's a good thing for our budget.

Still no answer though... I think you just don't want to go on record as supporting government hand-outs in the form of unnecessarily higher interest rates. That's fine, but don't shy away from your position.

You are guilty of ascription.

Do you know how the Fed sets rates?

JohnnySavage · Aug 25, 2015

I give up.

Fear & Greed

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