My Feelings About This Market...

My passion is to look for low risk high reward investment opportunities. I apply my accounting skills and investing experience in order to find interesting investment ideas that offer the possibility to lead me towards my financial goals.
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My 5 Core Stock Market Investing Beliefs

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Always keep in mind: “Investing involves risk of loss”

[amoult]

Sven, I'll give you an investment recommendation for free; a new mic is where the value is at

[darnellcapriccioso]

It is a government inspired crisis this time. The Treasury have to sell Bonds to cover the trade imbalance and the government spending imbalance. In order to sell them they have to raise interest rates and the old long-term, low risk, low interest, AAA investments (including Treasury Bonds), held by the banks (often due to government regulatory policy), become next to worthless. The next milestone is the 15th when the government issue a new batch of Bonds. I have approximately 350k stagnant in my portfolio that needs growth. What is the best way to take advantage of this downturn?

[simonbad]

My advice to new investors: Buy good companies stocks and hold them as long as they are good companies. Just do this and ignore the forecasts and market views which are at best entertaining but completely useless. I’ve only ever saved($510, 000), never invested but want to start.

[klausfriedrich]

Question- Why should average PE of (e.g.) 1880 to 1980, based on completely different companies, international regulations etc., be indicative of what to expect in 2023?

[polimenov]

Great content as usual, Sven! Just a friendly note to add - the sound cracks in recent videos are a bit annoying, might be something to look into :)

[TomasVbcn]

As Burry said - the greatest "Buy The F Dip" generation of all time. It is crazy but it does worry me that sitting on too much cash might lead to -10% while the market goes up 100% and then crashes 40% and then we can choose to invest our depreciating cash at 120% of today's inflated valuations.

[alvarosalazar]

So according to the 1st graph the last time it was "safe" to invest in equities was in 2010 for a value investor. Is interesting that since the start of the internet era, the s&p has been mostly "expensive"

[simba]

Let me guess: everything is expensive. We should wait for the s&p 500 to go from 4.000 to 100. When that happens, we can start investing.

[RanNaot]

Thank you Sven, I think buybacks must be taken into account when. You inspect a company return to it's investors, not only dividends.

[ericscott]

Palintir just doubled and I’m stuck holding quality stocks that not doing shit

[tzvassilev]

Thank you for your analysis. Your main argument is grounded in the perception that the PE ratio of the S&P 500, currently at 29, compared to its historical average of 17, presents a discouraging risk-reward scenario for investing in stocks. However, if one were to follow this reasoning, it would imply that the stock market would have been unfavorable for the majority of the time since the 1990s. This is clearly not the case, as several other factors can influence market attractiveness and potentially counterbalance a high PE ratio.

Firstly, you mention high nominal interest rates as a potential pressure on stocks. While high interest rates can indeed exert pressure on stock prices, this effect becomes significant primarily when real interest rates are high. Presently, however, real interest rates are not particularly high. If you consider the current level of nominal interest rates against inflation, you'll find that there hasn't been a dramatic shift in real terms.

Next, let's look at businesses themselves. In a scenario of high interest rates and inflation, it's not necessarily true that their stock valuations would decline. On the contrary, various factors could actually propel nominal stock prices upwards.

For instance, nominal valuation metrics like earnings, profits, and company assets tend to rise in such a scenario. Real wages have been declining across many industries, and this trend can actually bolster profit margins by reducing labor costs.

Additionally, the repayment of old debt becomes easier in an inflationary environment, as the debt was incurred when interest rates were lower and its real value has since diminished.

Finally, we must consider the rapid advances in technology. The adoption of AI applications across industries enables companies to enhance productivity and efficiency, often with fewer personnel. This can lead to increased profit margins, thereby offsetting any negative impacts from the economic climate.

In conclusion, while PE ratios are a useful tool in investment analysis, they should not be viewed in isolation. Other macroeconomic and industry-specific factors must be considered in order to accurately assess the risk-reward balance in stock market investing.

[patite]

Would it be possible to improve the audio quality of your videos? Thank you

[MirinBrah]

You are missing two points Sven

First being that technological improvement is an acceleratory force and compounds at least according to scholars. This itself will mean that innovations will be commercialized which we today do not know or understand. Like doing projections in 1989 for the 90s and then the internet comes along.

Second is also buybacks. If buybacks wasn't a thing the div yield would be much much higher.

Pozdrav

[jeffberg]

Jamie Dimon has recently said that things could get a lot more volatile than what we have experienced in the recent past as we head into Quantitative Tightening. Most people seem to believe that we are currently experiencing QT. But I would characterize the Fed's recent policy as "Quantitative Idling (with occasional light taps on the gas peddle)". we haven't come close to stepping on the break peddle yet because the Fed is to afraid of the systemic risk of the destruction of financial institutions' balance sheets if they had to mark their assets to market with a higher discount rate. So far hope, optimism, and reflexivity have been able to offset exogenous world events so that the Fed can keep Idling.

[dylancunningham]

I've definitely become a passive investor over time, I invest the same amount of money into an index fund every Monday. So far it's been working well for me.

[musabbir]

Inflation is still high. Makes sense that asset prices are adjusting. There is a reason most people tend to believe that the best hedges to inflation are assets.
Current interest rate is still quite a bit lower than historical rates. Market has a lot of liquidity due to government selling bonds to fund deficit.

Market going up is just an after-effect. If you look at the inflation adjusted graph of S&P 500 price over time, it is actually down and not flat.

Market just needs to stay flat or slightly up for a few years - the inflation adjusted value of it would be 15-30% lower than 2021 peak. No need to for a classic crash.

[philhosking]

Interesting content and viewpoint as always Sven. I wonder if you might be a little pessimistic on the overall market though. S&P 500 high PE and low div payout is so heavily influenced now by big tech. Forward PE of IT sector within S&P 500 is 26. Of overall S&P 500 its 18 and if you remove IT sector it is 16. I couldn't find the numbers for divs but I guess would it would follow a similar pattern. So if you are invested outside of IT into a broad portfolio of S&P 500 companies the future may be brighter than you project.

[mariusbagd]

Thank you Sven for the content, but I think that I heard this from you a few times already. Would be great to dive into particular stocks which are worth buying now.

[therighteous]

I understand judging by PE, but I don't agree to judging by div yield. Compared to history, companies and shareholders have discovered a much more tax efficient way of getting returns, which is buybacks.

[thatpointinlife]

So the highest P/E ever for the S&P 500 was 123.73 in May 2009, a.k.a., the best possible time in most of our lifetimes' to buy the S&P index when it was trading around $1, 000?