Will you invest in U.S STOCK NOW ?

[Letsgodiving]

Originally Posted by logo

Only caution is that an indefinite timeframe is not the financial goal for everyone. If I invested $100,000 in 1998 in the S&P500, it would be worth $246,000 today. However, inflation has also gone up about 65% since 1998, so really my net gain is about $80k. If my profit is $80k over 24 years, sorry but that reward does not balance the risk threshold for me. Safer to just put money in bonds, or even at an hourly wage of $20/hour, this is equivalent to working an extra 3 hours per week, and with zero risk of market dynamics messing up your savings. Me personally, I’d rather sell at $20k loss after year 1 or 2 and move on to some other venture faster (investing is half taking profits, and half minimizing losses).

Now, I recognize most long haul investors are not just putting money in and waiting. They are making monthly contributions as well. So since 1998, the S&P has returned 3.9% annually on average to date (S&P at 1500 in 1998, and at 3700ish today = 3.9% compounded over 24 years). So let’s say I were to have contributed $25,000 plus $1000 per month, every month along the way. My total contributions would be about $315k and my total equity would be about $525k. Adjust for inflation a bit and let’s call it somewhere around $150-200k equivalent in profit. Not bad, but again…. This is 24 years. So I’m “making” an extra $8k year equivalent, but absorbing all the risk with less working capital daily as well.

My point is just to show that a long term horizon is fine, the likelihood is that you will be ahead. But, what is that long term investment being used for is the question. For some it’s just a place to park excess cash, which is the ideal - you will be ahead. For some it’s their retirement, maybe less ideal as you’d really need large regular contributions to add up to something meaningful. How long are you willing to wait and for what size return? These are not the same answers for everyone, completely depend on financial situation and goals.

I’d highlight that long term investing in equities is one strategy to consider, and for those who are using it as a means to compound excess cash then absolutely I think it’s a great option. But similarly if you don’t have tons of cash to diversify, or if you are young in your career/life journey, why not start a business? Invest in real estate? Invest in further education etc? There are many ways to make money work for you, stocks are just one option.

In the current climate of climbing inflation, plus declining equity prices, there’s a double hit. Worth considering what exactly you expect your money to do for you before deciding whether to invest and where to invest imo.

Where are you getting your numbers from? $100k invested in the S&P 500 in 1998 is worth $587,199 today with a CAGR of 7.41% and an inflation adjusted value of $319,112.

[logo]

Originally Posted by Letsgodiving

Where are you getting your numbers from? $100k invested in the S&P 500 in 1998 is worth $587,199 today with a CAGR of 7.41% and an inflation adjusted value of $319,112.

Just looking at the S&P price. S&P500 was 1500 in 1998. Today it is 3700. Over 24 years, that's a compound rate of ~3.9%. A CAGR of 7.41% from the starting of 1500 in 1998 would give you an S&P spot price of >8000 today.

[logo]

Originally Posted by logo

Just looking at the S&P price. S&P500 was 1500 in 1998. Today it is 3700. Over 24 years, that's a compound rate of ~3.9%. A CAGR of 7.41% from the starting of 1500 in 1998 would give you an S&P spot price of >8000 today.

Adding - my numbers do not account for re-investing dividends.

[Letsgodiving]

Originally Posted by logo

Just looking at the S&P price. S&P500 was 1500 in 1998. Today it is 3700. Over 24 years, that's a compound rate of ~3.9%. A CAGR of 7.41% from the starting of 1500 in 1998 would give you an S&P spot price of >8000 today.

You're leaving out dividends.

[espanol]

Originally Posted by logo

In the current climate of climbing inflation, plus declining equity prices, there’s a double hit. Worth considering what exactly you expect your money to do for you before deciding whether to invest and where to invest imo.

Logo, I think you bring up some excellent points in your post. The best investment one can make is in one’s self, and focusing on magnifying one’s personal future earnings will likely be more valuable than what they do with their equities today. Each of the ideas you brought up present opportunities for individuals to earn multiples on their money, and certainly offset deficiencies in one’s investment strategy (short time horizons, erratic temperament toward investing, and speculating).

That said, the dataset you chose is certainly cherry-picked to build a narrative. Not saying the numbers are off (albeit mine are somewhat different), but rather, sensationalized to potentially build a point which statistically, would be an outlier.

Using similar years (since 1972), the following S&P500 trends of the could be noticed:

There have been 0 observed negative 15-year rolling periods (monthly) from beginning of 1972 to 30 Sept, 2022. Meaning, Every rolling 15-year period from 1972 has produced positive performance. In fact, on average investors have earned 10.98% per year during all observed 15-year periods. Best case was much higher, worst case was 3.67% per year. Best and worst case are statistical outliers.

Only ~5% of any observed 10-year period yielded negative results, 95% were positive. Average of all observed periods yielded investors 11.21% per year over the 10-year period. Worst case (Mar 1999-Feb 1999) was -3.45% per year on average. Best case was much higher. Best and worst case are statistical outliers.

For the speculators- even only ~20% of any observed 1-year period yielded negative results, remaining 80% were positive. Average 1-year was 11.86% per year, worst case was Mar 2008 to Feb 2009 at -43.44%

Most simply do not understand mathematics well enough to make sound investment decisions. For those that don't follow investing, or don't know much about it, always set realistic expectations, and understand the data you're being shown.

I could get in a wreck on my way home today, but like investing, it's a risk I'm willing to take.

[glenn_herwig]

I’m short everything in my trading account. Long term I’m always holding ETFs. I believe DBMF is a great portfolio diversifier ETF. It is a hedge fund replication that tracks managed futures funds. Up 30% or so YTD.

My view is Deutsche Bank and Credit Suisse will go under. Could spill into our markets. I’m watching the 200 day moving average on SPY monthly that’s a good long entry to start nibbling. Personally I think AAPL will go to $40 a share. I’ll be buying there until there is some sort of trend change I’m staying short Chinese Large caps, small caps, Financials, long dated treasuries, AAPL, DB.

Maybe I’m wrong. But I’ve always had this view for years that Europe may see bank run due to ECB.

Long story short, I will start buying SPY @ $210 and I’ll continue holding a portion in DBMF in retirement accounts. FTLS isn’t a bad one either for more equity exposure.

[huncho]

Originally Posted by glenn_herwig

I’m short everything in my trading account. Long term I’m always holding ETFs. I believe DBMF is a great portfolio diversifier ETF. It is a hedge fund replication that tracks managed futures funds. Up 30% or so YTD.

My view is Deutsche Bank and Credit Suisse will go under. Could spill into our markets. I’m watching the 200 day moving average on SPY monthly that’s a good long entry to start nibbling. Personally I think AAPL will go to $40 a share. I’ll be buying there until there is some sort of trend change I’m staying short Chinese Large caps, small caps, Financials, long dated treasuries, AAPL, DB.

Maybe I’m wrong. But I’ve always had this view for years that Europe may see bank run due to ECB.

Long story short, I will start buying SPY @ $210 and I’ll continue holding a portion in DBMF in retirement accounts. FTLS isn’t a bad one either for more equity exposure.

if apple drops to 40 the s&p will be much lower than 210 because microsoft, amazon and other mega caps would have equivalent drops. tons of s&p stocks are back to pre covid prices and we're still at 365 largely thanks to apple and the other few that have heavy weight in the s&p holding it up. apple at $40 would require some form of global armageddon that i don't really want to imagine and i highly doubt you'd be buying it at that price because we'd have bigger problems than buying stocks. an 80% drop for a company that big would be unprecedented

the problem with anyone who says they'll buy x stock at some extremely low price is that when that time actually comes most are too afraid to touch it because of what it took to get there. you see this with every market, just look at people who were begging for watches to drop and now a lot have taken 50% hits or are trading at retail and people are afraid to buy or are waiting because they think it'll drop more. same with the s&p, we've had a 20% drop and who wants to buy it right now given the environment? even in crypto where people were begging for 30k btc one more time and here we are at 19k and everyone's gone

maybe you're different and i'm not calling you out, but that's just basic human psychology. hope we don't go that far down this road personally

[Calatrava r]

Too much to digest in many of the posts here, but Warren Buffet says anybody who bets against the US stock market will lose that bet. No matter what happens these publicly corporations are valued in current dollars and have always come back strong when a steep decline occurs. Inflation long term is your friend if you're in the market as the whole process is in current dollars. The only way to beat the street is to dollar cost average into the market index funds. You get more shares when the prices are down and less shares when they are up. All these managed funds, but just a small fraction can beat the index funds year in year out. Most people, otherwise, buy high and sell low. People at retirement age should systematically dollar cost average out of the market to have a 2-to-3-year cash or cash equivalent reserve for withdrawals.

[RyanJ]

If you are bored, here is a pretty cool backtest portfolio visualizer to play with.

https://www.portfoliovisualizer.com/backtest-portfolio

[trandonnghia92]

What now ?

[superdog]

Originally Posted by trandonnghia92

What now ?

No chance. I’m more skeptical than I was when you started this thread.

I love the high interest rates. I’m happy to take advantage of that. Not risking this market that’s been propped up on a pile of toothpicks.

The manipulation that I feel is happening is unsustainable. Just my opinion.

But a recession is not priced in.

I’m waiting a bit longer.

[beshannon]

Originally Posted by trandonnghia92

What now ?

WMT and HD just easily beat earnings, the economy is very strong.

I continue to do what I have always done for the last 50 years, trade, invest and look for opportunity. This is one of the best investing environments since 2009

[superdog]

fact is, no one knows. if they did, they'd be sitting on a mountain of money. and even the guys/gals sitting on that mountain of money or usually wrong more than they are right.

but I tend to agree with these types of articles. and I do think we will see at least another 15% drop before we find a sustainable bottom.

https://www.yahoo.com/finance/news/m...133500318.html

[HHIslander]

Originally Posted by superdog

fact is, no one knows. if they did, they'd be sitting on a mountain of money. and even the guys/gals sitting on that mountain of money or usually wrong more than they are right.

but I tend to agree with these types of articles. and I do think we will see at least another 15% drop before we find a sustainable bottom.

https://www.yahoo.com/finance/news/m...133500318.html

I tend to agree with Morgan Stanley too. With a rapid rise in rates and the removal of liquidity, I find it very difficult to believe that we won’t revisit the lows and likely break them in the 24. The market isn’t exactly cheap at these levels when you factor in that forward PE is likely to vector downward over the next year. That being said, I’m long now and will stay as such until I see something that indicates we are about to reverse course. I don’t see anything like that until the next fed meeting, which could be a party crasher. It’s a traders market and will likely stay that way for at least a couple more quarters. I don’t think we’ll break new highs until 4th quarter next year at the most optimistic earliest. Ymmv, I’ve been wrong many times before.

[superdog]

Originally Posted by HHIslander

I tend to agree with Morgan Stanley too. With a rapid rise in rates and the removal of liquidity, I find it very difficult to believe that we won’t revisit the lows and likely break them in the 24. The market isn’t exactly cheap at these levels when you factor in that forward PE is likely to vector downward over the next year. That being said, I’m long now and will stay as such until I see something that indicates we are about to reverse course. I don’t see anything like that until the next fed meeting, which could be a party crasher. It’s a traders market and will likely stay that way for at least a couple more quarters. I don’t think we’ll break new highs until 4th quarter next year at the most optimistic earliest. Ymmv, I’ve been wrong many times before.

I too am wrong more than I am right, but that is why I find all this so much fun. and why I am so conservative.

truly, I love this topic and love learning about it. I love talking about it. I love everything about it. there is no other topic that I find more engaging.

especially as it is different for everyone. depending on age, current finances, family size, priorities, retirement horizon, risk tolerance etc... things change.

I expect to be at my position in my company for many years to come. but my contract is up in 2.5 years. I am very much preparing now for a potential retirement then (will be 51). that is super duper unlikely, but I have always had a low risk tolerance. so for me, I am much more in wealth conservation and preservation mode rather than wealth building.

I am very happy right now to sit on cash, build more cash, and wait for good opportunities while making a few points in HY savings, CD's and short term bonds. I have also changed my spending habits dramatically. I am very prepared for a long term downturn. And I am getting more prepared every day.

I do think we see a few big slides or one massive bloody day. but either way, once we hit the new year, I am likely going to start buying methodically every month. Even then, I will stay very very conservative.

either way, for the first time in a long time, I am feeling very comfortable with where I am and the plan I have in place and am implementing.