Stock market is a "fully-fledged epic bubble" and will burst
Discussion
Burwood said:
Using vague definitions of value and growth
Dimensional tend to use price to book. Others use different measures. Burwood said:
Dimension seem great at producing research but they can't seem to perform better than any other asset manager
They are pretty well respected at picking up the premiums that have (historically) given greater returns over the long run. And to be fair to them, over the medium-long term (couple of decades), they have held up well against a tracker (which tends to migrate towards the top of the pack over time due to survivorship bias etc).
https://alphaarchitect.com/2019/01/the-failure-of-...
Burwood said:
Investors are better served realising the undeniable fact that comparing today to 1920's or even 1970s is a waste of time and anyone who does it is merely trying to support a bias.
Investors are one of the reasons that the value premium is believed to exist (behavioural - the other reason is that you are taking more risk and being compensated for that). Maybe investors have modified their behaviour which prevents them from buying lottery stocks, chasing recent winners etc, or maybe they haven't.Burwood said:
What matters is relative performance over the 'investors' time horizon
Typically multiple decades in my world. Burwood said:
Over the past several decades growth has outperformed value (despite the terms being nuanced)
I've not seen that - can you post a link please.Certainly since 1974, you can see that value (11.24) has outperformed the overall world index (10.66) and growth (9.92), and that's in spite of the crazy last decade. (Value in this case being measured on book, forward earnings and div yield).
https://www.msci.com/documents/10199/25465a5a-d52c...
https://www.msci.com/documents/10199/a20000f5-7518...
Burwood said:
A blended approach may be best?
Yep, certainly a case for that if you are unwilling to accept long periods of underperformance relative to the overall market (as has been the case with value over the last decade."The US Bureau of Labor Statistics reported this Tuesday that inflation, as measured by the Consumer Price Index (CPI), decelerated to 8.3% on a yearly basis in August from 8.5% in the previous month. The reading was slightly above consensus estimates pointing to a decline to 8.1%.
The Core CPI, which excludes volatile food and energy prices, rose by 0.6% in August (0.3% anticipated) and climbed to 6.3% on yearly basis, up from 5.9% in July and 6.1% expected."
The Core CPI, which excludes volatile food and energy prices, rose by 0.6% in August (0.3% anticipated) and climbed to 6.3% on yearly basis, up from 5.9% in July and 6.1% expected."
Any notion that the markets price anything in anymore seems dead to me. They simply won’t acknowledge inflation is an issue, until it is. They ignored all the stuff the Fed was saying before Jackson Hole. Then they listened for about 5 mins, then went straight back to thinking inflation wasn’t going to be as big a problem again.
BorkBorkBork said:
Any notion that the markets price anything in anymore seems dead to me. They simply won’t acknowledge inflation is an issue, until it is. They ignored all the stuff the Fed was saying before Jackson Hole. Then they listened for about 5 mins, then went straight back to thinking inflation wasn’t going to be as big a problem again.
Exactly.‘The market’ is all participants acting together.
The closest comparator to risk response is a herd of cattle. All calm until it’s not.
All is calm. And the ability to sense risk has been blunted by a decade of CB intervention at every down market.
Yes yes, *some participants might be sophisticated, yadda yadda.
But the market is the sum of *all participants.
It’s kinda exciting and interesting watching it all move down, the ebbs and flows of positivity and how it effects posts on here and the headlines on financial sites etc.
BorkBorkBork said:
Any notion that the markets price anything in anymore seems dead to me. They simply won’t acknowledge inflation is an issue, until it is. They ignored all the stuff the Fed was saying before Jackson Hole. Then they listened for about 5 mins, then went straight back to thinking inflation wasn’t going to be as big a problem again.
No they didn’t. The market reacted then to the data at the time. Today they reacted again, pricing in the ramifications. The interesting bit is that many businesses will thrive regardless. Opportunity knocking or glass half empty. Hilarious there are comments about 1929. Have ‘you’ forgotten the 30 other corrections? Phooey said:
If it’s any consolation, a big selling day is usually followed by a big buying day so too soon to call it anything other than an overreaction… 
It’ll be interesting to see what tomorrow brings. You can only imagine huge sell offs in Asia and then Europe. And the US might bounce back a little, but this is all trending as Michael Burry predicted. These dips and rallies are consistent with historic movements before huge crashes.The underlying fundamentals are shockingly weak, and higher rates and QT is going to have a much bigger impact that some think. Consumer debt in the US spiked this year, after all the free covid money ran out, people still want to spend. And they’re taking on debt to do it.
Burwood said:
BorkBorkBork said:
Any notion that the markets price anything in anymore seems dead to me. They simply won’t acknowledge inflation is an issue, until it is. They ignored all the stuff the Fed was saying before Jackson Hole. Then they listened for about 5 mins, then went straight back to thinking inflation wasn’t going to be as big a problem again.
No they didn’t. The market reacted then to the data at the time. Today they reacted again, pricing in the ramifications. The interesting bit is that many businesses will thrive regardless. Opportunity knocking or glass half empty. Hilarious there are comments about 1929. Have ‘you’ forgotten the 30 other corrections? BorkBorkBork said:
Burwood said:
BorkBorkBork said:
Any notion that the markets price anything in anymore seems dead to me. They simply won’t acknowledge inflation is an issue, until it is. They ignored all the stuff the Fed was saying before Jackson Hole. Then they listened for about 5 mins, then went straight back to thinking inflation wasn’t going to be as big a problem again.
No they didn’t. The market reacted then to the data at the time. Today they reacted again, pricing in the ramifications. The interesting bit is that many businesses will thrive regardless. Opportunity knocking or glass half empty. Hilarious there are comments about 1929. Have ‘you’ forgotten the 30 other corrections? 
dmahu said:
Remarkable drop for a 0.3% miss on the expected number. The inflation read even fell.
I am not too worried as it will all jump back up at the first glimpse of a slowdown in rate rises. We’ve been through this cycle a handful of times already this year.
RightI am not too worried as it will all jump back up at the first glimpse of a slowdown in rate rises. We’ve been through this cycle a handful of times already this year.
Yes it will go up again
But how far will it fall first or after
Burwood said:
BorkBorkBork said:
Any notion that the markets price anything in anymore seems dead to me. They simply won’t acknowledge inflation is an issue, until it is. They ignored all the stuff the Fed was saying before Jackson Hole. Then they listened for about 5 mins, then went straight back to thinking inflation wasn’t going to be as big a problem again.
No they didn’t. The market reacted then to the data at the time. Today they reacted again, pricing in the ramifications. The interesting bit is that many businesses will thrive regardless. Opportunity knocking or glass half empty. Hilarious there are comments about 1929. Have ‘you’ forgotten the 30 other corrections? We’ve seen a build up on historic low borrowing costs and QE… and are now seeing historic moves to tightening.
Also these moves have been seen around the world.
And so markers react to the data at the time. Thus they price in at the time, or ahead of time?
You assume the whole market is sophisticated and rational.
Today an absolute ton of garbage is bought at any price because it’s in big tracker packages, a ton of the buyers aren’t even making a choice based on data or guidance or the outlook.
You were telling me late last year why Nvidia was so special and it’s lost about 60% of its value since then.
At the time ‘the market’ was punch drunk of free money and fomo.
The market is clueless. It’s a hundred-headed hydra and each head might be screwed on fairly well, but where the body will go is anyones guess…
Hence… for the hundredth time in this thread… why the lines are as wiggly as s
t, and not nice and smooth.People reacting emotionally. No rationally.
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