tag:blogger.com,1999:blog-8358039.post1546241419686539596..comments2024-03-25T15:17:04.488-07:00Comments on Captain Capitalism: According to DudeBroWallStreetFratBoys the Stock Market is Never OvervaluedCaptain Capitalismhttp://www.blogger.com/profile/05620212946121617985noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-8358039.post-21696833783291544672015-03-24T17:14:14.481-07:002015-03-24T17:14:14.481-07:00I'm a 25 year old communication studies grad (...I'm a 25 year old communication studies grad ( I know) and I am currently training in U.S. Army AIT. At present, I place 15% of my income into a TSP (military 401k) account and another 10% into my savings account. My question: if the stock market is grossly overvalued and many 401k's are essentially worthless, what can I do to better appropriate my money to secure my financial future?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8358039.post-87046265965524687052015-03-18T02:03:04.195-07:002015-03-18T02:03:04.195-07:00PE ratio in itself cannot tell you whether a busin...PE ratio in itself cannot tell you whether a business is over or undervalued. All businesses are going to be valued at a multiple of their earnings, and what matters is if that multiple makes sense with respect to the underlying asset, not how it compares to other assets in other businesses.<br /><br />If Tesla trades at some ridiculously high PE ratio, does that mean that it's "overvalued"? Who knows. Maybe Tesla has potential to go huge. But if you do know, don't hesitate to put your money where your mouth is. But if predicting whether a stock is over or undervalued relied entirely on reading their PE ratio, portfolio managers and large swathes of the finance industry would be out of a job. <br /><br />Now, I'm not an EMH extremist like some people, but if you check Fama's Nobel prize lecture, you'll see in all honesty that he makes some good points about Shiller's purported prescience. E.g. :<br /><br /><i>How good was Shiller’s forecast? On December 3, 1996 the CRSP index of U.S. stock market wealth stood at 1518. It more than doubled to 3191 on September 1, 2000, and then fell. This is the basis for the inference that the original bubble prediction was correct. At its low on March 11, 2003, however, the index, at 1739, was about 15% above 1518, its value on the initial “bubble” forecast date. </i><br /><br />http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/2013/fama-lecture.pdfAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-8358039.post-25276131217909814222015-03-17T21:01:29.244-07:002015-03-17T21:01:29.244-07:00I'm stuck investing 3% of my salary in the sto...I'm stuck investing 3% of my salary in the stock market because my state requires it of teachers.<br /><br />I'm stuck having about $50k in the stock market because it's in my IRA and I would pay out the a$$ to take it out.<br /><br />However, about six months ago I cashed out everything I could take without penalty, bought gold (yes, through Franklin Miles), paid off some debt, and started putting the money I had been investing each month into a savings account while I figure out what to do with it. Right now I'm thinking that the two best options are either pay down the mortgage (invest in real estate) or put it in an envelope in the safe since I assume people will still accept it barring a major collapse of the system.heresolonghttps://www.blogger.com/profile/00461382067580153600noreply@blogger.comtag:blogger.com,1999:blog-8358039.post-52741417169460096232015-03-17T18:25:03.057-07:002015-03-17T18:25:03.057-07:00Captain, You're showing the Shiller P/E 10 rat...Captain, You're showing the Shiller P/E 10 ratio based on average inflation-adjusted earnings from the previous 10 years. <br /><br />The P/E ratio is 19.58.<br /><br />Just a nitpick but both you and Grey are right. You're just looking at different graphs. See the link<br /><br />http://www.multpl.com/Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8358039.post-30066477176975346652015-03-17T15:54:47.357-07:002015-03-17T15:54:47.357-07:00Grey, are you going to believe you or Dr. Robert S...Grey, are you going to believe you or Dr. Robert Shiller?Captain Capitalismhttps://www.blogger.com/profile/05620212946121617985noreply@blogger.comtag:blogger.com,1999:blog-8358039.post-23100298283421917892015-03-17T15:15:30.184-07:002015-03-17T15:15:30.184-07:00Cap,
I would like to add foreign investors. The U....Cap,<br />I would like to add foreign investors. The U.S. has had a chronic trade deficit since 1976. Some of the money we use to buy foreign goods stays overseas some as actual physical currency as the U.S. dollar is still the reserve currency of the world. Most of it comes back to the U.S. not to buy goods or services or even direct investment but to buy financial instruments. <br /> Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8358039.post-24343213390210841182015-03-17T14:20:18.679-07:002015-03-17T14:20:18.679-07:00The PE ratio is not 27. it's 17-20, depending ...The PE ratio is not 27. it's 17-20, depending on the source. The playstation analogy doesn't really work because the playstation can only lose value , whereas the underlying business behind a stock becomes more valuable. Earnings are growing at roughly the same rate stock prices are rising. You have to understand there is nothing out there that gives risk adjusted yields even close to what the SP& 500 or nasdaq has to offer. A 5 yr bonds yields 1% , or 1/13 of the yield of the S&P 500. grey enlightenmenthttp://greyenlightenment.comnoreply@blogger.comtag:blogger.com,1999:blog-8358039.post-70629526087228335852015-03-17T08:35:24.568-07:002015-03-17T08:35:24.568-07:00Since they do not teach any real economics which i...Since they do not teach any real economics which is that of the Austrian variety, what else can you expect but functional stupidity?<br /><br />Even the Chicago School are bunch of commies. If they are truly free market, why a central bank issuing notes backed by nothing yet these same entities insist on keeping gold on hand?sth_txsnoreply@blogger.comtag:blogger.com,1999:blog-8358039.post-18230750385155274932015-03-17T08:07:39.136-07:002015-03-17T08:07:39.136-07:00Always educational and always appreciated, even if...Always educational and always appreciated, even if you are pretty sure you've covered it before. You can flog that carrion any time.Peregrine Johnhttps://www.blogger.com/profile/03511962495322344119noreply@blogger.com