tag:blogger.com,1999:blog-5389144729834496735.post5244481435528351288..comments2024-03-17T05:15:55.634-04:00Comments on The Brooklyn Investor: Scary Chart!Unknownnoreply@blogger.comBlogger10125tag:blogger.com,1999:blog-5389144729834496735.post-29943141310188101882016-08-22T14:01:38.931-04:002016-08-22T14:01:38.931-04:00interesting stuff thanksinteresting stuff thanksAnonymoushttps://www.blogger.com/profile/06322208466098442969noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-19371092306738545202016-08-05T12:52:43.316-04:002016-08-05T12:52:43.316-04:00Logically, stocks shouldn't be valued relative...Logically, stocks shouldn't be valued relative to current rates, but rather relative to the expected discounted return from rates across the duration of the investment. Or at least that's what makes sense to me.<br /><br />This is why stocks don't double when rates go down by half, since they're expected to climb back up again. However, if it were somehow known that rates would *permanently* stay as low as they currently are then stocks would logically be priced much much higher than their current valuations.Parker Bohnnoreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-70558583886894863352016-08-04T12:40:58.514-04:002016-08-04T12:40:58.514-04:00hi kk
agree with you on not chasing the equity ma...hi kk<br /><br />agree with you on not chasing the equity market up based on lower rates. Aside from rates not staying low forever, the logic of lower rate = higher equity valuation only works to a certain point<br /><br />If rate goes to say 1%, people are probably going to say "based on some formula, required return on equity should be 6-8%". But if they think about what they're discounting, these forecasted cash flows/earnings for stocks could easily be off by 10-30%! So discounting that by 6% would provide no margin of safety whatsoever. There has to be a floor for equity discount rates to cover the forecast/modeling risk that is missing in treausry/IG bonds<br /><br />Unfortunately this flawed logic of low rate = low discount rate seems to be taking hold, and I wouldnt be surprised if market is headed for a ridiculous bubble from here..<br /><br /><br />mspacey4415https://www.blogger.com/profile/11868322471454225634noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-87192499107597141822016-08-03T15:42:32.894-04:002016-08-03T15:42:32.894-04:00Thanks for all the great stuff. I am familiar wit...Thanks for all the great stuff. I am familiar with most of it and Druckenmiller's argument. I love reading things like that. <br /><br />But you know, as usual, I've been reading stuff like that for decades and it's always fun to read. But I don't know what to do with it, really. <br /><br />I try as hard as I can to think of myself as a businessman accumulating businesses, so most of those things don't have anything to do with that. Yes, maybe GDP is lower from now on due to demographics, debt levels and whatnot. But if I own a great business with decent margins and returns on capital at a decent price, I'm fine. <br /><br />I'm sitting here at a big mall now (family thing, cousins, nephews etc...). If you own a crowded restaurant, you are not going to sell because Druckenmiller says we are screwed, right? So that's how I try to look at it. <br /><br />I always argued that the stock market has what I would call the "curse of liquidity". It's so easy to hit the "sell" button on a stock so it's hard to own stuff over time. It really is. Believe me, I am tempted as much as anyone else to dump everything and go into triple leverage inverse S&P ETF's after reading some of this stuff.<br /><br />My views here are really not anything to do with whether we will have a bear market or not. I am sure we will have 20% and even 50% corrections over time, and I believe they will happen. That's 100% certain. But I also believe it will tend to happen when people don't expect it; not when the main 'stars' are "ringing the bell" on CNBC every other day. <br /><br />Those charts in the above are all quite scary and we should all be mindful of it, but also keep in mind that a lot of it is double-counting. <br /><br />If asset prices are high due to low interest rates, then everything else is going to look high too. Of course, wealth as percent of GDP or whatever will be high, cuz asset values are high, because interest rates are low. Stock market to GDP is also high cuz rates are low etc. <br /><br />So they are all pointing to the same thing. Sometimes, it feels like modelers try to count each one as separate evidence of a bubble, but to me, it's still just one data point, not 3 or 5. It's still just one. High asset/wealth level to GDP also just means return on asset is low. But with interest rates at 1.5%, of course that will be true. <br /><br />So, no need, really, to freak out over each chart that looks like that because they are all the same. <br /><br />Anyway, again, this is not to say we won't have a big correction. We will, no doubt.<br /><br />Maybe I will make another post about this in the near future after reading all the above info carefully. Thanks for posting all the links! <br /><br />kkhttps://www.blogger.com/profile/06299974418283948333noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-18797725815676571722016-08-03T15:32:27.041-04:002016-08-03T15:32:27.041-04:00Hi, maybe I will at some point, but CMG is pretty ...Hi, maybe I will at some point, but CMG is pretty straight forward. I don't think there is anything on the balance sheet or income statement that is 'hidden' or anything like that. It just comes down to how much more they can grow, if they can get back and then maintain some good sss growth, margins back up etc. I wouldn't want to price in the other concepts yet as it's probably true that most attempts with chains starting other concepts tend not to work out. I hope, more as a customer than a shareholder, that the Asian Shophouse works out. I loved the one in DC and can't wait til they roll it out in NYC. <br /><br />Thanks for dropping by... kkhttps://www.blogger.com/profile/06299974418283948333noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-13108961824429962912016-08-03T13:24:01.251-04:002016-08-03T13:24:01.251-04:00Great article as usual. Wondering if you might be ...Great article as usual. Wondering if you might be interesting on writing a CMG stock valuation.. Cheers!Diego Garciahttp://www.ibafirm.comnoreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-6007953978645253722016-08-03T11:23:51.384-04:002016-08-03T11:23:51.384-04:00Great post and interesting point regarding margin ...Great post and interesting point regarding margin debt. <br /><br />However I dont like when both margin debt, number of IPOs and buybacks signal a bubble at the same time. I also find margin debt adjusted for inflation as more informative than as precentage of market cap, but thats just my opinion. M&A activity is also up quite a bit from what i know.<br /><br />What the CAPE tries to do is to adjust for the variability of profit margins, I would therefore suggest caution when valuing the market based on current p/e ratios.<br /><br />Fortunately here in Sweden valuations are not as a extreme, although stock market interest seem to be too high. Recently WE had a boom in IPO issuance almost matching the mania during 2000. The lower stock market valuation in Sweden is also a result of Riksbanken suppressing the value of the SEK, lifting the profits of exporting companies.<br /><br />Here comes some more "scary charts", ENJOY:<br /><br />http://jessefelder.tumblr.com/post/148107159765/over-the-past-50-years-an-earnings-recession-of<br /><br />https://twitter.com/markets/status/756453387089113088?ref_src=twsrc%5Etfw<br /><br />https://www.thefelderreport.com/2016/01/27/what-follows-the-most-epic-reach-for-yield-episode-in-history/<br /><br />Finally you got Druckenmillers presentation which can be seen here:<br />http://jordholmen.blogspot.se/2016/05/en-av-var-tids-framsta-placerare-ar.html<br /><br />Frank K Martins text is also interesting, which discusses the CAPE ratio:<br /><br />https://www.mcmadvisors.com/wp-content/uploads/2015/02/Why-We-Worry-Top-Down_.pdf<br /><br />#DifferentThisTime, #RetardedComment #ReadingAllLinksTakes3Days.<br /><br />Have a nice day<br /><br />"Gloom and doom" from Sweden. Jordholmenhttps://www.blogger.com/profile/09558266756672696633noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-70080936709498774352016-08-02T06:36:28.309-04:002016-08-02T06:36:28.309-04:00Thanks. I fixed it. Thanks. I fixed it. kkhttps://www.blogger.com/profile/06299974418283948333noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-145512595438620462016-08-02T05:13:38.531-04:002016-08-02T05:13:38.531-04:00Hi, i think u forgot to insert the URL into the ad...Hi, i think u forgot to insert the URL into the advisor perspectives article.<br /><br />Believe it's this one.<br /><br />http://www.advisorperspectives.com/dshort/updates/NYSE-Margin-Debt-and-the-SPX.phpAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-27549689208292043372016-08-02T02:22:25.686-04:002016-08-02T02:22:25.686-04:00Excellent post. Always welcome to read some common...Excellent post. Always welcome to read some common sense as opposed to the maniacal cries of bubble, depression and doom.FKnoreply@blogger.com