Long Term Investing Valuation and Timing Strategies

Interesting chart thanks @dunno. Where did you get it from if you don’t mind me asking?

Below the red line pretty much matches our opportunistic and steady accumulation over the years. Much of the time since the GFC has been pretty good for ASX Accumulation. The most recent push above the line also seems the match my lack of enthusiasm toward the market.

I’m hoping mean reversion / cycles will play out. Due to great ASX Accumulation opportunity post GFC we’re overweight same. So need to accumulate more International Equity going forward. US had their lost decade, AUS the opposite. Since GFC AUS has had it’s lost decade whilst the US has gone gangbusters. A reversion in the near future would suit us fine?

 

Market Cap data from the ASX Site.
GDP data from the ABS site.

 

How does this chart compare against long term market P/E ratio and Dividend Yield?

I normally keep it simple by getting greedy once market dividend yield is higher and P/E ratio is lower than long term average.

Cheers,
Oracle.

 

Here’s div, P/E, earnings etc charts for comparison for those interested:

Market Statistics

I look at these occasionally but the GDP chart I found very interesting.

 

The article where Buffett shone the spotlight on comparing market capitalisation to a countries economic performance.

Warren Buffett On The Stock Market What's in the future for investors--another roaring bull market or more upset stomach? Amazingly, the answer may come down to three simple factors. Here, the world's most celebrated investor talks about what really makes the market tick--and whether that ticking should make you nervous. - December 10, 2001

 

Hey @Nodrog just wondering is there any current equivalent of Ashley Ormond's Fear Vs Greed Index still floating around? I have always loved long term log scales with long and short term trends on them. Shadow used to create one for Sydney property on the old forum which was great to see how things deviate from the long term trend then snap back eventually. Thanks.

 

No, not that I’m aware of.. He goes under the name of Ashley Owen now. You can find his articles etc at a few sights but this is probably the best:

You searched for Ashley Owen - Cuffelinks

 

thanks

 

@dunno I don’t want to be a pest but do you happen to have an updated version of this chart that you would care to post?

 

For those that havn’t come across John Hussman before his monthly market comment might be of interest.

Hussman

Quote from March 2019 comment

“One has to remember that the current market capitalization of U.S. corporate equities now stands at $40 trillion, twice the level of U.S. Gross Domestic Product – the highest multiple in history (the multiple peaked at 1.9 in 2000). “

 

Re-iteration of a theme which has been doing the rounds since goodness knows when.

https://www.canberratimes.com.au/bu...hat-might-cost-you-money-20190402-p519tg.html

 

Hussman still forecasting a base case peak to trough for sp500 of 66% with low of roughly 1129. If that eventuates, this morning will have been the half way point in the decline.

Buckle up people and hold your nerve, manage your cash reserves and look after your health.

"From a full-cycle perspective, the decline in the U.S. stock market from its recent high remains something of a non-event, compared with the probable market loss over the completion of this cycle.

I continue to expect the S&P 500 to lose about two-thirds of its value from its recent high to the trough of the next bear market. As I’ve regularly observed, a decline of that magnitude would not be a worst-case scenario. Rather, it would merely draw S&P 500 valuations to historically run-of-the-mill valuation norms that have been observed over the completion of nearly every market cycle in history, with the exception of the 2002 low (which was later breached in 2009). Based on the valuation measures we find best-correlated with actual subsequent market returns across history, even a retreat to October 2002 valuations would require a market loss of over -50% from the recent peak.

To put run-of-the-mill historical valuation norms into perspective, a two-thirds loss in the S&P 500 Index from its February 19 high of 3386 would place the index at roughly 1129,"

 

Wow that’s a big call. 66% and he said it’s not the worst case.
Worse case is 100%. That’s my predication.

 

If it goes, 90% I will probably sell by IP to purchase S&P 509

 

If it goes to 90% I will probably sell my a## to purchase S&P500.

 

Interesting piece by Nick Maggiulli

The Problem with Valuation

 

My Favorite Investment Writing of 2023

 

I realise its an old post but here is Ashley Owen's latest not the old fear and greed unfortunately but there is talk of a new web site so lets hope he fires it up.

 

The Corey Hoffstein linked article is very good.

Ps. I know the early bird gets f the worm, but 1:42am is taking it a bit far isn't it. Hope you are in another time zone enjoying a migration.