Will this be the big correction

Discussion in 'Shares & Funds' started by MTR, 25th Feb, 2022.

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  1. learner

    learner Member

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    Yep, defining extreme is a problem.

    I'm not familiar with Yardeni, is there a metric other than CAPE which is predictive out of sample?

    From the article I linked, it is interesting that John Bogle "did indeed make very prescient and public forecasts of lower than normal expected long-term stock returns at the time" (of the dot-com bubble). How did he know? A valuation metric of some sort? Observing crazy investor behaviour maybe? Something else?
     
  2. Ross36

    Ross36 Well-Known Member

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    John Bogle says you won’t make much money from stocks

    Bogle did great things for investors no doubt, but he was not great at forecasting or changing his mind. I don't know if he ever got over his hatred of ETFs....
     
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  3. SatayKing

    SatayKing Well-Known Member

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    He slightly modified his view later in his life.

    "John Bogle says, “using the proper ETF, and using the proper ETF in the proper way, is a perfectly intelligent strategy—just so as long as you don’t fall for their basic selling proposition, which is the ability to get out of the market in the middle of the day.” Market timing and speculation are just gambling. Buy the broad market indexes and don’t trade them. Buy and hold!"

    John Bogle Says: Don't Trade ETFs! (video)
     
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  4. Redwing

    Redwing Well-Known Member

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    upload_2022-5-20_10-3-19.png
     
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  5. Redwing

    Redwing Well-Known Member

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    upload_2022-5-20_10-5-55.png
     
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  6. Whitecat

    Whitecat Well-Known Member

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    I won't trade mine even the dog ones CLNE clean energy and ERTH climate change Innovation I'm hoping in the long run those one should outperform but from now on I'm just going to go for broad ones like DHHF/VGS etc
     
  7. learner

    learner Member

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    Interesting, so Bogle uses trailing PE. CAPE has its flaws, but I would have thought it would be better than PE.

    If Bogle was a smart guy (by all accounts he seems to be?), and PE/CAPE is not predictive out of sample, then not sure what he doing using it to forecast future returns. Something doesn't add up for me.
     
  8. Hockey Monkey

    Hockey Monkey Well-Known Member

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    You might not want to watch this video then
     
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  9. Whitecat

    Whitecat Well-Known Member

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    Yeah good videot I have read about this elsewhere. I am new to shares and I would not have bought them if I had known what I know now having said that it's not a very large part of my portfolio.
    Although it appears the value of these ETFs had already dropped significantly before I bought about a month ago and from their launch. So what I'm trying to work out is whether or not they will continue to drop. Ie whether clean energy companies are still overvalued, or whether the inevitable push towards clean energy will maintain their value?
    IE to cut my losses or not.
     
  10. Ross36

    Ross36 Well-Known Member

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    Wisdom of Great Investors – Quotes | Davis ETFs

    It takes a while but eventually you realise that all the forecasts are trash. Vanguard has their fancy model, good on them, I've seen no evidence that it works better than just looking at the modal 10 year returns and picking that. Bogle himself said to ignore forecasts as they are all wrong.

    The global financial system is too complex to forecast, noone has any idea what will happen. Right now we are in a standard correction that happens every year or two - not a bear market - and people are freaking out. So they look to tea leaves readers for guidance. Then they pick one that confirms their bias -sell out the crash is coming OR buy the dip, we're going to the moon - and implement that. If they pick the former, which is most likely given prospect theory, the odds are that they lose out. Then they become one of the millions of Australians saying "shares are rigged I'll never buy them again" whilst unbeknownst to them every fortnight they are getting rich as their shares in their super are being DCA'd into.

    Long term investing in shares is an easy game that isn't easy to play. I think of it as a bit like owning casinos, I might have long losing streaks but over time the odds are STACKED in my favour. If I own a bunch of different casinos everywhere (eg. USA midcaps, Asx, Global REITs, Global large caps) I should hopefully smooth out the ride. Occasionally a new trick will come along (eg. Card counting) that causes all my casinos to lose a lot of money at once, but that quickly gets solved and at least some of them will bounce back very rapidly.

    Strange analogy I know. But it works for me. It's up to you to find out what works for you.
     
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  11. Redwing

    Redwing Well-Known Member

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  12. Hockey Monkey

    Hockey Monkey Well-Known Member

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    i found the whole ESG investing thing quite counter intuitive. The same presenter has some good videos on the topic Eg


    Essentially prices can be bid up as investor change their tastes towards green stocks but then ultimately future returns will be less as investors with tastes for green stocks are willing to pay a premium for them.

    Who knows what point we are at now
     
  13. Whitecat

    Whitecat Well-Known Member

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    That's right I wish there was a way to find out what point we are at now because I don't know whether to sell them and just put it into DHHF or vgs or something or whether or not to sell later
     
  14. Hockey Monkey

    Hockey Monkey Well-Known Member

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    Even if you knew, you are talking about market timing to avoid expected underperformance over the long term.

    How would you know when to switch in the future?

    In the meantime, Betashares and Vaneck are getting their 0.65% MER
     
  15. Whitecat

    Whitecat Well-Known Member

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    So if it was you would you cut your losses and move into a diversified.etf?
     
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  16. Hockey Monkey

    Hockey Monkey Well-Known Member

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    have the drops in price of these ETFs really differed all that much to VGS in the past 3 months? If you choose to switch it might be a wash, buying back into the market at the same point.

    There is nothing wrong with investing in ESG if it matches your tastes. Just realize it comes at the cost of lower expected returns. What the actual returns will be, no one knows.
     
  17. Redwing

    Redwing Well-Known Member

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    Talking a friend and he showed me the below shares he owns

    upload_2022-5-21_9-12-32.png

    Nice, I asked him to zoom out to when they were purchased and was surprised at the chart, he mentioned he has to try and find the shares also as cant remember who he purchased them through (maybe Bankwest, now Commsec) and doesn't have his old email account any longer either

    upload_2022-5-21_9-16-29.png
     

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  18. Pier1

    Pier1 Well-Known Member

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    Great question, only history will tell I guess.
    Looks plausible
     
  19. TickerHound

    TickerHound Well-Known Member

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    Interesting reading this thread, and hearing people's beliefs and thoughts about how the market works.

    The US is currently in a bear market and has been since the start of the year. So far, there is simply no strong buying and the selling has been orderly with no signs of panic. I'm sure we'll have some ripping bear market rallies at some point and final capitulation at the end.

    The COVID bear market was short and v-shaped because the Fed pumped in huge amounts of stimulus in a heartbeat. You can expect probably one or two of the type of bull markets we saw in 2020 in a lifetime. It had everything, including ARK as its pied piper, NFTs, bitcoin, wallstreet bets, and fairy-tale story stocks. We still have people (including ARK) buying the dips in the old leaders that topped a long time ago thinking its still 2020.

    Now, the Fed isn't supporting the market and one could guess that this bear will go on for a longer duration. The longer it goes on for, and the deeper correction, the more optimistic one can be about the size and strength of the bull market which will follow.

    If I was long-term, buy and hold type I would just completely ignore all of the above. I'd read Bogle, Peter Thornhill, Buffett, etc every night, mentally prepare for a 50% correction two or three times in a life time, buy more when the market selling hits the main stream news, focus on dividends, and get a hobby away from the markets.
     
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  20. Casteller

    Casteller Well-Known Member

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    Not much of a correction, most of the stuff I own hasn't moved much at all. Correction seems to be have been confined to tech stocks, meme stocks, crypto. Touch wood though maybe a prelude to general market.

    Australian dollar is also still relatively strong, has been good to buy euros and pounds. It's the USD that is up rather than AUD down.