Why are all the young people going nuts in France.

A 17 year old getting killed by police is a tragedy. It's very sad. Really it is.

But, a child dies every 10 seconds of hunger and nobody bats an eyelid.

Why did Donald Trump get elected? Some other root cause of discontentment is clearly brewing under the surface.

In reality, the economy isn't strong. It's a complete bubble disaster.

Because we, as humans, are not the rational creatures we think we are?

There is also a lot of herd behavior going on, which just exacerbates all the inherent flaws.

The predictable thing is that people will keep making bad decisions, going irrational alongside the crowds to then not even remembering why they got so enraged, blaming others while minimizing their own faults etc etc etc

There is huge herd mentality in markets alright. They become extremely over valued and extremely under valued.

At a minimum you need to see a clear path for your company to generate you a 10 percent annual yield.

If you pay a 100 billion for a company you better make sure that you see a clear path for it to be able to create a profit for you off 10 billion every single year or eventually the market will clobber you over the head.

making 10% returns year over year is close to impossible. I hate the market for this reason,.

Nah stocks are money making machines. As long as you don't overpay they print money.

Something people really underestimate about stocks is they benefit from retained earnings.

They are constantly expanding, innovating, marketing and growing and updating their plant and equipment which is an unseen benefit that doesn't hit the profit part of the income statement.

For example, Googles property plant and equipment has grown from 11 billion in 2012 to 112 billion in 2022.

This is an asset that all Google shareholders now own a piece off which can be used to generate more earnings or can be sold in the event of a liquidation.

Compare this to a bond which never grows it's earnings or a house which doesn't spawn new houses and you have to replace furniture, carpet, washing machines etc which have to get deducted out of any rent that you collect and stocks become clear winners over time and it's not even close.

Stocks in the long run also protect you from inflation.

If inflation is 10 percent a year Nike just raises it's prices 10 percent a year.

But, if you underestimate how high inflation is going to be and if you buy a 10 year bond that yields 3.5 percent a year and inflation works out on average at 10 percent a year, your real returns are negative 6.5 owning that bond.

U speak as if stocks never bottom at 0$ ….

Everything seems to revolve around Apple. My index funds are mostly in Apple. Is that a bad thing or is the company fundamentally sound enough to justify it? Even if fundamentally sound, is it still a bad thing? Seems like if Apple tanks the whole market is going to be fked.

~7.5% of holdings in AAPL isn't "mostly in Apple.". That is any fund that is S&P 500 based.

If you do actually have an index fund that is "mostly in Apple," perhaps you should invest in a less silly fund.

I guess I meant largest holding, not a majority of the fund. Like 38%.

The S and P 500 is pretty much everything you can buy in America.

15 percent of the S and P 500 is Apple and Microsoft.

But clearly 15 percent of the US economy isn't Apple and Microsoft.

Great companies, but their stocks are bubbles.

They have PEs in the 30s and market captilisations in the trillions.

In 2016 when Buffett was buying Apple it's PE was 10.

Why would you invest in a fund that had that much concentration in one stock? Kind of defeats the purpose of a fund.

are you assuming nikes stock will stay the same price if they raise their prices 10% in one year?

Apple is 47% of Berkshire Hathaway’s invested assets currently

Over a 50 year period the return from a stock and what you pay for it, is exactly correlated to the income that it produces.

I have no idea what stocks will do tomorrow or next year.

But yes, in the long run if a government prints money and it loses 10 percent of its value, businesses respond by raising their prices by 10 percent.

Unless you want to walk around the street bare foot Nikes revenues, profits and share price will rise by 10 percent.

Don't blame the greedy businesses and greedy shareholders though. They are just raising their prices by the amount the currency has been devalued by the government.

can you explain what you mean by correlated? because as you have written it, youre not saying much, just that two things change when one changes. This is also not how currency devaluation works.

If the dollar gets devalued, do you think that is good or bad for the american economy, and why?

Correlated means that 2 variables have a relationship between each other.

In 1960 the earnings from the S and P 500 were 3.6. In 2019 those earnings grew to 219.49. That's a 60 times rise.

In 1960 the price of the S and P 500 was 50. In 2019 the price of the S and P 500 was 3000. That's a 60 times rise.

Devaluing a currency by printing it is the worst way to wipe out debt, because it destroys the value of the savings in the economy.

Savings are a result of production and can be reinvested into the economy to fuel further productive capacity.

When a government prints money and devalues the currency nothing is produced only paper and the value of the savings are wiped out along with it.

So, instead of "everything revolves around Apple," you meant, "for some reason DumbosTrunk bought a weird fund that has no relationship to the total market."

You probably shouldn't buy weird index funds.

You mean Berkshire's US equity holdings. Their other assets are also investments.

Interestingly, Apple stock is 100% Apple stock. Also, interestingly, Berkshire is not an index fund.

Thank you for clarifying.

I realize Berkshire is not a fund, but I was just adding it to the discussion of being heavily weighted in Apple stock.

Here are some more details on quantity / buy dates for anyone interested:

https://stockcircle.com/portfolio/wa...l/transactions

Berkshire is definitely heavily weighted in Apple, but their equity investments are only about 1/3 of their total assets (as of their last quarterly report) and some of those are foreign (so they don't show up on 13f). The 13f (and various headlines) makes it look like they have a much higher percentage of their assets in Apple than they do.

yes they have a relationship, can you explain further?

devaluing a currency relative to another currency, all other things equal, increases the first currency's countries' exports.

so when your currency gets devalued, your exports go up and your GDP goes up.

Did you know this?

are you saying a currency is devalued due to inflation?

I guess there isn't much that can be done about this but anyone else think it is becoming dicey that SPY is increasingly looking more and more just like the nasdaq? TSLA, META, NVDA in addition to the big tech companies are like 35% of the index now. Since these companies pay almost no dividends relative to market share, the dividends of the rest of SPY just flow into them, creating another bid.


Another question I have is does anyone have any opinion on when there could be an inflection point to where the market becomes less efficient because of all the index buying? I've heard this argument often lately and even from people that I would consider intelligent. My take is that there is just too much price discovery in the market for this to be an issue and I don't see it being an issue for atleast another 15-20 years. There are just so many eyeballs on these stocks nowadays that I find it hard to believe that blind index buying is going to cause some great market inefficiency to occur.

Lastly, to the OP. I've heard everyone from Drunkenmiler to Gundlach to El-erian to Roubini to Grantham to Dalio, etc etc be comically wrong about the short-term directions of the markets (usually too bearish) for pretty much my entire adult life now. If they're having this much trouble timing the market, then the rest of us have no chance.

SPY w/ some bonds or die imo

There has been a really long tech boom (with notable hiccups). It would be really weird if tech stocks did not make up a pretty big share of SPY.

Dividend reinvestment of those who own SPY going partially into non-dividend paying stocks has a pretty darn small effect size. I'd worry about it if I completely ran out of things to worry about and thought that some needless worrying would bring some excitement to my life

We should be so lucky. An inefficient market is beatable, an efficient one is not.

Thoughts? Yeah I got thoughts This market is in an uptrend. Has been for months. This market has just "felt" like it wanted to go up all year and so far it has. I don't know much, but I do know that buying dips in an uptrend is the most rock solid "trading" strategy ever imagined. Stock market goes up over time. Period! Will you miss sometimes? Absolutely! But you will score far more often. From a trading standpoint this market is pure gold. Don't buy anything that is not in an uptrend. And don't buy anything until it dips. But when it does? Jump in and and score. Dip buying (calls in particuliar) on the hot uptrend stocks along with Q's and SPY's is basically printing money right now.

Everybody always wants to be a bear. But it doesn't pay unless you timing is perfect and you don't overstay your welcome if correct. Tough game. I always have some puts "just in case" but I have been waiting for this uptrend since the last big selloff for most of 2022. Now that it is here you just have to embrace it. There are a million reasons not to believe and they all make sense. The charts tell a different story and that is the one I believe. Dips in uptrends is basically foolproof.