Author Topic: Wilshire 5000 market cap / GDP exceeds dot-com peak  (Read 8491 times)

RuleNumberOne

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Re: Wilshire 5000 market cap / GDP exceeds dot-com peak
« Reply #40 on: January 17, 2020, 07:13:10 AM »
I was looking at Japan's 1989 stock market bubble. That one topped out at a 139% ratio of stock market to GDP (would have been a lower ratio if GNP was used.) So the current stock market is in uncharted territory.

Jay Powell has turned out to be the weakest Fed Chair in history. We have been at 3.x unemployment for a long time but the Fed promised to not raise rates until after the November elections. Powell got bullied easily.

The market may go up another 5-50% this year even with no earnings growth. If central bankers excuse is they are waiting for inflation in Alabama or growth in Europe, they are waiting for rain in a desert - it is not going to happen. A lot of investors will feel the pain at some point in the next few years.


Castanza

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Re: Wilshire 5000 market cap / GDP exceeds dot-com peak
« Reply #41 on: January 17, 2020, 07:51:28 AM »
Macro is so unpredictable and speculative. It's interesting to discuss for sure (everyone loves a good apocalypse thesis), but there is no sure way to effectively use any of this to your advantage. It's much more effective to hedge yourself on the personal finance side of things. Hedge your career with other skills outside of your current career path. Don't over leverage yourself with personal debt. Build a solid emergency fund. Take care of your body. One way or another, life will go on.
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stahleyp

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Re: Wilshire 5000 market cap / GDP exceeds dot-com peak
« Reply #42 on: January 17, 2020, 07:54:32 AM »
I was looking at Japan's 1989 stock market bubble. That one topped out at a 139% ratio of stock market to GDP (would have been a lower ratio if GNP was used.) So the current stock market is in uncharted territory.

Jay Powell has turned out to be the weakest Fed Chair in history. We have been at 3.x unemployment for a long time but the Fed promised to not raise rates until after the November elections. Powell got bullied easily.

The market may go up another 5-50% this year even with no earnings growth. If central bankers excuse is they are waiting for inflation in Alabama or growth in Europe, they are waiting for rain in a desert - it is not going to happen. A lot of investors will feel the pain at some point in the next few years.

The guys has been doing it for less than 2 years and you're deeming him weakest in history?
Paul

RuleNumberOne

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Re: Wilshire 5000 market cap / GDP exceeds dot-com peak
« Reply #43 on: January 17, 2020, 09:59:07 PM »
Is Jay Powell still alive? Nobody has heard from him for over a year. I am getting worried. Doesn't look like anyone is in charge at the Fed.

There are rumors circulating that Bullard stabbed Powell in the back and buried him.


I was looking at Japan's 1989 stock market bubble. That one topped out at a 139% ratio of stock market to GDP (would have been a lower ratio if GNP was used.) So the current stock market is in uncharted territory.

Jay Powell has turned out to be the weakest Fed Chair in history. We have been at 3.x unemployment for a long time but the Fed promised to not raise rates until after the November elections. Powell got bullied easily.

The market may go up another 5-50% this year even with no earnings growth. If central bankers excuse is they are waiting for inflation in Alabama or growth in Europe, they are waiting for rain in a desert - it is not going to happen. A lot of investors will feel the pain at some point in the next few years.

The guys has been doing it for less than 2 years and you're deeming him weakest in history?

thepupil

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Re: Wilshire 5000 market cap / GDP exceeds dot-com peak
« Reply #44 on: January 18, 2020, 07:47:36 AM »
Large cap Japan was at 120x CAPE ratio and while market was at 70-80x PE; to compare the US stock market of today to 1989 Japan is to believe that company earnings will decline by some 60-75% via an extreme combo of margin compression/ sales decline to get to similar valuations as then.


http://siblisresearch.com/data/japan-shiller-pe-cape/

RuleNumberOne

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Re: Wilshire 5000 market cap / GDP exceeds dot-com peak
« Reply #45 on: January 18, 2020, 09:10:09 AM »
https://www.theglobaleconomy.com/Japan/stock_market_capitalization/

The ratio was 139% in 1989 and 106% in 2018. IMO, GDP is much less volatile than earnings and less subject to manipulation or arbitrary accounting ideas.

Large cap Japan was at 120x CAPE ratio and while market was at 70-80x PE; to compare the US stock market of today to 1989 Japan is to believe that company earnings will decline by some 60-75% via an extreme combo of margin compression/ sales decline to get to similar valuations as then.


http://siblisresearch.com/data/japan-shiller-pe-cape/

thepupil

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Re: Wilshire 5000 market cap / GDP exceeds dot-com peak
« Reply #46 on: January 18, 2020, 09:30:19 AM »
Yes but if you are comparing Japan to US market cap to GDP that normalizes sales / margins between the countries. Given the differences in culture and company composition, this would be very mistaken, in my opinion. Why does the US have higher market cap to GDP than Japan bubble time but somewhere between 1/4 and 1/6 the PE ratio? Huge difference in earnings an margins. I think US corporates are over earning but to make the comparison between US and Japan is to say they are overearning to an extreme degree. I think the comparison has little relevance or analytical merit.

thepupil

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Re: Wilshire 5000 market cap / GDP exceeds dot-com peak
« Reply #47 on: January 18, 2020, 09:40:30 AM »
https://www.gurufocus.com/global-market-valuation.php?country=JPN

Also, what’s your data source? I think JApan Market cap to GDP got to over 300% according to the link.

RuleNumberOne

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Re: Wilshire 5000 market cap / GDP exceeds dot-com peak
« Reply #48 on: January 18, 2020, 09:43:22 AM »
The link I posted earlier said the data was from the World Bank.

https://www.theglobaleconomy.com/Japan/stock_market_capitalization/


https://www.gurufocus.com/global-market-valuation.php?country=JPN

Also, what’s your data source? I think JApan Market cap to GDP got to over 300% according to the link.

Cigarbutt

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Re: Wilshire 5000 market cap / GDP exceeds dot-com peak
« Reply #49 on: January 19, 2020, 01:15:29 PM »
^The Japanese cycle reference is interesting.
If used as a benchmark, then it's possible that US markets could double overnight and reach Nikkei 89's height.

On top of earnings decline and margin compression, Japan has had to deal with a triple whammy as they sort of went (are going?) through some kind of paradigm shift.
From Dec. 1989 to somewhere in 2019, total annual return in yen: -0.8%.
https://dqydj.com/nikkei-return-calculator-dividend-reinvestment/

Tell me where I'm going to die so I don't go there.