End Of The Golden Age (for US Equities)?

[yakers]

Interesting article in The Economist Magazine, says essentially the 'golden age'is over for the US "....in ten years’ time nobody will be repeating the obvious conclusion of today: that investors in equities—especially American ones—have enjoyed a golden age"
But bonds don't look so great (to me & my friend Buffet). So where to place my $ for reasonable returns? 
Fortunately I'm in my senior phase and have enough but it has been heart wwarming to watch the portfolio grow while in the spending phase of life. Maybe no more.

[FD1000]

They have been saying that the golden age is over, AKA overvaluations, for over 10 years now.
Bonds are going to be decent to good because rates are elevated and will go down.

[Mustang]

I guess it depends on how you define overvalued. The mean Shiller P/E ratio is 17. Currently it is a little more than twice that. Except for the 2008 crash it has been above the mean since January 1991. According to those who follow Shiller's P/E ratio the market is overvalued. And those that believe in reversion to the mean are expecting bad news. They just don't know when.

[FD1000]

Mar 1, 2024 20:49:35 GMT Mustang said:

I guess it depends on how you define overvalued. The mean Shiller P/E ratio is 17. Currently it is a little more than twice that. Except for the 2008 crash it has been above the mean since January 1991. According to those who follow Shiller's P/E ratio the market is overvalued. And those that believe in reversion to the mean are expecting bad news. They just don't know when.

And that's the whole point...valuations can be wrong for years and other indicators too.
Shiller is wrong since 2012

Prof Shiller created PE10(P/E over 10 years) which supposed to predict performance based on valuation better than PE
On 05/2012 (article)

Question: You have become famous for your cyclically adjusted 10-year price/earnings ratio. What do the latest numbers say about future stock market returns?

Shiller: we found a correlation between that ratio and the next 10 years' return.
If you plug in today's P/E of about 22, it would be predicting something like an annualized 4% return after inflation.

FD: reality, the SP500 made 13.6% in the next 10 years (04/31/2012-04/31/2022). Let's deduct the inflation and make it 11%. It is much better than countries with lower PE10 such as Emerging markets (link)

[steelpony10]

yakers ,

       Reasonable returns to me just means staying above my personable inflation rate minus the frills. I found that to really be sort of easy.

        Articles like these are typical at times when markets cool especially if one doesn’t have a portfolio designed to make a decent return in all markets. Equities are only one option and should just be a part of a well rounded all weather (my personal situation) investment portfolio.

         Since I believe markets move in steps maybe in another 5 years the next step up could be lead by AI. Invest in NVDA and wait 15, 20 years. The top tech companies in the U.S. have more yearly profits then most companies in the world and still has the most stable democracy in the world in my opinion. The U.S. is still the best opportunity to make reasonable returns.

[catdog]

I think the "Silver Age" or "Bronze Age" of investing may be good enough for many.

catdog

[johntaylor]

www.youtube.com/watch?v=sIKUkcNeZfQ

[Deleted]

Mar 1, 2024 15:25:35 GMT yakers said:

Interesting article in The Economist Magazine, says essentially the 'golden age'is over for the US "....in ten years’ time nobody will be repeating the obvious conclusion of today: that investors in equities—especially American ones—have enjoyed a golden age"
But bonds don't look so great (to me & my friend Buffet). So where to place my $ for reasonable returns? 
Fortunately I'm in my senior phase and have enough but it has been heart wwarming to watch the portfolio grow while in the spending phase of life. Maybe no more.

"Risk Free" 3 month T-Bills have a real return, an interest rate above the inflation rate. For the first time as an investor that I can remember, I don't have to gamble on stocks or bonds if I feel the odds are not in my favor and not fear that decision will affect my future spending power.

[steadyeddy]

During periods of elevated inflation (which is likely to be the next 10 years), both equities and bonds perform reasonably well. True that T-bills are good now, but as rates drop they lose their luster.

[Deleted]

"Top U.S. asset manager Vanguard doesn't expect the Federal Reserve to cut interest rates this year, defying the view from Fed officials that rates will be reduced three times in 2024."

www.cnbc.com/amp/2024/03/21/vanguard-doesnt-believe-the-fed-will-cut-interest-rates-this-year.html

I know housing is being somewhat affected by today's interest rates, but the rest of the economy seems to be zipping right along. I don't see the strong case for lowering rates.

[racqueteer]

Mar 21, 2024 13:05:50 GMT @django said:

"Top U.S. asset manager Vanguard doesn't expect the Federal Reserve to cut interest rates this year, defying the view from Fed officials that rates will be reduced three times in 2024."

www.cnbc.com/amp/2024/03/21/vanguard-doesnt-believe-the-fed-will-cut-interest-rates-this-year.html

I know housing is being somewhat affected by today's interest rates, but the rest of the economy seems to be zipping right along. I don't see the strong case for lowering rates.

While high rates are good for savers, and the market has been good for folks with the money to invest, the economy generally relies on the consumer, and a lot of them are being squeezed by debt now.  Cheap debt is helpful to the economy.  So there is a conflict between the two themes; you get in trouble if things get too out of balance.  My take, fwiw.

[johntaylor]

Even though "avarice is the longest lever in the world" (MacDonald, The Empty Copper Sea) , my guess is just one rate cut this year.

[yogibearbull]

That's the view of "a" Sr Economist (Shaan Raithatha, UK) at Vanguard,
corporate.vanguard.com/content/corporatesite/us/en/corp/what-we-think/bios.html

[Capital]

Doom and disaster has been predicted so many times while humans have inhabited this Earth that it amazes me that The Universe still exists.

[uncleharley]

The current trend for the Fed Target Rate and for inflation is sideways. My conclusion is that we will continue to go sideways until something changes. Ag commodity prices are implying that we might get a bump up for inflation and [with some lag] a bump up in interest rates.   

[gman57]

Doom and gloom gets eyeballs/clicks. Everything is going great and everybody is happy.... not so much.