23-09-2002 20:56									#331
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I continue to buy the S&P at around 825. It seems like a reasonable buy at those prices.

(Yes, this is a shameless bump )

Last edited by DanS on 23-09-2002 at 21:04

	23-09-2002 23:32									#332
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quote: Originally posted by DanS I continue to buy the S&P at around 825. It seems like a reasonable buy at those prices.

Why?

	23-09-2002 23:47									#333
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Nothing really specific, other than it seems reasonable and I'm tired of sitting in cash.

My thoughts were that since 1970, ex-dividends, the S&P has appreciated at about an 8% clip per annum. This is about 2% less than what was implied a couple of years ago, which seemed a little far-fetched.

	24-09-2002 01:08									#334
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8% eh?, that's only 0.5% a year faster than the growth in nominal GDP.
DanS do you have any data on total stockmarket capitalization for those years (1970 and latest) ?

	24-09-2002 01:19									#335
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No, but I guess the total cap is dominated by the S&P 500.

w/dividend reinvestment

http://research.stlouisfed.org/fred2/data/TRSP500.txt

Edit: S&P puts the 500 market cap at $8.5 trillion and the 1000 market cap at $10 trillion.

Last edited by DanS on 24-09-2002 at 01:27

	24-09-2002 02:36									#336
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Maybe you need to consider the deflation that seems so prevalent according to the commentators.

(ok just a silly joke)

	24-09-2002 02:44									#337
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BTW, the discussion about skyscrapers seems to have grind to a halt. (I don't really have to add anything anymore either) I still haven't found a convincing reason why they should be more prevalent (my fav word today) and taller in the US than in Europe (or Japan vs China, for that matter) but I got to hear very interesting stuff so I think this was a nice discussion.

	24-09-2002 02:46									#338
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If you wanna make money just get Colon to lend to you at the rate of inflation + 0.01% (hence making a real return) and invest the money as you see fit.

It seems that silly jokes abound this evening.

	24-09-2002 12:17									#339
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quote: Originally posted by el freako DanS do you have any data on total stockmarket capitalization for those years (1970 and latest) ?

What's wrong with the Wilshire ex-5000 ?

	24-09-2002 12:19									#340
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quote: Originally posted by DrSpike It seems that silly jokes abound this evening.

Yup, they paraded a bunch of clueless yankee clowns on CNN to comment on the german election, economy and digestive conditions. Absolutely bizarre. And pissfunny.

	24-09-2002 22:47									#341
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"but I got to hear very interesting stuff so I think this was a nice discussion"

I agree. I got to research something that I was totally clueless about before. Now I'm slightly less clueless.

My secretary is getting some numbers for me on $/ft^2 for residential structure construction in the DC area (not from the subdivision house mills). She's pretty clued in on this.

"Yup, they paraded a bunch of clueless yankee clowns on CNN to comment on the german election"

Turnabout is fair play.

Actually, new topic. How do you account for the stock market bubble in Paris, London, and Frankfurt that either followed or led the NYC downturn? Is this Greenspan's fault too?

DAX...

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	25-09-2002 04:38									#342
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The Dax chart vs the S&P looks pretty interesting by the by - points to further S&P weakness. Especially if all the damn foreigners would quit propping up our market at overvalued levels. Get your flight to quality money out of here, you are messing up our valuations!

S&P earnings are estimated at between $40 and $50; we are using 600 as a base for the S&P which would be 12-15x earnings. Not unrealistic, but still not really deep value.

The Treasury short squeeze is driving me crazy, there just isn't enough tradable debt out there and it is creating a self-feeding bubble for investment managers again. Just like the value (real econ) stocks were getting killed by the tech stuff in the late 90s, now we are having the treasury outperformance drive money from corporates.

	25-09-2002 12:46									#343
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We ran up along with the US bubble, and we came down faster. Smells a bit like bull capitulation here, a thing the US is still far away from. The US will drive us down further I suppose... so I thought there's value around ESX50 ~2500, now I'd say you should get those stocks a good deal cheaper (1500-2000).

Sten: What happened to your "value at S&P 900" ?

"Especially if all the damn foreigners would quit propping up our market at overvalued levels. Get your flight to quality money out of here...."

I guess the only ones doing a "flight to quality" into the US have to be Iraqis and North Koreans.... and I took my lottery money out of the US ages ago.

	25-09-2002 22:59									#344
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"value at 900" not sure what specific thread that might have been in, I think for a few years we have been saying that max for a while is ~1000 or 20*$50, and fair value is more like 750 with 825 being investable and 600 being a base value. Not that we couldn't or wouldn't trade below any of those.

A while back we were frustrated when the market wouldn't trade below 1000, and we were looking for at least 925. But who knows what I could have said, as a bond guy I get dizzy when numbers get bigger than 0.01. I do like some stocks in here, though.

(The other day I said that futures closed at 911 and that sounds about right, but I was refering to 911 as the American style date September 11th, rather than a valuation call on the market.)


by the by, a few weeks ago I got a post card from my parents from Mozartville, and before I flipped it over to see who it was from I thought "how did Roland get my address?"

	30-09-2002 06:51									#345
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Here is a nice article by Warren Buffett that I have read a couple of times since the end of last year. While I really didn't have it mind when I started putting money in at S&P @ 825, it puts context on the decision.

http://www.fortune.com/indexw.jhtml...el=artcol.jhtml

Looked at from a number of different ways, we're at an investable number for the S&P. Not a killer investment, but a rational investment nonetheless.

	30-09-2002 12:26									#346
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A multiple of maybe 20 is no level to start a new bull.

	30-09-2002 18:46									#347
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No, no basis for a bull. But considering what is available otherwise...

Anyway, I sure wouldn't mind seeing some cheaper stocks than 825.

Last edited by DanS on 30-09-2002 at 19:05

	01-10-2002 00:11									#348
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What do you mean "But considering what is available otherwise..."? Would you prefer to buy US stocks that give a negative return, rather than money market funds, for the sake of them being US stocks?

	01-10-2002 00:29									#349
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What do you mean "But considering what is available otherwise..."?

I was thinking about this...

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	01-10-2002 00:43									#350
	Increase the size of your Attachments

Oh, btw. Has anybody checked out Roland's blog?

http://www.jamous.com.br/weblog/

Last edited by DanS on 01-10-2002 at 02:02

	01-10-2002 01:12									#351
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quote: Originally posted by DanS What do you mean "But considering what is available otherwise..."? I was thinking about this...

And I'm thinking about this

	01-10-2002 01:19									#352
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BTW, I've finally found a chart comparing the line of monetary policy suggested by the Taylor rule with the actual policy.

	01-10-2002 01:28									#353
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Must be an attachment war...

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	01-10-2002 01:55									#354
	final chance to get textual Support Apolyton, buy GURPS/ Alpha Centauri

Otherwise I'm going to crush you and I'm not kidding.

Firstly, how about a chart with real rates instead of nominal?

Secondly, how about considering that the theory there's a causual relation between stock prices and treasury rates is an extremely dubious one? It keeps popping up for some reason while there's little to back it up.

BTW, that link to Roland's blog isn't working.

	01-10-2002 02:21									#355
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BTW, don't take my "I'm going to crush you" too seriously.

	01-10-2002 02:41									#356
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I'm looking at it from an investor's perspective going forward rather than what "causes" the other at some time in the past. The fall in interest rates offered by the US Gov't has made stocks more valuable on an instant basis, whatever the market says at this point.

You might be able to earn 7-8% on the S&P at current prices on a stock that you buy and hold. The 10-year is offering 3.59%.

Making that comparison and buying the index is at least a rational proposition, even if it's not a scream of a deal.

Edit: fixed blog link.

Last edited by DanS on 01-10-2002 at 02:50

	01-10-2002 03:28									#357
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take this chart and...

The real rate listed as the "last" quote is from Aug month end, since Augie CPI isn't out yet. Note that the 10s are at 3.60 which would make real about a 1.80 if CPI is unch'ed.

The treasury rally has not carried corporate bonds with it by the way. BBB rated corps are option adjusted about 360bp over treasuries, which makes BBB corp yields more than twice treasury yields. This is the largest precentage gap recorded, to my knowledge.

As new mortgage production hits the pipelines, we should see a rather dramatic reversal. Should.

can't get it sized correctly, so in anger I'm gonna post it upside down.

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	01-10-2002 12:13									#358
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"As new mortgage production hits the pipelines, we should see a rather dramatic reversal. Should."

Why ? (that's not a "why" as in "normal situation", that's a "why" as in "with the GSEs and the Fed at the pump like crazy")

Btw, hope your people liked Mozart City. Or did they just arrive in time for the flooding ?

Btw2, I'm still curious what you meant with the new mortgage products.

Dan: Way too much diet coke to be me.

	01-10-2002 18:32									#359
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http://www.argmax.com/mt_blog/archive/000061.php#000061

Cool interview with Bob Solow, a truly great economist.

	02-10-2002 21:05									#360
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quote: Originally posted by DanS I'm looking at it from an investor's perspective going forward rather than what "causes" the other at some time in the past. The fall in interest rates offered by the US Gov't has made stocks more valuable on an instant basis, whatever the market says at this point. You might be able to earn 7-8% on the S&P at current prices on a stock that you buy and hold. The 10-year is offering 3.59%. Making that comparison and buying the index is at least a rational proposition, even if it's not a scream of a deal. Edit: fixed blog link.

If you don't expect a bull for the moment, I'd be wise to put your money into something that at least guarantees you a positive return for the next year or two, wouldn't you think so?

And besides, you're forgetting that inflation doesn't only affect treasury returns, but also profit growth, so that 7-8% might be a couple of % lower. (not sure what the average real return would be)
And if you expect inflation to pick up, why not purchase inflation protected treasuries?