Anybody Buying Yet? Where’s the Bottom?

[rogerthat]

Best I can find is this below. I can find a half dozen problems with this concept, but whatever. If you are waiting for the S&P to drop below 2800 you might be disappointed. It could happen, sure, but I guarantee that when it does, you will be completely convinced not to buy it then either.

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I can assure you your wrong. What makes you think I am not buying now? Without specifics of my situation, time horizon, etc. your making some wrong assumptions. Lots of stocks not in the S&P 500. If your investing for retirement and you have a 30 year time horizon that is a scenario - dollar cost averaging, index funds, and time in the market are hard to beat, but what if I have a 10 year time horizon? 5 year time horizon? Decisions are tougher. You see the performance of the S&P during the inflation years of the mid 70's to 80's? 2000 to 2010? The S&P was dead money. Definitely not saying that will be the case with current politics, wussification of society, and an ingrained dovish fed(I bet we don't end up anywhere near current rate predictions) but it is nice to see valuations come down a little and a little euphoria come out of this bubblicious market at least maybe I don't have to get stock tips from my taxi drivers. With any luck we will see 2800 on the S&P and some reasonable valuations. But as they say "if you were buying the market before, you ought to really like it now".

 

[Sytes]

Inflation is chased by cost of living adjustments... from minimum on up. Life. Milk cost 20$ a gallon yet people buy bubble gum for 10$... <future>

 

[TOGIE]

gosh. my recollection from high school is going to chipotle and getting big, whopping, so big they were hard to hold steak burritos for like $6.80 WITH tax.

now you're looking at $9.90 before tax and it may or may not be as big as a 5 layer burrito from taco bell.

sigh.

 

[SAJ-99]

I can assure you your wrong.

Ok.wouldn’t be the first time.

 

[SAJ-99]

Inflation is chased by cost of living adjustments... from minimum on up. Life. Milk cost 20$ a gallon yet people buy bubble gum for 10$... <future>

You lost me on this.
Inflation is caused by people accepting it and expecting more of it. Margins for corporations at all time highs because they can increase the cost of product and claim “Inflation!”. As long as people keep buying $10 burritos and just say “damn inflation” it won’t go away.

 

[Nick87]

You lost me on this.
Inflation is caused by people accepting it and expecting more of it. Margins for corporations at all time highs because they can increase the cost of product and claim “Inflation!”. As long as people keep buying $10 burritos and just say “damn inflation” it won’t go away.

Your right about it not going away just because people say inflation. Unfortunately some of the most inflated goods right now aren't luxuries. Food especially.

 

[rogerthat]

You lost me on this.
Inflation is caused by people accepting it and expecting more of it. Margins for corporations at all time highs because they can increase the cost of product and claim “Inflation!”. As long as people keep buying $10 burritos and just say “damn inflation” it won’t go away.

Too bad it isn’t that simple. If all you can eat is burritos and they increase the cost from $6 to $10 that’s closer to where we are in this cycle right now. I just put some fertilizer on my hay fields. It’s up 90% from last year. Do you just not do it? Honestly crossed my mind

 

[SAJ-99]

Too bad it isn’t that simple. If all you can eat is burritos and they increase the cost from $6 to $10 that’s closer to where we are in this cycle right now. I just put some fertilizer on my hay fields. It’s up 90% from last year. Do you just not do it? Honestly crossed my mind

It is that simple. You confirm it by saying “honestly crossed my mind”. Until demand is constrained, prices will increase to whatever level demand and supply are equal.

 

[rogerthat]

It is that simple. You confirm it by saying “honestly crossed my mind”. Until demand is constrained, prices will increase to whatever level demand and supply are equal.

I think you misunderstand. Not spreading fertilizer would be akin to quitting my job. Needs vs wants. Not sure how you step away from needs

 

[Sytes]

About as simple an example as I could provide. Far too often it gets so damn technical - people want to sound vaulted kings of the economy, etc...

Inflation is simply that though in our society, people are blaming and depending on the government to the extent if the politician wants to be re-elected, s/he raises minimum wage to match inflation.

Minimum wage is not dropping any time soon nor will it ever. It's an upward trend regardless. Depression part Ii? No mas with dear uncle Sam passing free dinero like it grows on trees through covid... who gives a rats if we're 50 tril in the hole... we want our new 70" tv...

Inflation, matched by wages continues thus we have a market that's constantly rising. But at X price 50 years later... it will match.

Ask yourself... what did you pay for a gallon of fuel in the 70's? What was min wage at the time?

Where are we now? It's a simple example how we are no longer accountable for our debt.

 

[SAJ-99]

I think you misunderstand. Not spreading fertilizer would be akin to quitting my job. Needs vs wants. Not sure how you step away from needs

I assure you I completely understand your business. Ag prices are up big. Fertilizer cos are just seeking to take a share of the increase in prices.

 

[SAJ-99]

Your right about it not going away just because people say inflation. Unfortunately some of the most inflated goods right now aren't luxuries. Food especially.

Listen to earnings calls like Conagra. Tyson is in a couple of weeks. Watch for a beat on numbers but they talk down the future forecast.

 

[rogerthat]

Listen to earnings calls like Conagra. Tyson is in a couple of weeks. Watch for a beat on numbers but they talk down the future forecast.

Ok another example, so my wife drives a 2001 doesn’t matter pos car that is about to blow up, she has saved diligently but now car prices are through the roof. What does she do? She needs a car to get to work. Inflation equals too much demand exceeding supply it’s not just corporations padding pockets although you are correct that is happening ie record profits

 

[rogerthat]

I assure you I completely understand your business. Ag prices are up big. Fertilizer cos are just seeking to take a share of the increase in prices.

That’s exactly why it isn’t that simple. I have a massive increase in input cost but what will be the sales price of my goods when they are ready to sell? Only time will tell. I agree with some of what you say for some goods just not the necessity items. Folks are hosed on food, toilet paper, and beer. You know the necessities lol

 

[schmalts]

Best I can find is this below. I can find a half dozen problems with this concept, but whatever. If you are waiting for the S&P to drop below 2800 you might be disappointed. It could happen, sure, but I guarantee that when it does, you will be completely convinced not to buy it then either.

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Anyway to come up with a chart adjusted to interest rates?

 

[rogerthat]

Anyway to come up with a chart adjusted to interest rates?

This is a really solid question but the real question is on how to adjust it for interest rates. Shiller adjusts it for cpi but that doesn’t take into account the fed funds rate or the 10 year us govt bond or real borrowing rates

 

[SAJ-99]

That’s exactly why it isn’t that simple. I have a massive increase in input cost but what will be the sales price of my goods when they are ready to sell? Only time will tell. I agree with some of what you say for some goods just not the necessity items. Folks are hosed on food, toilet paper, and beer. You know the necessities lol

Hedge. Can’t hedge for hay, but wheat, corn, soy no problem.

Anyway to come up with a chart adjusted to interest rates?

As @rogerthat said, really good question. It’s a valuation issue. What should you pay for earnings when rates are at a certain level. There is no good answer for that. The market determines that, so it changes from day to day. On an individual comapny level, it might matter the stability/forecast ability (is that a word?) of those earnings.

 

[schmalts]

This is uncharted territory for younger investors who never seen rate hikes like this.

 

[Sytes]

Market's a feast for shorts / Puts!

 

[TOGIE]

i can assure you i/we are buying way fewer 10 dollar burritos than we used to.

chipotle has turned into a crock of chit regardless.

still better than qdoba tho