Yellen’s interview with Norah O’Donnell certainly has her rose colored glasses on.
The NY Post had an article about the tug of war berween Powell & Yellen.
Powell wants to bring down inflation ASAP. Yellen not so much as 2024 election nears.
Ack! I’m a tool! 
Who remembers Jay saying this nearly 4 years ago? The process, Powell proclaimed, was on “automatic pilot”: It would not be slowed or hindered, even if stock prices plunged or the bond market panicked.
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I too am positioned for the possibility of capitulation, a steep crash below the lowest lows this year, and possibly slow 80’s style recovery. If I am wrong my stocks will outperform my cash just like 2000-2 and 2009-11.If I am right, I will have cash when Cash is King.
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@iampops5 and @38Packard I’m with you. Heavily invested in short-term Treasuries and TIPS that will mature in 2023, waiting for capitulation.
Wendy
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There’s a very old saying in investing. Don’t fight the Fed.
I humbly suggest if you are investing in such a way that a 50 - 75 bps rate increase this week is bad for your investments, you are trying to fight the Fed.
–Peter
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Jeff,
That dye was cast this year with the IRA. We will see massive GDP growth in 2024. Meanwhile in many segments the build out will begin in 2023.
Met a young man yesterday who is working locally in a firm that builds skyscrapers. He is involved as a worker on the steel in those buildings. His industry is going to become bulletproof next year. It is already very hot.
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@iampops5 and @38Packard I’m with you. Heavily invested in short-term Treasuries and TIPS that will mature in 2023, waiting for capitulation.
I’m similarly positioned; currently 25% Japanese equities, 75% dollars and short-term US treasuries.
I previously held euros but it’s quite hard to justify that when eurozone inflation is around 12% and euro short-term rates are 2%, and when the euro always seems to dump at the same time as stockmarkets.
One small difference. I’m not waiting for capitulation. I’m just waiting for ‘reasonable’ prices. Doesn’t need to be accompanied by any particular market movement.
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What happens if capitulation doesn’t happen? How do you then decide when to get back in to the market?
Or if waiting for “reasonable” prices, how do you determine that? Solely by P/E? Which markets? Which segments? Do you adjust that for prevailing interest rates? Etc.
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Or if waiting for “reasonable” prices, how do you determine that? Solely by P/E? Which markets? Which segments? Do you adjust that for prevailing interest rates? Etc.
A bunch of metrics.
Shiller CAPE is still wildly high.
Buffett Ratio still high.
Price/earnings 1-year is higher than normal
Yields not impressive.
Price/sales not impressive.
All of the above especially bad given an incoming recession, rising rates, high inflation, & global synchronised housing crash.
I’m using the whole market as a gauge. Picking sectors is tricky with inflation, recession, wildly fluctuating supply chains and energy costs.
I don’t think we’re at an extreme high valuation generally, just very high. But, very high + recession is extremely high in context.
I don’t adjust for interest rates (short term) but I keep an eye on long-term bond yields as a prospective alternative investment.
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Interesting! When was the last date that your requirements were met?
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Great question. I’m hoping for the S&P to hit somewhere around 2800. That’s a target number that I wrote down about a year ago from a post on the BRK board. Not sure who posted it, as I would give a shout out to the original poster - but the rationale for 2800 was pretty solid in my mind - so I’m going with that target.
In the meantime, I’m 90% in cash / cash equivalents and waiting for the shoe to fall. If it doesn’t - no problem. Our conservative financial plan requires us to make 2% annually at a 3% annual (average) inflation rate. I know inflation is not 3% right now, but given the law of averages, I think we should be OK staying out of the market.
I’d get back in with 20% of our retirement money at S&P 2800 just to have lots of fun money to spend on future grandkids 
'38Packard
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I know many people, including me, who were waiting for the S&P to hit 650 before getting back in in 2009. We’re still waiting! 
The problem is, what happens if there are a few years of making 3% with inflation at 7%? Two and a half years of that reduces your purchasing power by a full 10%!!! Arggghhhh.
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I’ll just have to take the credit card away from DW…
'38Packard
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I never posted on the BKR board but I posted the same number on the old version of this board. My rational was simple. Starting at the low in 2009 2800 +/- is just about back on-trend line with an approx. 42% correction. A bit more than the 35% average bear (heh heh) but no record setter “Grandaddy of all Bubbles” and all that blather I was hearing.
If you remember anything about the other person’s reasons for 2800 could you list a few?
PS: I am beginning to see why no investment celebrities ever get it right! I don’t see 2800 out there as much now.
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2016ish, around Brexit vote day, and March 2020 lows.
Apart from that it’s been uninvestably awful for years.
People have just got so used to it they don’t even see it any more.
FWIW check this out, and this is after 12 months of bear market, and with imminent recession and rising rates
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good plan - best to keep the other 80% to buy in at S&P 1500, along with the rest of us 
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Now that would be capitulation!!!
I’m sorry that I did not write down all of the reasons why the original poster offered a rationale for S&P @ 2800. Maybe it was a picture of a chart that showed the S&P’s meteoric rise in the past 7 years or so that really got my attention. I just tried to create that chart on stockcharts but am unable to get it to go back that far.
'38Packard
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@FCorelli @38Packard and others.
IIRC, the argument for SP at (about) 3000 was, in part, “Mean reversion”.
I watch the BMW index charts for Mean reversion.
Here is SP500:
https://invest.kleinnet.com/bmw1/stats30/^GSPC.html
IMO Mean reversion is just a TOOL in the tool chest.
This Mean reversion graph suggests the market is still a bit over valued.
2800 would be mildly “undervalued”?
ralph
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I plan to start averaging my excess cash back in next spring-hopefully taking advantage of lower prices caused by the Fed’s tightening policies. If I am wrong, I will be glad that I left 2/3 of my money in equities.
I made a recent investment in a gaming PC. Modest price on sale at Costco. It might be the best investment I ever make.
Play on the inside of an industry. The upgrade was necessary. The machine is inside the specs of developing a 4K 60 fps game. The 3070 was necessary.
Next year retooling costs are going to substantially rise.