World Colonial

Yes, I noticed.  If I were to buy it in quantity though, I'd also want to be able to obtain the benefit from the rising rates in those countries which isn't usually possible using US sources.  It requires buying locally.

The most likely currency I would buy is the Canadian dollar, because I might live there later in life at least part time.

On 9/15/2022 at 11:54 PM, VKurtB said:

There is a HUGE section specifically for World and Ancient coins at all ANA shows, and if your material can’t be found at NYINC, it can’t be found. 

I've never found much of anything at the five or six ANA shows I attended and never been to NYINC.  What I did find wasn't in the coins I primarily collect either, only my secondary collections.  I also don't think I would find much of anything.

It's possible some dealer had a coin I wasn't aware of but it's a low probability.  Most likely exceptions I know are Mike Dunnigan (who specializes in Mexico) and Mr. Eureka who posts on the PCGS forum, as neither have a website.  I have bought coins on eBay but only one (currently at NGC now) that I would consider better quality.

Here is a breakdown of where I sourced these coins.  Total population = 92

Auction direct: 47

eBay - full time dealer: 15

eBay - collector: 18 

Dealer direct: 12

Additional notes:  There is some overlap between dealer direct and eBay dealers.  I bought it from the same source.  Some of the eBay collectors are regular sellers, most probably though I didn't attempt to verify.  Of the 12 dealer direct purchases, all but two are from well-known sources.  The vast majority of my better coins were bought at auction or from full time dealers (eBay or direct).

So, to conclude, while I haven't pursued using dealers for direct purchase from collectors, I think I'm covering all the other bases.  I have on occasion missed coins I later identified but that was before I knew the sources I know now.

If you are interested in die variety attribution, I have Yonaka's reference covering all five denominations from Mexico.  I bought it directly from him.  It's hard cover and I think I paid $150 for it new.

Can't remember if you said you have access to any larger coins shows.  I've never asked about these coins (since I don't collect it) but seen plenty at the national ones I have attended. 

I don't visit local dealers either but would expect that many would carry it now, as it's widely collected.

You should have plenty of supply from which to choose generically for the two types (Charles III and Charles IV) though I don't know the availability of specific dates. 

On 9/15/2022 at 2:51 PM, VKurtB said:

Many dealers today operate off of “want lists” from even prospective clients. I can’t tell you how many times I’ve been told, “send me your want list, no obligation.”

I have tried it a few times with no success.  This is with dealers who actually sell Latin coinage as I wouldn't bother with most dealers.

I bought four coins from one dealer you presumably know.  I don't need to ask him to do it since he offers what I collect when he can find it.  He offered me two of the four coins I bought before adding it to his website.  I'm sure he's done it for others too.  But the second time he offered, I didn't buy the coin and that's the last time,

Now, his prices are too high.  As an example, he listed one for $975 which sold on Heritage for about half that price.  Someone bought it too.  It happened to be a coin I own in duplicate in slightly higher grade (both MS-61 vs. AU-58) but I'd really have to want it to pay something like a 100% mark-up.

On 9/15/2022 at 2:10 AM, GoldFinger1969 said:

Wow....so he finished very early.  And back then, no internet or coin shows to grab hard-to-get coins.

I think he showed his coins in his later years, maybe he did in the 1950's, too.  I don't know.

Thanks DL ! 

Even back then, I'm guessing the more expensive coins could be bought by having a dealer find it for you, if you made it worth their while.  Harvey Stack wrote a series of articles for Coin Week where he described doing this for Josiah Lilly.  This is the 6000 gold coin collection (US and world) later donated to the Smithsonian.  Few of those coins would be hard to buy now but presumably were a lot harder then.

On 9/14/2022 at 1:40 PM, Quintus Arrius said:

This comment illustrates best why even with the internet some may find it difficult, if not impossible, to collect and complete a  collection: availability. And that's why I am, and shall likely always remain, a Roostermeister weiner!  

Somewhere on this forum, RWB mentioned the existence of "old money" European collections going back 200+ years.  Long term ownership of specific coins is unusual but not an aberration.

The internet has made most coins available but the difference with many world coins is that it has both limited availability and isn't really worth selling. 

I have multiple coins in duplicate which I bought because it's about the only type I buy.  I'm not selling the extras as the proceeds won't make any difference financially to me and there aren't other coins I would rather own at anywhere near an equivalent cost.

So, this just means there is less for anyone else who might want to buy the same coins I do.  I alone probably own about one third of the limited number of better (AU and above) TPG coins for this series, somewhat more excluding the more available ones. 

On 9/13/2022 at 12:58 AM, GoldFinger1969 said:

Gold was up 6-fold at the time and had SPIKED on the European Debt Crisis and the U.S. (bogus) downgrade by S&P.

Why was the US downgrade bogus?  Because the US can print?

If that's your reason, I don't know why the rating agencies even rate any sovereign debt denominated in the local currency, since they can always "pay it back", even if it's steeply devalued.

The entire credit rating system is bogus.  Look at the history of bond rating upgrades and downgrades.  It's practically worthless as a decision making tool.  Bond raters invariably downgrade after prices have crashed.  That's completely useless.

On 9/12/2022 at 10:48 PM, zadok said:

...basically true...however, 99% of the participants on this forum most likely collect those series u r referring to as common n easy to assemble, the flies in the ointment of ur hypothesis is they dont have Hansen money n they r not just filling holes, many if not most r attempting to complete sets that exhibit uniformity, average grades, comparable appearances etc...therein lies the obstacles n creates the challenges that make this hobby interesting...

I was trying to point out that attempting to collect legitimately scarce but low to moderately priced coinage the same way most collectors buy US coinage isn't workable.

I am aware that no collector would ever choose to complete any series (other than maybe bullion) in one day.  No point in doing that.

On 9/12/2022 at 10:48 PM, zadok said:

.Iceland for example, difficult to find n no coin dealers in the entire country n most likely a hand full of collectors if any there, even Hansen would find it difficult to assemble a complete set in gem condition regardless of price...some of the colonial coins u collect or the territorial coins i collect, Hansen n others wouldnt give a second thought to, no prestige even if completed n maybe 5 people in the entire world that would even care...

Agree

Of course, I also don't see any sense of accomplishment in having an essentially unlimited bank account and completing anything either.  What kind of accomplishment is there in that?

On 9/12/2022 at 7:35 PM, VKurtB said:

Come ON! There is no type of collecting that would be impossible without the Internet. There used to be these things (implied upward tone of voice as if a question) called letters (again) and people would write down messages (yup, again) and put them in envelopes (ditto) and put a stamp on them (last time, I promise). You get the idea. Relationships with dealers is how this hobby used to operate. I even had a correspondence with a Belgian collector. Internet, schminternet. 

Have you ever looked for the coins I primarily collect?  There isn't enough money to make it worthwhile for a dealer to even attempt to find the coin for me, possibly excepting paying multiples to current estimated value.

Collecting (relatively) low priced hard to find coins doesn't apply in collecting US coinage, except under some specialization where most of it was invented because most US series are so easy to complete. 

As a date, all US coins are either cheap when common or expensive if scarce or rare.  There is nothing in the middle.  Common coins are easy to buy by definition.  Somewhat scarce but (very) expensive coins are more prominent and have a high enough turnover where the coin is easy enough to buy also.  Most of the coins which most US collectors consider scarce are actually common and also easy to buy, like practically all 20th century key dates.  It's only actually rare and scarcer US coins with the highest preferences that are actually hard to buy.

Anyone who has the money can literally complete the majority of US series (a noticeable majority) in one day, either in "high" or "acceptable" (by pre-TPG standards) quality.  That's why it was so easy for Hansen to reach the completion rate in his collection as fast as he did.

As an example, it's possible to buy every single US regular issue circulation strike half dollar in the quality I described in one day, outside of the scarcest Liberty Seated and maybe the 1794, excluding specialization like die varieties.  Same applies to every series back to the Barber coinage, excluding Saints and Indian Head eagles.

No one can do that with the primary series I collect or anything close to it.  Though the exact scarcity is only partially known, the coins are actually hard to buy, there is limited incentive to sell due to the low to moderate market value, and the coins apparently have a high enough preference where the owners do not want to sell it.  Otherwise, I would have seen more of the coins I know exist from prominent collections which I have not.

On 9/11/2022 at 8:28 PM, zadok said:

..but to answer one of ur original questions yes, there r a few select collectors that strive to obtain the finest available coins even in the most common dates regardless of premiums....

I'm not referring to now or since PCGS came into existence.  I'm referring to an earlier time.  I don't know that no one did it but I'm confident hardly anyone would have paid more than modest premiums to do it. (I have heard it happened anecdotally.)

On 9/11/2022 at 8:28 PM, zadok said:

...true, the internet has destroyed probably more than it has created...as far as pure coin collecting, the internet is a two edged sword, it has allowed many collectors to add to their collections from sources they other wise would not have access to however, it has virtually eliminated "collecting" for an equal number of collectors, they just sit at home n punch buttons n no longer participate personally in the hobby...vkurt has correctly expounded on this numerous times, u cant truly grasp all the aspects of the hobby if u dont actively engage with other collectors n the real market of the hobby, coin clubs help but r limited...

This is how I collect as it's my only option for what I collect,.to my knowledge.

I could have attended the auctions in person but would be uneconomical to do so given the value of the coins I collect.

I could also literally contact dealers all over the world (even the ones who sell similar coins to mine) repeatedly and possibly never have found a single coin I don't own now that I would want to buy.  However many times they had anything, it wouldn't be many.  Back when I collected South Africa, I asked one of the more prominent dealers in that country how many times they had sold a better 1931 silver circulation strike in over 30 years.  Their answer was never.

If I were collecting pre-internet, I wouldn't be able to collect my primary interest, unless I did so only through private transactions, probably mostly through dealers.  That's what I presume the collections I know must have done (Norweb, Patterson, Sellschopp).  I haven't done that, yet.

On 9/11/2022 at 2:37 PM, zadok said:

...only in some areas...in general many if not most early collectors, lets say late 1880s to 1930s, were fairly satisfied with obtaining nice examples of each date n mint, especially if they were collecting multiple series...

I was thinking more of Eliasberg's contemporaries.

One of the many unpopular viewpoints I have expressed on coin forums is that the internet has eliminated the traditional challenge in collecting the coins most collectors collect, US and many other countries.

Most US are easier to buy because the much higher price level makes the coins available for sale with greater frequency, but it also applies to at minimum Europe and the Anglo-Saxon countries.

I have read the Hansen "Mega thread" on the PCGS forum intermittently.  Offhand, I recall he bought at least 95% of all US Mint issues within a few years and has mostly upgraded since.  Someone like him has the money to buy any coin, but even coins not normally available can be bought privately through the dealer network because these US coins are simultaneously expensive. 

It's not possible to do that for much lower priced non-US coinage without likely paying large premiums to "market" but even then, often the prospective buyer may not be able to identify the owner or even worse, confirm the coins they want even exist.

On 9/9/2022 at 10:11 PM, zadok said:

...sort of...eliasberg was also a "hole filler", true he bought some super major rarities but sort of skimped on other areas of his collection with vf-xf coins as well...his very best coins quality wise were from other collections that he bought intact...hansen on the other hand is attempting to buy as high of grades as he can find...the garret, norweb, pogue collection were superior in quality to the eliasberg collection but not as complete....

Doesn't this have a lot to do with the difference in collecting approach at the time?

The differences in quality which modern US collecting finds so important now (mostly due to money) were a lot less important or irrelevant back then.

As one example, I've never heard that any elite collection cared about buying what are now the highest graded but very common or extremely common coins.

On 9/8/2022 at 6:30 PM, Modwriter said:

I have noticed Queen Elizabeth's portrait has changed through the years. I have sold several QEII British Commonwealth coins in the past and now have only Canadian coins.

I prefer the first by far.  I still have a modest number from South Africa before the country changed to a republic and left the Commonwealth.

On 9/10/2022 at 11:54 PM, VKurtB said:

Except for one VERY important piece of data. European sovereign debt with negative interest rates DID SELL. In fact, they were fully sold out. People literally paid 1,000 euros to get 900 and something back later. Amazing what can be done when the physical currency can be and is demonetized from time to time. Can’t even stuff it under the mattress. 

You are correct.

But I can infer that those who did the buying weren't actually doing it with their own money hardly at all if ever.  Aside from the ECB with its deranged monetary policy, it must have been institutional buyers 99+% of the time.  And the only reason they did it was believing rates would go even more negative as an interest rate speculation.

As one example, I recall Austria selling a 1000YR bond at 1.2%.  Not negative but even worse than a ST negative coupon bond.  Serial defaulter Argentina sold 100YR USD debt within the last 10 years or so.  This was a "reach for yield" by the buyers and yes, it's already in default now.

On 9/11/2022 at 1:12 AM, GoldFinger1969 said:

Various mortgages in Europe did just that. 

Yes, I read about that. 

It's absolutely insane.  It's obvious that when the mortgage contract was written, the underwriter never conceived that they would find themselves doing that.

On 9/8/2022 at 10:01 PM, VKurtB said:

Right now, interest rate caps are no worry. Interest rate FLOORS are. Other developed countries HAVE dabbled with negative interest rates, and not just in the case of real interest rates either. Negative cash rates. What is that? Obviously it is a societal/governmental “bribe” to create new enterprises. Under normal circumstances, that would be crazy. 

What you are describing is a form of price fixing. That's what monetary policy represents.  It "works" now for the reasons I have given you.

On 9/8/2022 at 10:01 PM, VKurtB said:

But in the regulatory/environmental/social obligation environment that accompanies creating a business today, I submit to you it is efficient pricing. 

Your statement is a contradiction.  Negative interest rates are a contradiction, as no one would voluntarily pay anyone to borrow.

On 9/8/2022 at 5:18 PM, VKurtB said:

Interest is the price of borrowed liquidity, nothing more. Assigning debt a negative connotation is itself a bizarre ideology, one to which very few trained in economics adhere. You @World Colonial, are far and away the ideological outlier in this matter. 

Debt is a tool, that's all.  No tool is good or bad in and of itself.  You disagree with me that ANY amount of debt poses a problem for a society.  That's my disagreement with you and nothing else.

If I believed as you claimed, I'd be in favor of usury laws.  I'm not.  I'm against any interest rate caps of any sort.  I do believe disclosures should be understandable to consumer borrowers but otherwise, anyone should be able to charge any rate they want.

I'm also against bailouts of any sort.  That's what governments and central banks have been doing lately, over and over.

On 9/8/2022 at 3:58 PM, GoldFinger1969 said:

But we DON'T have a stock mania or even a real estate bubble.  The stock market may be overvalued but it's not set to collapse.  Valuations are NOWHERE near 2000 or 2007 levels in terms of P/E or leverage.  Not even close.

The P/E is the one of the worst measures of value.  The only reason the P/E has the correlation it does to stock prices is because the "P" is the market. 

It's a lagging indicator.  When stock prices fall a lot, the P/E ratio is high making the market look more expensive.  you know this as well as I do.

On 9/8/2022 at 3:58 PM, GoldFinger1969 said:

As for real estate, it's pricey and certain areas are overvalued, but it's not a bubble.  A bubble was 1990 or 2007.  Check out the supply of new homes relative to the population:  it's DOWN by 30-40% while our population is UP by 30%.

There wasn't a national real estate bubble in 2006 either.  Are you telling me that wasn't a bubble either?  Look at the Case-Schiller indices for the 20 component cities.  All are not in a bubble, but more are now versus then and the overvaluation is a lot worse.  Housing is less affordable than it's ever been, even according to the NAR or whatever affordability index is used.

On 9/8/2022 at 3:58 PM, GoldFinger1969 said:

Unless you can tell us WHEN this collapse is coming, it's useless, WC.  If it happens in 75 years, anybody waiting for Armageddon is a fool.

Everyone should have to live with the consequences of their financial decisions.  Problem is in today's society, they don't.  Those who take imprudent risks disproportionately immediately look for someone else to bail them out.

Back in 2020, I told you I thought the oil majors were cheap, but I didn't buy it.  Why?  Because I've subsidized my mother and sister to the tune of $150K in the last five years. I have to make sure that regardless of what happens, I can meet my obligations. 

Are you going to write me a check if I am wrong and need the money?  I didn't think so. 

I don't need to participate in the most overpriced markets in history to do what I need to do.  That's one of the main reasons most people are in this market.  I can do what I have been doing to this point and still be better off than most others in the future.

On 9/8/2022 at 3:58 PM, GoldFinger1969 said:

The U.S. has favorable demographics, private property rights, the rule of law, mobility of capital and labor, etc.  We have dozens of world-class tech, medical, and other companies -- we lead the entire world.  Europe has many continental problems, China is run by a 1-party authoratarian monopoly.  Economies and financial markets just don't collapse, they collapse relative to internal valuations or compared to other countries metrics.  The U.S. is by far the best house in a lousy neighborhood.

No "fundamental" event ever bought or sold a single share.  The fundamentals are also worse now than decades ago, yet valuations are much higher.  Interest rates are the primary example.  No one can rationalize away that aggregate credit quality and credit standards are the lowest ever yet interest rates have been the lowest ever with it.

If the US fundamentals are so great, why has what can only be described as emergency fiscal and monetary policy been necessary since at least 2008?  The answer is because the economic fundamentals aren't what you claim.

On 9/8/2022 at 3:58 PM, GoldFinger1969 said:

FRED data is interesting but doesn't tell the whole picture.  Median figures are just that and don't show the upward mobility of Americans over time.  You are assuming income, net worth, and mobility are all static.

I'm not assuming anything.  I'm aware of movement up and down the income and wealth distribution.  The FRED data is the most representative data for the population as a whole.   It doesn't demonstrate the result you like but that's another consideration entirely.

On 9/8/2022 at 12:44 PM, GoldFinger1969 said:

You are shortchanging the long-term growth in real earnings per share of USA Inc.

7% real earnings growth over decades is NOT a fiction. 

I'd agree a lot more with you if I knew it wasn't substantially or mostly the result of the distortions I just described to you.

The US of today isn't the same country it was in the past and the change isn't for the better.  That's one aspect of my disagreement with you and everyone else who disagrees with me.  I also disagree that what is actually a form of socialistic central planning (the Bizarro World 21st century monetary and fiscal policy in most or every developed country) creates permanent long-term prosperity.  This is another aspect of my disagreement with you and presumably practically everyone else.

My difference of opinion with others here isn't actually economic or financial, it's philosophical.

On 9/7/2022 at 3:10 AM, GoldFinger1969 said:

The quality of U.S. earnings is very solid.  You can state that earnings will collapse, but the quality is A-1.  

It's predominantly based upon a fake economy, so while it may mean a lot to you, it doesn't mean anything to me.

On 9/7/2022 at 3:10 AM, GoldFinger1969 said:

Leverage in U.S. corporations is very modest compared to past cycles.   Banks, for an example, were levered at about 25:1 before 2008.  Today, they are leveraged about 10x.  Capital ratios across the spectrum are 2-4x HIGHER than 2008's.  It's like comparing a straw house to a brick house with the economy the Big Bad Wolf. 

Check out the JP Morgan Guide Book I listed above for more household and corporate data points.

You can't mix financial with non-financial companies.

For non-financials, leverage is low measured by the earnings coverage ratio because of extended low interest rates. Concurrently, their debt levels are not low but historically high.

I'm working with a company now (which I won't name) whose debt is rated BBB-, barely above a junk credit.  Concurrently, it's debt coverage ratio now is 11:1.  So yes, it's obviously not at imminent risk of default.

This is typical, not an outlier or even close to it.  Like I said in a recent post, this will take a while to change as the credit cycle progresses because companies have extended maturities.  (The converse of which is the buyers will experience huge losses).

This, of course, assumes they can mostly continue to borrow.  Interest rates have barely increased, yet the weakest borrowers (US corporate and international) are already showing signs of duress.  They have been (practically) shut out of the credit markets.

Given current operating and financial leverage, it doesn't take much for supposedly "solid" credits to be gasping for financial air without much if any notice.  

On 9/6/2022 at 6:37 PM, VKurtB said:

And by the way, holding debt is real wealth. Ask the holder of my mortgage. I didn’t hold a gun to their head to get a ridiculously low 30-year fixed mortgage rate. It’s a lower rate than my parents ever got in the 50’s to the 80’s. 

It's wealth to the individual, not the economy.  This is something else almost everyone misses entirely.

You or I as individuals are wealthier when our bank balance or asset portfolio increases in price.  The economy in the aggregate isn't.  

On 9/7/2022 at 3:07 AM, GoldFinger1969 said:

DXY dollar index at multi-year highs; dollar at 24-year highs vs. Japanese Yen.   Remember when everyone said Japan and their managed economy was the wave of the future, circa 1980 ?  They've been stuck in quicksand for 30 years now. 

I'm not referring to the FX rate of the USD, but it's domestic purchasing power.

On 9/7/2022 at 3:07 AM, GoldFinger1969 said:

DXY dollar index at multi-year highs; dollar at 24-year highs vs. Japanese Yen.   Remember when everyone said Japan and their managed economy was the wave of the future, circa 1980 ?  They've been stuck in quicksand for 30 years now. 

I agree we (probably) can't go lower unless we're going to have negative interest rates, something the Fed doesn't want (banks, money market funds, pension funds, etc.).  But the circumstances that led long-term Treasuries to go from 2% in April 1946 to 15% in September 1981 are not present today.

You had:  trade barriers (Cold War, China/India closed).....currency problems (leading to floating rates in 1973)....Treasury vs. Fed conflicts (largely addressed in 1951 Accord) that persisted with control of dollar vs. open market operations.....inflation going from 2% to 5% to 12%.  These are NOT likely to persist for years or decades.

You are looking in the rear-view mirror, just like everyone who looks at the so-called fundamentals.

Of course, at or near a market peak, the so-called fundamentals look good to most people.  How else do you think we got the combination of the lowest credit quality and lowest credit standards in human history simultaneously with the lowest interest rates in history?  It's also why we have a stock mania and real estate bubble.

If you go back to 1981 at the peak of the interest rate cycle, either no one or virtually no one would have foreseen that interest rates would be so low now and recently with such actually awful credit quality.

On 9/7/2022 at 3:07 AM, GoldFinger1969 said:

A single-minded focus on debt is misguided, IMO.  As I have said before, it took Greece -- a 3rd-rate, tourist-dependent Socialist economy -- nearly 30 years to implode.  A global financial superpower which is the best debt-laden house in a debt neighborhood is not likely to have the problems you believe.

First, the primary basis of my position isn't on debt.  Current debt is a symptom of extended social and economic decay.  You and practically everyone else miss this entirely.  The actual state of country longer-term is nowhere near as favorable as you imply.  It's poor to very poor.

Second, comparing to Greece makes no sense.  I'm aware Greece is in worse shape, but your inference is that the starting point for the US now is favorable when it isn't.  

Predicting that most Americans are going to become poorer or a lot poorer over the indefinite future isn't "doom and gloom", it's completely realistic. A turn in the long-term credit cycle (in 2020) and an end of the asset mania are more than sufficient to result in this outcome.

Believing that any society can live above its means as the US has for decades and then expecting more of the same indefinitely is nonsensical.  That's the consensus.

Go look at public data published by FRED.  It's not mine.  Real median household income and net worth has essentially flatlined since the late 90's.  This is an entire generation and probably the worst performance in US history over a comparable time period.  It's also occurred during a mostly expanding economy, except for short periods surrounding 9/11, the GFC, and COVID.

It took a 5X increase in the national debt, an 8X increase in the FRB's balance sheet, the lowest interest rates in history, and the biggest asset mania in history to achieve this pathetic economic performance.  

On 9/6/2022 at 6:37 PM, VKurtB said:

SOMEBODY can spend earnings, for SOMETHING, whether it’s by a stockholder from a dividend, or the company itself for growth of the core business, or even M&A. Earnings are highly relevant, to ALMOST the exclusion of any other metric. 

Not the shareholder.  They never see it unless it's paid out as dividends.

As for growth there is no little if any correlation with earnings in the recent past, like much of this century.

Earnings are an accounting abstraction to practically every individual, as they have absolutely no ability to monetize it.  They can sell their shares, but any appreciation is mostly or entirely independent or any supposed growth.

On 9/6/2022 at 11:37 AM, GoldFinger1969 said:

Over time,  REAL financial assets are the only assets capable of generating positive, inflation-adjusted returns over long measuring periods.  Tangible assets, collectibles, and commodities have their years or decades...but then they get too high...correct...don't pay dividends or income....and you go 10-15 years making nothing.

That is NOT the case with stocks or bonds.

For stocks it depends upon what you owned.  There were 10 year periods from 1966 (or earlier) and 1982 when returns were zero or negative, definitely measured in purchasing power which is what ultimately matters.  This was during a mostly expanding economy, measured by GDP.

Unless you believe the interest rate cycle has not bottomed (which I do), I can't imagine a worse time to buy bonds than now or recently.  It's better now versus 2020 but only marginally.  Due to relative overvaluation in all major asset classes, I expect short-term higher quality debt (like ST UST) to outperform, but still with a likely negative real return.

On 9/6/2022 at 5:43 PM, VKurtB said:

Are equities really so high based on PE’s? I honestly haven’t had cause to check much lately. The last I heard, PE’s were fairly normal. But I realize that at some point, dividends can matter more than earnings per se. 

The P/E ratio is a poor value measurement.

First, it's a lagging indicator because stock prices always move before earnings, up or down.

Second, earnings aren't even real money.  You can't spend it.  No one can spend it.  It's an accounting number and nothing more with most of it permanently buried in the balance sheet.  The dividend is actual cash in your pocket and most payouts are very poor historically.  It only appears competitive due to the abnormal rate environment but that's changing fast now.  In a long-term economic uptrend, rising payouts can mostly or entirely negate this but someone would have to be wildly optimistic to believe that's where we are now.

Also look at the quality of corporate balance sheets.  For anyone who is going to ignore valuations and hold anyway, at least make sure that the company can sustain the dividend during bad times.  The leverage most larger companies have now better supports they can't, unless the recession is very modest and brief.  In 2008, stock prices crashed (the S&P fell 58%), then earnings crashed, and then dividends were cut or eliminated.  All in a few months. The fundamentals are far worse now versus 2008 and balance sheets are much weaker.

Third, earnings are also inflated for a variety of reasons.  Some of it is due to increased efficiency but much of it is something else.  The extended low interest rate environment has artificially reduced interest expense.  This won't change quickly but it's going to be a headwind for the indefinite future, a long time.  Financial engineering (mostly in the form of stock buybacks) has inflated EPS while simultaneously gutting corporate balance sheets. The credit mania has inflated GDP and with it, corporate earnings by enabling the everyone to consume above their means.  If globalization partly reverses, this will reduce labor arbitrage.