The Case For $3,000 Gold 1 1

[zadok]

On 1/4/2024 at 9:36 PM, VKurtB said:

This idea that P/E ratios are somehow bogus is itself the bogus part of the conversation. It’s complete poppycock. P/E ratios are a perfectly fine metric. Whether those earnings are paid as dividends, or used to buy back stock, or used to finance growth in key areas, or EVEN to engage in M&A activities, thus making it unnecessary to finance that with debt, is about 99% immaterial. It ALL becomes shareholder value. Now of course if they want to use it to pay obscene management salaries, or pursue DEI activities, that is an invitation to sell immediately and run for the hills, and I shall, right after I vote down that garbage with my proxy form. 

...try paying ur electric bill with all of those examples except for dividends n u will be looking at ur coins by candlelight....

[VKurtB]

On 1/4/2024 at 8:47 PM, zadok said:

...try paying ur electric bill with all of those examples except for dividends n u will be looking at ur coins by candlelight....

So what I hear you saying is that capital appreciation is somehow bogus? I have to sell it to spend it? Like coins, huh?

Edited January 5 by VKurtB

[GoldFinger1969]

On 1/4/2024 at 6:00 PM, World Colonial said:

Yes, you keep telling me this, because you keep on claiming that the P/E multiple demonstrates it.  And you do this because you continue to believe in false causality, that prices are determined from supposed "fundamentals"    It's also evident you believe numerous other fallacies promoted by Wall Street too.

These aren't fallacies promoted by "Wall Street" -- even folks who disagree with WS marketing agree that numbers are numbers.  You can quibble with the numbers but you can't say they aren't representative of the fundamentals.

On 1/4/2024 at 6:00 PM, World Colonial said:

The P/E ratio is one of the least reliable valuation metrics.  It’s been a lagging indicator at major turning points during the 21st century mania, both tops and bottoms.  The ratio was higher at the 2002 low versus the 2000 peak and higher at the March 2009 low versus the October 2007 peak, the opposite of any actually useful indicator. This happens because the economy never leads stock prices (usually lagging) and earnings also lag economic performance somewhat.

Yes, but that doesn't mean the P/E is irrelevant.  You need to know if earnings have collapsed.  Clearly, they haven't.  So the P/E ratio IS useful right now.  If we enter a recession, I agree:  best to buy at 25x EPS instead of 16x EPS (although the trend in recent years has been for the multiple to collapse MORE than earnings).

MULTIPLE compression is often WORSE than the earnings decline.

On 1/4/2024 at 6:00 PM, World Colonial said:

Earnings are only relevant to "investors" to the extent they receive it as a dividend.  The dividend yield is barely above the all-time low from the 2000 dot.com bubble, and this is even with all the economic distortions since at least 2008 which you also completely ignore.

No. 

Markets and the public change and so do stocks.  MSFT went public in 1986 and didn't pay a dividend until about 20 years later but it went up 100-fold in that time.  AMZN has never paid a dividend and her stock is up 1000-fold.  WMT never paid a public dividend until after 30 years as a public company and returned 34% a year.

All those companies GREW -- they were GROWTH stocks -- and their stock prices reflected those realities.  If you were advising Sam Walton, he would have paid a dividend in the early-1970's and never toppled Sears-Roebuck.  And if you were a stockbroker, you would not have recommended buying WMT in the depths of the 1974 bear market...because the S&P 500 sold for 6x EPS and WMT sold for 12x EPS, 2x the market.  You would have passed on the stock at $12...even though it would have been A BARGAIN AT $600/share !!! 

The market has returned a nice CAGR since 2000.  You can't stay in cash for 23 years.  Dividend yield is not something that is useful today as it was in the Old Days when the DJIA (the index followed then) was a buy at 6% and a sale at 3%.  It hasn't been at 6% since the 1980's -- you can't stay out of stocks for 40 years because some indicator says so.

Your Other Lengthy Posts:  Buybacks reduce share count and increase EPS if done at attractive prices and NOT offset by share dilution from bad M&A deals and/or compensation shares.  I lean towards dividends, but buybacks done effectively reward shareholders.  So does dividend reinvestment. 

The market ex-Mag 7 is pretty cheap.  It's not dirt cheap, but it's certainly not a "mania."  A mania was tech stocks in 2000....a mania is NFTs in 2021....a mania is gold in 1980....a mania was bonds in 2020 and 2021 with the 10-year Treasury yielding 1% or less.  The stock market at 21x is not a mania, though with cash paying 4% it now has competition.

No, the S&P 500 at 21x and the Small Cap 600 at 15x are not "manias."  MSFT and GOOG at 25-30X might be rich, but not a mania (you think anybody will knock them off like GM or EK ?).  AI might be extended and NVDA might be a bubble, but would you buy it at 22x EPS instead of 32x with the earnings RISING ?  I would.

Look, I tend to be a Value/GARP investor over Growth because of various circumstances.  But you can't say something is a mania or a bubble when the conditions that would alleviate it don't appear for decades.  In that case, the assumption of the mania or bubble is wrong, IMO.

I'd be curious to see at what level of the S&P 500 you would be a buyer. 

 

Edited January 5 by GoldFinger1969

[GoldFinger1969]

On 1/4/2024 at 9:47 PM, zadok said:

...try paying ur electric bill with all of those examples except for dividends n u will be looking at ur coins by candlelight....

I like dividends but I've had 2 stocks cut dividends.  It happens.....

Dividend GROWERS are often better than higher-yielding dividend stocks.  MSFT yielding 2% in 2010 was a great investment. 

[GoldFinger1969]

On 1/4/2024 at 10:12 PM, VKurtB said:

So what I hear you saying is that capital appreciation is somehow bogus? I have to sell it to spend it? Like coins, huh?

Different strokes, I say. 

Nothing wrong with being a growth investor, probably is better going forward than a value investor.  But if you aren't wealthy and/or want to sleep at night, lower but more predictable returns might be the ticket.

[World Colonial]

On 1/4/2024 at 9:36 PM, VKurtB said:

This idea that P/E ratios are somehow bogus is itself the bogus part of the conversation. It’s complete poppycock. P/E ratios are a perfectly fine metric. Whether those earnings are paid as dividends, or used to buy back stock, or used to finance growth in key areas, or EVEN to engage in M&A activities, thus making it unnecessary to finance that with debt, is about 99% immaterial. It ALL becomes shareholder value. Now of course if they want to use it to pay obscene management salaries, or pursue DEI activities, that is an invitation to sell immediately and run for the hills, and I shall, right after I vote down that garbage with my proxy form. 

I already explained your objection.

There is a difference between the company and the stock certificate.

You're also still assuming that prices are contingent upon "fundamentals", implicitly a belief in the Efficient Market Hypothesis. 

It's complete bunk.  No one can explain prices from "fundamentals".  It's accepted as a truism.

Edited January 5 by World Colonial

[World Colonial]

On 1/5/2024 at 1:21 AM, GoldFinger1969 said:

These aren't fallacies promoted by "Wall Street" -- even folks who disagree with WS marketing agree that numbers are numbers.  You can quibble with the numbers but you can't say they aren't representative of the fundamentals.

I absolutely can dispute this claim, because neither you nor anyone else can demonstrate otherwise. It's not incumbent upon me or anyone else to disprove this conventional belief.  You actually believe in a form of EMH without admitting it.  EMH is nonsense.  Academics never demonstrated EMH.  They just couldn't explain prices by supposed causal events, so they just made this theory up.

I explained to you the implied concensus agreement on the impact of psychology on various "bubble" stocks: serial money losers, "disruptors", "meme stocks", "unicorns".  So, am I supposed to believe these are valued on "fundamentals" too?  If not, based exactly on what?

How about CSCO?  How does its performance explain the stock price?  It's 35% lower today versus 2001 even as it's a much larger far more profitable company.  

Or how about these markets?  How do you explain this?  You're going to tell me that this price performance is explained by earnings and GDP?

Index               12/23                 COVID low      GFC peak       dot.com peak Other

S&P 500          4559                2191                1555                1553                442 (10/1994)

Stoxx600         459                  306                  400                  407                  125 (10/1994)

Switzerland     10879              9036                9548                7938                2675 (10/1994)

ASX 200          7040                5022                6851                3386                1857 (10/1994)

Shanghai         3040                2646                5560                1953                794 (10/1994)

Hong Kong      17559              22519              27254              18397              16820 (7/1997)

Singapore        3094                2381                3726                2528                Not available

Korea              2496                1439                2085                1066                1145 (10/1994)

Taiwan            17287              8523                9807                10393              10512 (1/1990)

Thailand          1397                1105                924                  499                  1695 (10/1993)

Dot.com peak = late 1999. early 2000           GFC peak = mid-2007 to mid-2008               

Stoxx600 is Europe’s S&P 500                      All indices in local currency

Source: CNBC.com

[GoldFinger1969]

On 1/5/2024 at 10:51 AM, World Colonial said:

I absolutely can dispute this claim, because neither you nor anyone else can demonstrate otherwise. It's not incumbent upon me or anyone else to disprove this conventional belief.  You actually believe in a form of EMH without admitting it.  EMH is nonsense.  Academics never demonstrated EMH.  They just couldn't explain prices by supposed causal events, so they just made this theory up.[/

I explained to you the implied concensus agreement on the impact of psychology on various "bubble" stocks: serial money losers, "disruptors", "meme stocks", "unicorns".  So, am I supposed to believe these are valued on "fundamentals" too?  If not, based exactly on what?

How about CSCO?  How does its performance explain the stock price?  It's 35% lower today versus 2001 even as it's a much larger far more profitable company.  

Or how about these markets?  How do you explain this?  You're going to tell me that this price performance is explained by earnings and GDP?

Index               12/23                 COVID low      GFC peak       dot.com peak Other

S&P 500          4559                2191                1555                1553                442 (10/1994)

Stoxx600         459                  306                  400                  407                  125 (10/1994)

Switzerland     10879              9036                9548                7938                2675 (10/1994)

ASX 200          7040                5022                6851                3386                1857 (10/1994)

Shanghai         3040                2646                5560                1953                794 (10/1994)

Hong Kong      17559              22519              27254              18397              16820 (7/1997)

Singapore        3094                2381                3726                2528                Not available

Korea              2496                1439                2085                1066                1145 (10/1994)

Taiwan            17287              8523                9807                10393              10512 (1/1990)

Thailand          1397                1105                924                  499                  1695 (10/1993)

Dot.com peak = late 1999. early 2000           GFC peak = mid-2007 to mid-2008               

Stoxx600 is Europe’s S&P 500                      All indices in local currency

Source: CNBC.com

You're hung up on EMH.  Nobody buys or sells stocks based on textbook theories.  Forget about EMH -- unless they talk about it on CNBC. 

COST is not 35% lower -- it's HIGHER.  Better get a new data supplier, WC !!  

There are MANY moving parts to a stock's price.  It's NOT just earnings or GDP or cash flow.  If earnings go up but the stock was too expensive -- P/E too high -- you can have a profitable company whose stock SUCKS for years -- think CSCO after 2000.

Every single market you cited is HIGHER today than years earlier -- except Hong Kong/China for obvious reasons.  All that is telling me is that stocks do great over long periods of times...earnings tend to go up (about 7% a year for the U.S.)....GDP growth is important which we and Asia have and Europe does not....and starting valuations matter.

Again, I don't know if you own ANY stocks at all but if not, when did you ?  Because the nirvana you want to get the ALL-CLEAR to buy probably hasn't been around except in late-March 2020....November 2008/March 2009...October 2002....January 1991....October 1987...and August 1982.

And I am not sure you would have bought at those great buying spots, so if not those, when ? 

[World Colonial]

On 1/5/2024 at 1:21 AM, GoldFinger1969 said:

Yes, but that doesn't mean the P/E is irrelevant.  You need to know if earnings have collapsed.  Clearly, they haven't.  So the P/E ratio IS useful right now.  If we enter a recession, I agree:  best to buy at 25x EPS instead of 16x EPS (although the trend in recent years has been for the multiple to collapse MORE than earnings).

Why would I make an exception for recessions?  If earnings are a legitimate metric to value stocks, then the P/E ratio should be valid in all market environments.  This is another rationalization.

On 1/5/2024 at 1:21 AM, GoldFinger1969 said:

Markets and the public change and so do stocks.  MSFT went public in 1986 and didn't pay a dividend until about 20 years later but it went up 100-fold in that time.  AMZN has never paid a dividend and her stock is up 1000-fold.  WMT never paid a public dividend until after 30 years as a public company and returned 34% a year.

All those companies GREW -- they were GROWTH stocks -- and their stock prices reflected those realities.  If you were advising Sam Walton, he would have paid a dividend in the early-1970's and never toppled Sears-Roebuck.  And if you were a stockbroker, you would not have recommended buying WMT in the depths of the 1974 bear market...because the S&P 500 sold for 6x EPS and WMT sold for 12x EPS, 2x the market.  You would have passed on the stock at $12...even though it would have been A BARGAIN AT $600/share !!! 

Yes, there is change, a psychological change.

I've told you that to 99%+ of shareholders, there is a difference between the company and the stock certificate.  Yes, I agree it's an unorthodox view, but that's what practically everyone actually buys, a stock certificate.  They own a piece of paper whose value isn't contingent upon what most believe. 

Look at the examples I gave you in my above post, especially the foreign markets.  I didn't include those examples to get an answer from you, because the "fundamentals" don't and can't explain this performance.  The purpose is to demonstrate that this belief is invalid.  If "fundamentals" actually explain prices, there is no possibility for these results.

I already know you are going to disagree, because you're going to reply with some other supposed reason to explain it which doesn't have anything to do with anything.

The price is what it is, regardless of what it is.  It isn't because of "fundamentals".

[World Colonial]

On 1/5/2024 at 11:06 AM, GoldFinger1969 said:

You're hung up on EMH.  Nobody buys or sells stocks based on textbook theories.  Forget about EMH -- unless they talk about it on CNBC. 

Belief in "fundamentals" is a form of EMH.  There is no evidence that stocks or any financial assets are valued from "fundamentals".  Everyone just assumes it.

[GoldFinger1969]

On 1/5/2024 at 11:06 AM, World Colonial said:

Look at the examples I gave you in my above post, especially the foreign markets.  I didn't include those examples to get an answer from you, because the "fundamentals" don't and can't explain this performance.  The purpose is to demonstrate that this belief is invalid.  If "fundamentals" actually explain prices, there is no possibility for these results.

Sure they can.  But fundamentals are only 1 leg in the 3-legged stool of stock analysis.  You also have to look at starting valuation and interest rates.  Sometimes political considerations (i.e., China vs. Hong Kong/South Korea/Japan) comes into play.

There are NO anomalies in your list.  Prices and performance vary over time, but it's easily explanable for the most part.

 

[World Colonial]

On 1/5/2024 at 11:06 AM, GoldFinger1969 said:

Every single market you cited is HIGHER today than years earlier -- except Hong Kong/China for obvious reasons.  All that is telling me is that stocks do great over long periods of times...earnings tend to go up (about 7% a year for the U.S.)....GDP growth is important which we and Asia have and Europe does not....and starting valuations matter.

Really, where is the evidence for this?

What is the obvious reason for China and Hong Kong?  Because it doesn't fit your claims?

[GoldFinger1969]

On 1/5/2024 at 11:08 AM, World Colonial said:

Belief in "fundamentals" is a form of EMH.  There is no evidence that stocks or any financial assets are valued from "fundamentals".  Everyone just assumes it.

Do you watch CNBC  or FoxBusiness or Bloomberg TV ?  They mention valuations and fundaamentals all day long, WC.  I get 25-30 research PDFs a day....that's all they talk about.

[World Colonial]

On 1/5/2024 at 11:10 AM, GoldFinger1969 said:

Sure they can.  But fundamentals are only 1 leg in the 3-legged stool of stock analysis.  You also have to look at starting valuation and interest rates.  Sometimes political considerations (i.e., China vs. Hong Kong/South Korea/Japan) comes into play.

No one can quantify the price from what you wrote.  Interest rates usually correlate to stock prices, but it's not mechanical.  

I'm aware starting valuations are relevant.  I never claimed otherwise.

[GoldFinger1969]

On 1/5/2024 at 11:10 AM, World Colonial said:

Really, where is the evidence for this?

What is the obvious reason for China and Hong Kong?  Because it doesn't fit your claims?

Not at all -- it does.  You have to look AT the fundamentals and BEYOND them, too....at times.

Because the expectation was that China would adopt democratic liberalization measures that would aid U.S. and other business interests in China.  This followed the 2000 WTO/GATT acceptance of China.  Without that, China doesn't become the world's manufacturer the next 2 decades.  Chinese stocks SUCKED for about 5 years until 2005 and then soared like 6-fold in 2 years.

I don't need to know fundamentals to know that any market or item that goes up 6x in 2 years is probably overvalued and priced for perfection -- and perfection didn't happen the next 10-15 years for China.  Ergo, market-losing returns except in select stocks.

Edited January 5 by GoldFinger1969

[World Colonial]

On 1/5/2024 at 11:11 AM, GoldFinger1969 said:

Do you watch CNBC  or FoxBusiness or Bloomberg TV ?  They mention valuations and fundaamentals all day long, WC.  I get 25-30 research PDFs a day....that's all they talk about.

I've watched it in the past.  It's not that I don't know anything you are telling me.  I disagree with your premises because it's not valid.

[World Colonial]

On 1/5/2024 at 11:14 AM, GoldFinger1969 said:

Not at all -- it does.  You have to look AT the fundamentals and BEYOND them, too....at times.

Because the expectation was that China would adopt democratic liberalization measures that would aid U.S. and other business interests in China.  This followed the 2000 WTO/GATT acceptance of China.  Without that, China doesn't become the world's manufacturer the next 2 decades.  Chinese stocks SUCKED for about 5 years until 2005 and then soared like 6-fold in 2 years.

I don't need to know fundamentals to know that any market or item that goes up 6x in 2 years is probably overvalued and priced for perfection -- and perfection didn't happen the next 10-15 years for China.  Ergo, market-losing returns except in select stocks.

Pure rationalization.  This doesn't explain anything.  What you described (without admitting or maybe even knowing it) is psychological.

China's Shanghai index hit 1400 in 1992 when GDP (yes, probably not accurate) was about 2% to 3% of today's reported level.  The index is around 2900 now.

The "fundamentals" do not explain this performance.

Edited January 5 by World Colonial

[World Colonial]

On 1/5/2024 at 11:08 AM, World Colonial said:

Belief in "fundamentals" is a form of EMH.  There is no evidence that stocks or any financial assets are valued from "fundamentals".  Everyone just assumes it.

One other point.  I know that most of these markets are higher now, after 15+ to 20+ years.

That's not the point.

The point is that if "fundamentals" really explained market prices, obviously these indexes should be noticeably higher than now.  I don't have earnings data but given whatever growth has occurred locally and globally where the largest companies operate, I can infer the stocks comprising these indexes are making (a lot) more now vs. previously where this performance doesn't correlate.  The prices then (at any of these points in time) weren't based upon "fundamentals", then or now.

If you don't like these indexes, take a look at the Korea ETF.  It's lower now vs. 16 years ago and yes obviously, I know it's paid some dividends.  Since Korea earnings are higher now versus then, why is this ETF lower?

[GoldFinger1969]

On 1/5/2024 at 11:18 AM, World Colonial said:

Pure rationalization.  This doesn't explain anything.  What you described (without admitting or maybe even knowing it) is psychological.

China's Shanghai index hit 1400 in 1992 when GDP (yes, probably not accurate) was about 2% to 3% of today's reported level.  The index is around 2900 now.  The "fundamentals" do not explain this performance.

It was a closed market manipulated by the CCP and riding the wave of the post-South Korean 1988 Olympics developing markets bubble.

You may not follow these items -- I did. 

 

[zadok]

On 1/4/2024 at 10:12 PM, VKurtB said:

So what I hear you saying is that capital appreciation is somehow bogus? I have to sell it to spend it? Like coins, huh?

...yep unless u want to borrow against that appreciation...beware the joe n moe show wants to tax u on that appreciation....

[VKurtB]

On 1/5/2024 at 9:37 AM, World Colonial said:

I already explained your objection.

There is a difference between the company and the stock certificate.

You're also still assuming that prices are contingent upon "fundamentals", implicitly a belief in the Efficient Market Hypothesis. 

It's complete bunk.  No one can explain prices from "fundamentals".  It's accepted as a truism.

No DIRECT relation between earnings and market value; just a stronger correlation than any other metric. One buys shares in a company, and is entitled to a SHARE of its value.

[VKurtB]

On 1/5/2024 at 1:25 PM, zadok said:

...yep unless u want to borrow against that appreciation...beware the joe n moe show wants to tax u on that appreciation....

Yep, Joe and da ho' have already announced that.

[VKurtB]

On 1/5/2024 at 10:10 AM, World Colonial said:

Really, where is the evidence for this?

What is the obvious reason for China and Hong Kong?  Because it doesn't fit your claims?

Marxism/Leninism is the natural enemy of economic health, whether it occurs in Minneapolis, or Compton, or Beijing.

Edited January 5 by VKurtB

[VKurtB]

On 1/5/2024 at 10:30 AM, World Colonial said:

One other point.  I know that most of these markets are higher now, after 15+ to 20+ years.

That's not the point.

The point is that if "fundamentals" really explained market prices, obviously these indexes should be noticeably higher than now.  I don't have earnings data but given whatever growth has occurred locally and globally where the largest companies operate, I can infer the stocks comprising these indexes are making (a lot) more now vs. previously where this performance doesn't correlate.  The prices then (at any of these points in time) weren't based upon "fundamentals", then or now.

If you don't like these indexes, take a look at the Korea ETF.  It's lower now vs. 16 years ago and yes obviously, I know it's paid some dividends.  Since Korea earnings are higher now versus then, why is this ETF lower?

I ask because I do not know. Is Korea considered a high risk economy due to geopolitical issues? I know Taiwan is. I am disinclined to be in Asian securities generally. Everyone gets to set their own risk aversion, and Asia is somewhere I simply don't want my kiester, nor my assets, to ever be. The big bully, the CCP, makes it unpalatable. Again, I get to decide, and there's only two places I want my assets to be - Western Europe and North America. Nowhere else appeals to me. I try to make it a policy to not invest in places that people walk thousands of miles to get away from.

Edited January 6 by VKurtB

[GoldFinger1969]

On 1/5/2024 at 11:08 AM, World Colonial said:

Belief in "fundamentals" is a form of EMH.  There is no evidence that stocks or any financial assets are valued from "fundamentals".  Everyone just assumes it.

Then what drives the price ?  What would cause YOU to buy stocks ?

[GoldFinger1969]

On 1/5/2024 at 11:30 AM, World Colonial said:

If you don't like these indexes, take a look at the Korea ETF.  It's lower now vs. 16 years ago and yes obviously, I know it's paid some dividends.  Since Korea earnings are higher now versus then, why is this ETF lower?

Because it's heavily weighted towards Samsung, APPL introduced the iPhone, and it's top-heavy in large-cap technology.

Comparing an ETF which doesn't represent the index (KOSPI) doesn't make sense.

[GoldFinger1969]

Oppenheimer Technical View for Gold in 2024:

[VKurtB]

On 1/9/2024 at 2:09 AM, GoldFinger1969 said:

Oppenheimer Technical View for Gold in 2024:

That would assume that drawing lines on charts was not complete and utter voodoo, which it is. Yes, I said it. Technical analysis is bunk and voodoo. Every time ANY Wall Street firm does technical analysis on ANYTHING, they lose my respect. 

Edited January 9 by VKurtB

[Henri Charriere]

Two points, if I may.

1.  It was Hollywood that changed the original "vodu," as it was known by oral tradition later set down on paper as voodoo. It is, again, one of the officially recognized religions of a nation I dare not offend you by uttering.  

2.  If you were to suggest gold will rise no higher than $2350 by year's end, I would accept and respect that prognostication [and hope that sits well with our Great z].  All of the people scammed by Madoff received very optimistic statements couched in impenetrable but encouraging money-speak which held them in good stead -- until it no longer did. Like the old adage goes, there are lies, damned lies and statistics. If the countless variables involved in technical analysis remained the same, would the results be as expected? I believe weather forecasting would be more reliable.

Edited January 9 by Henri Charriere
Die-polishing.

[GoldFinger1969]

On 1/9/2024 at 3:09 PM, VKurtB said:

That would assume that drawing lines on charts was not complete and utter voodoo, which it is. Yes, I said it. Technical analysis is bunk and voodoo. Every time ANY Wall Street firm does technical analysis on ANYTHING, they lose my respect. 

It matters because people THINK it matters.  Most relevant to currency traders.  Ever hear of Robert Prechter ?  Had the pulse of the stock market in the 1980's like few ever did with some esoteric TA called Elliot Wave Analysis.