stock market crash

[DealorNoDeal]

I agree... if I would need the money in the next year or two I probably would take it all right now. If you wont need it for another 3 or more years, leave it there and maybe get some extra funds to invest when it goes south.

I don't have any money in the US stock market at the moment and I'll be sitting on the side lines until the end of the next bear market.

Of course, this 10-year old bull market could go on for another 5 or 10 years but hey ho.

[CryingSheep]

Well, barring a sufficiently large natural (or manmade) disaster. But then the stock market will be the least of your troubles.

Exactly, if some event would end the economy as we know it, this could stop to be true, but then I guess that even the money under your blanket would worth nothing... so either invest on funds or on an underground shelter full of canned food!

[DimPrawn]

Signs of economic downturn.


Too many houses built in the US

Monthly Supply of Houses in the United States (MSACSR) | FRED | St. Louis Fed

Nope

Market Cap vs GDP

Buffett Indicator: The percent of total market cap relative to Gross National Product?

Over the long run, stock market valuation reverts to its mean. A higher current valuation certainly correlates with lower long-term returns in the future. On the other hand, a lower current valuation level correlates with a higher long-term return. The total market valuation is measured by the ratio of total market cap (TMC) to GNP -- the equation representing Warren Buffett's "best single measure". This ratio since 1970 is shown in the second chart to the right. Gurufocus.com calculates and updates this ratio daily. As of 11/13/2019, this ratio is 146.4%.

We can see that, during the past four decades, the TMC/GNP ratio has varied within a very wide range. The lowest point was about 35% in the previous deep recession of 1982, while the highest point was 148% during the tech bubble in 2000. The market went from extremely undervalued in 1982 to extremely overvalued in 2000.

Based on these historical valuations, we have divided market valuation into five zones:
Ratio = Total Market Cap / GDP Valuation
Ratio < 50% Significantly Undervalued
50% < Ratio < 75% Modestly Undervalued
75% < Ratio < 90% Fair Valued
90% < Ratio < 115% Modestly Overvalued
Ratio > 115% Significantly Overvalued
Where are we today (11/13/2019)? Ratio = 146.4%, Significantly Overvalued

Yes, crash possible.


Tobin's Q

https://www.advisorperspectives.com/...october-update



Crash looks likely


Historical P/E ratios

S&P 500 PE Ratio - 90 Year Historical Chart | MacroTrends

Nope, looks okay

Jobless claims

4-Week Moving Average of Initial Claims (IC4WSA) | FRED | St. Louis Fed

Again, looks pretty good.


So overall, at least from a US crash perspective, seems unlikely overall.

HTH BIDI

[DealorNoDeal]

So overall, at least from a US crash perspective, seems unlikely overall.

That's one too many overalls for my liking.

[DimPrawn]

That's one too many overalls for my liking.

Overall, I wrote that post too quickly overall...

[NotAllThere]

That's one too many overalls for my liking.

Overall, before every crash, there's a peak. Things are going up, so a crash will happen. Eventually. Maybe...

[northernladuk]

Overall, before every crash, there's a peak. Things are going up, so a crash will happen. Eventually. Maybe...

Said scooty every week for the past 3 years.

[DealorNoDeal]

Thanks DP, those valuation links are very interesting.

Maybe the historical means of "Market Cap to GDP" and "Tobin Q" no longer apply? The last 20-odd years certainly look very different to the prior 100 years.

Perhaps there's a new normal?

[DimPrawn]

Thanks DP, those valuation links are very interesting.

Maybe the historical means of "Market Cap to GDP" and "Tobin Q" no longer apply? The last 20-odd years certainly look very different to the prior 100 years.

Perhaps there's a new normal?

This time it's different™

[DealorNoDeal]

Historical P/E ratios

S&P 500 PE Ratio - 90 Year Historical Chart | MacroTrends

Nope, looks okay

BTW, the Shiller P/E might be a better measure, and that doesn't look quite so benign.

Shiller P/E Ratio: Where Are We with Market Valuations?

"Why Is the Regular P/E Ratio Deceiving?"