Granthom: A Bubble of “Epic Proportions”

SammyJ · Oct 31, 2021

Oh really ? Why were p/e’s 18 in 2020 and are 23 now based on 2022 earnings if earnings growing faster than the mkt ? Wrong !!!

Nine_Ender · Oct 31, 2021

SammyJ said:
Oh really ? Why were p/e’s 18 in 2020 and are 23 now based on 2022 earnings if earnings growing faster than the mkt ? Wrong !!!

I am comparing 2019 to 2021; 2020 had a black swan event. 23 is upper normal range just like I posted about in late 2019. The earnings growth has been tremendous in 2021, but this very basic fact seems to elude many short term traders. Too many obsessed with big tech; markets are so much more then just IT. And there are many other supporting factors right now that support a higher P/E anyways ( eg cheap money, seasonality ).

Drop the hyperbole. We have enough of that from the permabears on here. I believe it was a month or two ago one analyst did the calculation and the SPX P/E was up 21% over two years when the index itself was up 24%. I can't remember the exact numbers. So that doesn't support your idea that earnings weren't a huge part of the reason stocks are up.

Nine_Ender · Nov 1, 2021

Nine_Ender said:
I am comparing 2019 to 2021; 2020 had a black swan event. 23 is upper normal range just like I posted about in late 2019. The earnings growth has been tremendous in 2021, but this very basic fact seems to elude many short term traders. Too many obsessed with big tech; markets are so much more then just IT. And there are many other supporting factors right now that support a higher P/E anyways ( eg cheap money, seasonality ).

Drop the hyperbole. We have enough of that from the permabears on here. I believe it was a month or two ago one analyst did the calculation and the SPX P/E was up 21% over two years when the index itself was up 24%. I can't remember the exact numbers. So that doesn't support your idea that earnings weren't a huge part of the reason stocks are up.

Correction meant to say for SPX stocks, earnings were up 21% over two years.

cobco · Nov 1, 2021

d08 · Nov 1, 2021

Nine_Ender said:
Earnings have grown almost as much as the market has the last two years and are projected to be higher next year. So Amazon had lower earnings for a quarter; so what. Chevron and other energy companies are putting up huge earnings. Banks are growing earnings. Smart money rotated some or most of their money into cyclical and value stocks in 2021. Why on earth should we have corrected big ?

Market growth is actually 100% justified on a pure earnings basis based on actual earning growth and expectations of forward earnings growth in 2022. That may change in 2022 but we are still in 2021.

When you print money with zero concern, earnings ALWAYS grow. Quite a few developed economies are now approaching 10% inflation. Yes, totally normal, nothing to see here.

traider · Nov 1, 2021

It's a gray scale whether market is overvalued and not so obvious otherwise everyone will become rich timing the market.

Millionaire · Nov 3, 2021

Markets will have another 50% correction at some point as everyone panics and looks to exit as the same time. Fear is a stronger emotion than greed.

VIX jumps to 50+, S&P starts losing 250pts a day. Doesn't take long to wipe out 50% off the indicies at that rate.

Just nobody can say when it will happen.

nitrene · Nov 3, 2021

The question is what will be the "safe haven" trade when the collapse comes? In the Feb/March 2020 collapse bonds didn't really act like a safe haven. It was actually the USD and in a delayed manner big tech. The Fed was buying Munis because there value had collapsed 20-30%. Interest rate on Munis skyrocketed during the collapse.