Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A) ❤
No. of Recommendations: 0
Shame we don't have the feature. I was going to post;
Where do we feel the index will be by the end of 2024.
>10% above where we are now
<10% below where we are now
Within the range.
My vote would be 10% below
No. of Recommendations: 1
My vote is 10% above. The market goes up most years. And this feels like a market that wants to go up.
No. of Recommendations: 5
I would answer but I don't want to make the astrologers look good. :)
No. of Recommendations: 0
Tea leaves, Tetley are my favourite.
No. of Recommendations: 1
Just for giggles, here is an AI's thoughts on the index at the end of 2024:
Overall Sentiment:
- Moderate optimism: Most analysts expect a positive, but muted performance compared to 2023's stellar gains. Consensus forecasts see the S&P 500 reaching around 5,100 by year-end, translating to moderate single-digit growth.
- Uncertainty and potential volatility: Geopolitical events, inflation dynamics, and the Federal Reserve's monetary policy decisions will be crucial factors, creating periods of volatility and potential unexpected swings.
Key factors to consider:
- Economic outlook: A "soft landing" scenario is anticipated, with slower economic growth but no recession. This could lead to interest rate cuts in 2024, potentially boosting corporate earnings and stock prices.
- Earnings per share (EPS): Consensus estimates predict a 12% rise in S&P 500 EPS, offering some support for stock prices. However, investors might not be willing to pay more for these earnings compared to 2023's higher valuation levels.
- Investor sentiment: The upcoming US presidential election adds another layer of uncertainty, potentially impacting investor sentiment and influencing market movements throughout the year.
Specific forecasts:
- Bullish: Yardeni Research suggests a gain exceeding 14%, driven by a still-strong labor market and resilient consumer spending.
- Neutral: Goldman Sachs and Morgan Stanley project modest gains around 8%-9%, slightly below the historical average.
- Bearish: JPMorgan's forecast anticipates an 11% decline, highlighting potential risks from slower economic growth and tightening financial conditions.
Historical considerations:
- While past performance doesn't guarantee future results, analyzing historical cycles provides some context. The S&P 500 has averaged an annual return of around 10% over the long term.
- However, periods of significant outperformance like 2023 (potentially over 20%) are typically followed by periods of lower returns or even corrections.
No. of Recommendations: 25
Trying to assess t he tea leaves is a bit of a hobby of mine.
My "predictors" directory tree has 1078 spreadsheets in it.
The two biggest conclusions from my noodling:
Of all of the time frames you might try to predict, one year forward is about the hardest.
And a calendar year is even harder, since that's how all the professionals get evaluated ("Show me the incentive...") So I won't even speculate.
Shorter term, momentum really skews the odds pretty far away from randomness. Since the market just put in a recent high, the chances of a big and lasting drop within the next 2-5 months is well below average. It's probably safe to stay in the water for now. It seems that euphoria fades only slowly among market participants, who are by nature optimists. (pessimists don't buy stocks at all)
Average S&P 500 real total return in the next six months across starting dates since 1980, based on the number of days since the most recent short term high of the nominal index:
Under a month: +11.6% (as now)
1-3 months: +8.3%
3-6 months: +4.5%
over 6 months: -3.6%
Those are absolute returns, not annualized rates. So...first half of the year statistically likely to be decent, or at least the first few months.
Longer term, valuation metrics look pretty terrible, so the next 3-10 years are likely to be below average. But valuation is a pretty useless predictor of market returns in the next year, so that doesn't help us. If trends of real earnings and valuations remain similar to recent history, based history since 1995 you'd expect a ~7 year forward return from the S&P of inflation + 2.9%/year if valuations end at around the average 1995-2023 levels. That's because today's valuation level seems to be about 16% higher than the average since 1995 based on smoothed earnings. Higher based on sales.
So, bottom line:
Way less than a year, good.
Way more than a year, bad.
Right about a year: no clue. The tea leaves all stayed in the pot.
Jim
No. of Recommendations: 4
Perhaps a comment that WEB made at one of the annual meetings is
appropriate here.
"There is nothing magical about one year performances. The fact that
the earth revolves around the sun in one year does not really have
anything to do with measurement of business activity."
No. of Recommendations: 6
"If trends of real earnings and valuations remain similar to recent history, based history since 1995 you'd expect a ~7 year forward return from the S&P of inflation + 2.9%/year if valuations end at around the average 1995-2023 levels."
You may have posted this elsewhere, but I'm curious if you have a model that projects the same (expected returns over 7 years), but for RSP instead of SPY.
On the the hunch that the 'magnificent 7' are currently skewing SPY's valuation metrics considerably, and the remaining 493 companies have considerably better prospects for something approximating normal market returns.
No. of Recommendations: 13
You may have posted this elsewhere, but I'm curious if you have a model that projects the same (expected returns over 7 years), but for RSP instead of SPY.
On the the hunch that the 'magnificent 7' are currently skewing SPY's valuation metrics considerably, and the remaining 493 companies have considerably better prospects for something approximating normal market returns.
No, I haven't done it. Not much.
It would be much more predictable, but it's harder to pull together the data. I could do it, but it's a bit of a pain.
I agree that the concentration in markets these days is quite remarkable, so maybe I should.
And the high concentration in the biggies in the US is causing a high concentration in the US within the world.
From 2006 to 2012 inclusive, US equities represented 45% or less of the global index (MSCI All-World). Now it's about 62%.
The latter is partly valuations: in that old stretch non-US equities traded at an average valuation discount of around -10% to US stocks, and lately it's averaging about -30%. That's not the same as saying that non-US equities are "buy", but if one can figure out the explanation then there would certainly be implications for investment strategy.
The magnificent seven were not obviously more overvalued than most of the S&P 500 pretty recently because of of them were pretty reasonably valued relative to their huge earnings, but that's not longer the case. (emphasis on "not obviously"...maybe they're worth it, maybe not--different discussion)
As of about a week ago:
Cap-weighted average earnings yield of the big seven equates to a P/E of around 29.8 times current run rate net earnings. As usual, Amazon and Tesla are the outliers, both over 75.
Cap-weighted average of the rest comes to about 15.4.
Jim
No. of Recommendations: 4
Cap-weighted average earnings yield of the big seven equates to a P/E of around 29.8 times current run rate net earnings. As usual, Amazon and Tesla are the outliers, both over 75.
Cap-weighted average of the rest comes to about 15.4.
I realized this phrasing was ambiguous.
The last sentence meant this:
Cap-weighted average of the rest of the 493 S&P 500 stocks comes to about 15.4.
Jim
