Axelle said:
P/E doesn’t tell the whole story, and ‘fair value’ changes over time. What’s considered fair now might be way different from 20 years ago.
I get what you’re saying, but paying for 30+ years of growth upfront seems a bit much to me.
@Vega
Look at Amazon—everyone thought it was overvalued for years, but it just kept growing. Investing is always a bit of a bet.
Axelle said:
@Vega
Look at Amazon—everyone thought it was overvalued for years, but it just kept growing. Investing is always a bit of a bet.
True, but if the market hits extremes, there’s usually a pullback eventually.
@Vega
People buy 50-year bonds too, so it’s not unheard of to bet on the long term.
I’m also worried. I have a plan to pull out of the market if the Shiller P/E hits certain levels… just to protect my portfolio.
Vega said:
I’m also worried. I have a plan to pull out of the market if the Shiller P/E hits certain levels… just to protect my portfolio.
Where do you put the money when you pull it out?
@Zen
Into a low-volatility fund. Works better in pretax accounts.
The market doesn’t stop just because P/E is high. It goes up more than it goes down. These indicators are useless if you don’t have a crystal ball.
Tanner said:
The market doesn’t stop just because P/E is high. It goes up more than it goes down. These indicators are useless if you don’t have a crystal ball.
But is there a limit over the long term? Would people just keep investing forever?
The P/E ratios we’re seeing now are partly because of high-margin tech companies. It’s different from when industrials dominated.
P/E is meaningless unless you compare it to other companies in the same industry. A P/E of 60 is fine if everyone else is at 59, but not if they’re at 30.
Today’s companies are stronger than those in the past, which explains the higher P/E ratios. Back in the day, companies were just run differently.
It’s mainly the high P/E companies that are driving up the averages. People are willing to pay for growth potential, especially in tech.
Trying to time the market means missing out on the big gains now. Don’t let the past be your future!
Normalize by M2 money supply and see what you get.
If history tells us anything, we’ve got about three more years of this market push.
There’s value out there. I buy at 52-week lows and find solid buys daily. The U.S. market is still appealing, even for Gen Z investors overseas.
That’s why I’m into small-cap stocks now. I think they’re undervalued.
I’m loving the gains but mentally preparing for when it’s time to pull out.
Cheap money everywhere, no reason to sell. People hold onto assets, and prices just keep climbing.