Josh explains the world to the lovely Lauren:


Source: Yahoo Finance


Category: Cycles, Investing, Markets, Video

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

14 Responses to “Bull Market Needs One Thing to Keep Going”

  1. Willy2 says:

    Has Josh Brown moved to the “Sell side” ?

  2. Concerned Neighbour says:

    He lost me when he said most valuation metrics are only slightly above their historical norms.

    Love his (and your) blog though!

    • Thats what 14 of 15 valuation metrics suggest — somewhat but not wildly overvalued.

      I do not disagree

      • Futuredome says:

        Yeah, if the markets stays flat in 2014 like most people think, it will be completely fairly valued by January 2015.

        Posters like “Concerned” don’t understand the changes the market went through in the 80′s/90′s and the rise of globalism in terms of market valuation. Made the old progs useless(high Schiller).

      • Concerned Neighbour says:

        Futuredome, beware that you are saying it’s different this time.

        I take issue with BR’s list as for many metrics it biases the numbers by cherry-picking only the last 25-30 years of data, a period dominated by central bank priming of asset bubbles.

        Even still, the Q ratio is at the second highest value in recorded history. Dividend yields are near historic lows, while companies issue new debt to buy back their shares at, in many cases, record high prices. Profit margins are historically high in part due to low interest rates. Financial firms are allowed to make up prices for “assets” on their balance sheets. “Blue Chips” such as PG trade at 20+ trailing P/E’s despite having negative tangible book value. The list goes on and on.

        Note the frequent use of “historic” in the preceding paragraph. Please explain to me how globalism should cause us dinosaur investors to ignore these tried and true metrics. You don’t happen to work for the Fed, do you? Should I just put a blindfold on and spam the buy button?

    • VennData says:

      The problem with the PE10 the bears shout about is that it still includes 2008 “earnings” which were zero.

      What do on year of earnings six years ago have to do with GE’s ability to sell jet engines?

      • Ben Dover says:

        Earnings aren’t mean reverting, just as you suggest, however multiples and profit margins are. When you study the data peak margins, almost by definition, lead to lower future growth. Likewise, high P/Es lead to lower future returns. While a company might be a very good business it doesn’t automatically equal a good investment, you need a good valuation for that. You can remove the 2008 collapse in earnings and shiller p/e will improve somewhat, but it’s still elevated. People who do that confuse me, because that metric is designed to smooth the earnings denominator over the full business cycle. It’s a little nonsensical to start trying to tweak it further. Doesn’t mean you base your entire macro thesis on one metric, but I don’t think it’s wise to dismiss it totally either.

      • Ecliddes says:

        I am not so sure that over a full cycle, there is not some element of mean reversion involved.

  3. 4whatitsworth says:

    Acceptance phase.. what? I can’t see people who were badly burned in the last cycle buying an overpriced (ok slightly overpriced) market at a time of great geopolitical, environmental, and regulatory headwinds.

    If there really is a Cap-X and an interest rate boom (at that same time) but I don’t see how that could happen either.

  4. mpetrosian says:

    He might look like a Stratton Oakmont employee, but dammit Brown is a smart dude. I love his dismissive thoughts on Russia which are so true.