Time to buy......

[James]

My monthly ISA contribution is certainly buying a lot more micro-slices of businesses than it did this time last year.

[vand]

If you're passively investing then you don't try to time the market

Quite what the obsession is with the S&P is I don't know, though I have a good idea to blame the oversaturation of US centric content into our financial literature, including the very US-centric FIRE brigade.

[AsleepInYorkshire]

If you're passively investing then you don't try to time the market

Quite what the obsession is with the S&P is I don't know, though I have a good idea to blame the oversaturation of US centric content into our financial literature, including the very US-centric FIRE brigade.

Im not trying to time the market. I've noticed that the S&P 500 is down 25% ytd. For the long term (and I did say 10 years), then that could ba 25% better buying opportunity than it was ten and a half months ago.

As for the S&P itself, well, we passive investors dont like to over analyse things. To me, its a chance to buy the 500 biggest companies in the biggest economy in the world on a discount.

The EuroStoxx is also down buy a similar amount too btw. And the FTSE 250.

Analysis complete.

Hi Snorvey,

I've taken the liberty of spell checking your analysis. I'm afraid to say I'm going to have to see you after school

Probably at the Dog & Duck - bring next months investments money with you

AiY(D)

[GrahamPlatt]

If you're passively investing then you don't try to time the market

Quite what the obsession is with the S&P is I don't know, though I have a good idea to blame the oversaturation of US centric content into our financial literature, including the very US-centric FIRE brigade.

Im not trying to time the market. I've noticed that the S&P 500 is down 25% ytd. For the long term (and I did say 10 years), then that could ba 25% better buying opportunity than it was ten and a half months ago.

As for the S&P itself, well, we passive investors dont like to over analyse things. To me, its a chance to buy the 500 biggest companies in the biggest economy in the world on a discount.

The EuroStoxx is also down buy a similar amount too btw. And the FTSE 250.

Analysis complete.

Hi Snorvey,

I've taken the liberty of spell checking your analysis. I'm afraid to say I'm going to have to see you after school

Probably at the Dog & Duck - bring next months investments money with you

AiY(D)

It’s not the spelling that concerns me, it’s the maths… ytd … ten and a half months ago?

[mc2fool]

I've noticed that the S&P 500 is down 25% ytd. For the long term (and I did say 10 years), then that could be a 25% better buying opportunity than it was ten and a half months ago.

As for the S&P itself, well, we passive investors dont like to over analyse things. To me, its a chance to buy the 500 biggest companies in the biggest economy in the world on a discount.

Just 'cos it's down 25% YTD doesn't mean it's "on a discount". It could well be that it was overpriced at the start of the year and is still on a premium and has further to fall. Indeed, if one were a chart eyeballer one could say that it's been in bubble territory since (at least) the pandemic dip and is now in the process of bursting ...


https://uk.advfn.com/stock-market/SPI/SP500/share-price

P.S. I have no idea if it is or it isn't!

[GoSeigen]

Misleading, not a log chart. Makes the fall this year look like a crash but it's not.


GS

[mc2fool]

Misleading, not a log chart. Makes the fall this year look like a crash but it's not.

Only if you don't look at the x axis and realise that each year is only 20 pixels wide, and it's that narrowness that makes the moves look sudden.

Once you spot that you see that, rather than a crash, YTD is just a retraction of last year's gains. Maybe that's clearer with a five year chart. (Sorry, the ADVFN basic charts facility doesn't have log charts. If you want to post/link to one that does please do so.)

In any case, the style of chart is irrelevant to the core point I was making, that just 'cos it's down 25% YTD doesn't mean it's "on a discount". It could be that the market thinks it was overvalued before and is now in the process of re-(down)-rating it....


https://uk.advfn.com/stock-market/SPI/SP500/share-price

[GeoffF100]

That looks a little more bearish than the global index in GBP terms. I made a net purchase of overseas equities (after bed & ISA) of just under 1% of my portfolio last week. I will probably have another similar sized nibble later in the month. If I only make small changes, I can only make small mistakes.

[GoSeigen]

Misleading, not a log chart. Makes the fall this year look like a crash but it's not.

Only if you don't look at the x axis and realise that each year is only 20 pixels wide, and it's that narrowness that makes the moves look sudden.

I fear you have misunderstood. It is the fact that the original chart covers decades and that inflation and economic growth have significant impact on numbers over that length of time. A linear plot exaggerates the recent history and diminishes the distant past. It is like a mercator projection which shows greenland as a similar size to Africa. Yes, the new plot looks "better" but that is because it excludes decades of context!

Try plotting the same information on a semi-log scale and it will be clear that the falls so far this year (and in 2020) are of the common or garden variety, nowhere near as large as 2007-9 or 2000-3 or 1974-5 which were all generational events.

GS

[mc2fool]

Misleading, not a log chart. Makes the fall this year look like a crash but it's not.

Only if you don't look at the x axis and realise that each year is only 20 pixels wide, and it's that narrowness that makes the moves look sudden.

I fear you have misunderstood. It is the fact that the original chart covers decades and that inflation and economic growth have significant impact on numbers over that length of time. A linear plot exaggerates the recent history and diminishes the distant past. It is like a mercator projection which shows greenland as a similar size to Africa. Yes, the new plot looks "better" but that is because it excludes decades of context!

Try plotting the same information on a semi-log scale and it will be clear that the falls so far this year (and in 2020) are of the common or garden variety, nowhere near as large as 2007-9 or 2000-3 or 1974-5 which were all generational events.

GS

Yes, I agree and I do understand about long periods and log charts etc and if I'd had the facility to embed a log chart I would have done so, but I don't and anyone that's looked at long period linear charts will (hopefully) mentally adjust for those factors.

However, as I say and getting back to the OP question, the style of chart is irrelevant to the core point I'm making, which is that just 'cos the S&P is down 25% YTD doesn't mean it's "on a discount" and the "time to buy" is now. Personally I have no idea if it is or not. Answers on a (e-)postcard to Snorvey...

[monabri]

I've noticed that the S&P 500 is down 25% ytd. For the long term (and I did say 10 years), then that could be a 25% better buying opportunity than it was ten and a half months ago.

As for the S&P itself, well, we passive investors dont like to over analyse things. To me, its a chance to buy the 500 biggest companies in the biggest economy in the world on a discount.

Just 'cos it's down 25% YTD doesn't mean it's "on a discount". It could well be that it was overpriced at the start of the year and is still on a premium and has further to fall. Indeed, if one were a chart eyeballer one could say that it's been in bubble territory since (at least) the pandemic dip and is now in the process of bursting ...


https://uk.advfn.com/stock-market/SPI/SP500/share-price

P.S. I have no idea if it is or it isn't!

What if we are in for a repeat of the years after 1997 until 2013/4? Could the US markets fall further from current levels (and reduce those high P/E values) and then be static for another n years ( n>10 )?

For a UK investor, with the pound almost at dollar parity, is this a good time to be buying 'expensive 'US shares? Surely US investors will be looking further afield to invest, to countries which have "had a kicking" and are favourable regarding exchange rates.

I'm thinking of drip feeding into the European markets ( via Vanguard's VERX) on the grounds that it too has seen large falls in it's markets, consideration of currency relative to Sterling and to the US Dollar, situation in Europe (ie Ukraine).


Verx
https://www.hl.co.uk/shares/shares-sear ... rope-ex-uk

[Wuffle]

A risk free 4% for a bit (maybe more than a bit) brings the TINA thing to a shuddering halt though doesn't it?
It is going to be tempting for the conventionally risk averse rich old white guys who own most of the S&P.
Certainly their advisors anyway.

W.

[EthicsGradient]

Yahoo Finance gives you log plots - S&P 500, in dollars, for 26 years:

[moorfield]

P.S. I have no idea if it is or it isn't!

You are all looking at the wrong chart.

This is the one you should pay attention to if looking for the "time to buy" - the CBOE Volatility Index, aka the "Fear Index", which spikes on market sell-offs. The time to buy is when those large 40+ point spikes have subsided back to their moving average. April 2009, December 2011, August 2020 for example. Market Volatility is on the rise currently. Keep watching, and waiting ...

[mc2fool]

Yahoo Finance gives you log plots - S&P 500, in dollars, for 26 years:

Indeed, as do some other sources, but to embed those requires a bit of faff (screenshot, upload to image hosting site, etc) and I have a (very) easy way of getting the URLs to embed the ADVFN charts.

You are all looking at the wrong chart.

This is the one you should pay attention to if looking for the "time to buy" - the CBOE Volatility Index, aka the "Fear Index", which spikes on market sell-offs. The time to buy is when those large 40+ point spikes have subsided back to their moving average. April 2009, December 2011, August 2020 for example. Market Volatility is on the rise currently. Keep watching, and waiting ...

Aha! A crystal ball! Any particular moving average? And how the about 1999, 2001 and other 40+ spikes? ...

[GoSeigen]

P.S. I have no idea if it is or it isn't!

You are all looking at the wrong chart.

This is the one you should pay attention to if looking for the "time to buy" - the CBOE Volatility Index, aka the "Fear Index", which spikes on market sell-offs. The time to buy is when those large 40+ point spikes have subsided back to their moving average. April 2009, December 2011, August 2020 for example. Market Volatility is on the rise currently. Keep watching, and waiting ...

There was a long bull market from 2012 to 2019. You could have bought any time the VIX was over 20 (and below 30) and done very well. IMO the VIX is on the way down, not up -- unless the crystal ball is very clear and timescales very short... whereas we are talking about shares so short investment horizons are foolish whatever VIX happens to say...

It might be the right chart but it's not easy to read.

GS

[SteadyAim]

The FTSE 250 looks pretty good value just now.



I don't think I've seen these values this low before, although perhaps they were something like this in ~2000. If anyone has any data on that period it would be interesting to compare.

SA

Edit: I redid the picture but it still came out really big

[pje16]

My monthly ISA contribution is certainly buying a lot more micro-slices of businesses than it did this time last year.

You are buying smaller pieces of cake

[gpadsa]

Aha! A crystal ball! :D Any particular moving average? And how the about 1999, 2001 and other 40+ spikes? ...

Here is a crystal ball
"The Conference Board publishes leading, coincident, and lagging indexes designed to signal peaks and troughs in the business cycle for major economies around the world."

The Conference Board Leading Economic Index® (LEI)for theU.S.
https://www.conference-board.org/topics/us-leading-indicators

"The ten components of The Conference Board Leading Economic Index® for the U.S. include: Average weekly hours in manufacturing; Average weekly initial claims for unemployment insurance; Manufacturers’ new orders for consumer goods and materials; ISM® Index of New Orders; Manufacturers’ new orders for nondefense capital goods excluding aircraft orders; Building permits for new private housing units; S&P 500® Index of Stock Prices; Leading Credit Index™; Interest rate spread (10-year Treasury bonds less federal funds rate); Average consumer expectations for business conditions."

gpadsa

[mc2fool]

Aha! A crystal ball! Any particular moving average? And how the about 1999, 2001 and other 40+ spikes? ...

Here is a crystal ball
"The Conference Board publishes leading, coincident, and lagging indexes designed to signal peaks and troughs in the business cycle for major economies around the world."

The Conference Board Leading Economic Index® (LEI)for theU.S.
https://www.conference-board.org/topics/us-leading-indicators

"The ten components of The Conference Board Leading Economic Index® for the U.S. include: Average weekly hours in manufacturing; Average weekly initial claims for unemployment insurance; Manufacturers’ new orders for consumer goods and materials; ISM® Index of New Orders; Manufacturers’ new orders for nondefense capital goods excluding aircraft orders; Building permits for new private housing units; S&P 500® Index of Stock Prices; Leading Credit Index™; Interest rate spread (10-year Treasury bonds less federal funds rate); Average consumer expectations for business conditions."

gpadsa

Umm, ok, well, I always thought that stock markets themselves were supposedly leading indicators, and indeed I see they have the S&P 500 as one of the components of their index ... but let's remember, whether now is a good time to buy the S&P500 is the topic of this thread.

And then there's the question (and I don't know the answer) of how reliable such predicted "peaks and troughs in the business cycle" are in predicting future stock market index levels.

Their Leading Economic Index (LEI) "is a predictive variable that anticipates (or “leads”) turning points in the business cycle by around 7 months" which I'm not sure I see in their presented charts. Indeed, it looks to me like it predicted the beginning and end of the US Covid recession at the beginning and end of the US Covid recession!