The Market Looks Poised For A Correction

Seekingalpha2023-06-29

This euphoria seems off.In November 2021, I ignored blatant fundamentals that the market was obviously overbought and P/Es were overinflated. Given the significant increase in the risk-free rate of ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Report

Comment（5）

setia100
·2023-06-29
YES & NO❗The author just staying sideline 🤔
Reply
1
Report
Grumpy Cat
·2023-06-29
"Correction." Translation: a lot of people are going to lose a lot of money. Might be time to put my money into an interest account.
Reply
4
Report
Kbbaby
·2023-06-29
Share your opinion about this news…
Reply
3
Report
klarky
·2023-06-29
Torally agree, good article
Reply
5
Report
MidnightTrader
·2023-06-29
Thank you for this article and your insights. Pretty much confirms what I've been thinking! The mkt is so overbought it's crazy
Reply
5
Report

Most Discussed

7x24

All

Terms and Conditions·Privacy Policy

Company: TTMF Limited. Tech supported by Xiangshang Yixin.

Email：uservice@ttm.financial

{"i18n":{"language":"en_US"},"data":{"share":"https://ttm.financial/m/news/2346816478?lang=en_US&edition=fundamental","thumbnail":"","is_english":true,"pubTime":"2023-06-29 08:02","share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","id":"2346816478","market":"us","top_or_hot":-1,"title":"The Market Looks Poised For A Correction","media":"Seekingalpha","content":"<div>\n<p>This euphoria seems off.In November 2021, I ignored blatant fundamentals that the market was obviously overbought and P/Es were overinflated. Given the significant increase in the risk-free rate of ...</p>\n\n<a href=\"https://seekingalpha.com/article/4614029-market-looks-poised-for-correction\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>The Market Looks Poised For A Correction</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nThe Market Looks Poised For A Correction\n</h2>\n\n<h4 class=\"meta\">\n\n\n2023-06-29 08:02 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4614029-market-looks-poised-for-correction><strong>Seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>This euphoria seems off.In November 2021, I ignored blatant fundamentals that the market was obviously overbought and P/Es were overinflated. Given the significant increase in the risk-free rate of ...</p>\n\n<a href=\"https://seekingalpha.com/article/4614029-market-looks-poised-for-correction\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":".DJI","symbol_name":"道琼斯","start_time":0,"source_url":"https://seekingalpha.com/article/4614029-market-looks-poised-for-correction","article_id":"2346816478","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2346816478","pubTimestamp":1687996927,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"This euphoria seems off.In November 2021, I ignored blatant fundamentals that the market was obviously overbought and P/Es were overinflated. Given the significant increase in the risk-free rate of re","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{".DJI":"道琼斯",".IXIC":"NASDAQ Composite",".SPX":"S&P 500 Index"},"translate_title":"市场似乎已准备好回调","themeId":"","isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{".DJI":1.1,".IXIC":1.1,".SPX":1.1},"content_text":"This euphoria seems off.In November 2021, I ignored blatant fundamentals that the market was obviously overbought and P/Es were overinflated. Given the significant increase in the risk-free rate of return, it isn't a stretch to say that current prices are stretched even further now than they were then. I don’t want to make the mistake I made in 2022 again.Here are the basics. You can calculate the effective yield of your investment by taking the reciprocal of the price/earnings ratio (in other words, divide 1 by the P/E ratio). If you invest in a company with a P/E of 15, you would expect to make your money back in 15 years. That is a 6.67% yearly yield on your investment (which you can calculate by dividing 1 by 15).Right now, the forward P/E of the S&P 500 (NYSEARCA:SPY) is 19.4 and the Nasdaq (NASDAQ:QQQ) has be overbought or close to it for weeks. That P/E on the S&P 500 leads to an effective yield of 5.15%. Also right now, I can buy a 3-month T-bill that will pay me 5.34%. In other words, right now, I can invest in the S&P 500, which is a riskier investment than a T-Bill and receive a lower yield. That shouldn’t happen. Equities are inherently more risky than government treasuries, so there should be risk premium that you have to pay to buy stocks. In other words, when the yield on a risk-free alternative investment goes up, the P/E that investors are willing to pay for stocks should go down. You CERTAINLY should not be buying something that has higher risk and a lower yield.This graphic from the Financial Times tells the story quite well:Financial TimesNow, to be sure, we are much closer to the end of the rate hike cycle and so the discount rate isn't going to move higher like it did in 2022 to send things crashing down. That light blue line should be coming down in the future rather than continuing to decrease, but there should always be a gap between the dark blue line and the light blue line that represents the risk premium for equities. That gap illustrates the spread that people are willing to pay to take on risk. Even at a compressed spread of around 2%, that would mean the S&P 500 P/E should be around 13.6 right now.The earnings estimates might be off, and better earnings could justify this valuation, but every equity across the entire S&P 500 needs to beat estimates by about 30% to justify current prices. I also understand that the market looks forward, but the 1-year treasury yield is still 5.33% and the 2-year is at 4.76%. That means rates are not expected to come down very quickly, certainly not quick enough to justify this type of P/E ratio. The index is priced for perfection right now. It is overpriced right now. There should be a reversion to the mean for equity pricing. The tweet below describes the same thing in different terms.TwitterI actually see the Fed cutting sooner rather than later with the rate of disinflation. I think that the economy will slow but that economic indicators are actually, all things considered, doing pretty well. However, it can be both true that the market is overheated and above fair value AND that conditions are improving at the same time. That means things could be getting better and there still needs to be a correction.CNBCCredit card debt is now above $1T and credit card interest rates have never been higher. Average credit card interest rate is 20.8%. This fall, the student loan payment moratorium is ending and will siphon off about $18B every month from the economy according to Jefferies. The US consumer has stayed strong, but this is going to put extreme stress on them.LendingTreeBetween the weaker consumer and the overpriced S&P 500, I think we are going to get a large correction sometime, something like a 10-20% drop from peak to trough. I don't know when it's coming, but I personally think it will happen in the next 9 months as the rate hikes make their way through the economy, unemployment begins to rise, student loan payments take a large chunk out of monthly budgets, and credit card debt begins to really crush people. Greed will make way for fear at some point during that cycle, and equities will fall.CNNThis is talking about the indexes at large. There are still individual names that are undervalued. I’m also not selling my positions or anything. Usually I DCA weekly, but I stopped that about a month ago because things feel overheated. I will continue to build my cash position and might sell some covered calls on portions of my positions as a hedge. I will be ready to buy if the correction comes. If I’m wrong then I’ll have that cash to DCA at even higher prices than today and I’ll miss some upside, and that will be ok. Just wanted to share my thoughts on what I’m seeing and thinking.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":192418729750648,"gmtCreate":1688007582889,"gmtModify":1688007586978,"author":{"id":"3567852837945728","authorId":"3567852837945728","name":"setia100","avatar":"https://community-static.tradeup.com/news/5d07af59743ad001196b7aca5f1726d7","vip":1,"crmLevel":5,"crmLevelSwitch":0,"idStr":"3567852837945728","authorIdStr":"3567852837945728"},"htmlText":"YES &amp; NO❗The author just staying sideline 🤔","listText":"YES &amp; NO❗The author just staying sideline 🤔","text":"YES & NO❗The author just staying sideline 🤔","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/192418729750648","repostId":2346816478,"repostType":4,"repost":{"id":"2346816478","pubTimestamp":1687996927,"share":"https://ttm.financial/m/news/2346816478?lang=&edition=fundamental","pubTime":"2023-06-29 08:02","market":"us","language":"en","title":"The Market Looks Poised For A Correction","url":"https://stock-news.laohu8.com/highlight/detail?id=2346816478","media":"Seekingalpha","summary":"This euphoria seems off.In November 2021, I ignored blatant fundamentals that the market was obviously overbought and P/Es were overinflated. Given the significant increase in the risk-free rate of re","content":"<html><head></head><body><p>This euphoria seems off.</p><p>In November 2021, I ignored blatant fundamentals that the market was obviously overbought and P/Es were overinflated. Given the significant increase in the risk-free rate of return, it isn&#39;t a stretch to say that current prices are stretched even further now than they were then. I don’t want to make the mistake I made in 2022 again.</p><p>Here are the basics. You can calculate the effective yield of your investment by taking the reciprocal of the price/earnings ratio (in other words, divide 1 by the P/E ratio). If you invest in a company with a P/E of 15, you would expect to make your money back in 15 years. That is a 6.67% yearly yield on your investment (which you can calculate by dividing 1 by 15).</p><p>Right now, the forward P/E of the S&amp;P 500 (NYSEARCA:SPY) is 19.4 and the Nasdaq (NASDAQ:QQQ) has be overbought or close to it for weeks. That P/E on the S&amp;P 500 leads to an effective yield of 5.15%. Also right now, I can buy a 3-month T-bill that will pay me 5.34%. In other words, right now, I can invest in the S&amp;P 500, which is a riskier investment than a T-Bill and receive a lower yield. That shouldn’t happen. Equities are inherently more risky than government treasuries, so there should be risk premium that you have to pay to buy stocks. In other words, when the yield on a risk-free alternative investment goes up, the P/E that investors are willing to pay for stocks should go down. You CERTAINLY should not be buying something that has higher risk <em>and</em> a lower yield.</p><p>This graphic from the Financial Times tells the story quite well:</p><p></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/8cfcd232705774bb07305c97e7f40ca0\" tg-width=\"980\" tg-height=\"680\"/></p><p>Financial Times</p><p>Now, to be sure, we are much closer to the end of the rate hike cycle and so the discount rate isn&#39;t going to move higher like it did in 2022 to send things crashing down. That light blue line should be coming down in the future rather than continuing to decrease, but there should always be a gap between the dark blue line and the light blue line that represents the risk premium for equities. That gap illustrates the spread that people are willing to pay to take on risk. Even at a compressed spread of around 2%, that would mean the S&amp;P 500 P/E should be around 13.6 right now.</p><p>The earnings estimates might be off, and better earnings could justify this valuation, but every equity across the entire S&amp;P 500 needs to beat estimates by about 30% to justify current prices. I also understand that the market looks forward, but the 1-year treasury yield is still 5.33% and the 2-year is at 4.76%. That means rates are not expected to come down very quickly, certainly not quick enough to justify this type of P/E ratio. The index is priced for perfection right now. It is overpriced right now. There should be a reversion to the mean for equity pricing. The tweet below describes the same thing in different terms.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/6d730d045d9a8263b83e6c98437a2b2a\" tg-width=\"585\" tg-height=\"498\"/></p><p>Twitter</p><p>I actually see the Fed cutting sooner rather than later with the rate of disinflation. I think that the economy will slow but that economic indicators are actually, all things considered, doing pretty well. However, it can be both true that the market is overheated and above fair value AND that conditions are improving at the same time. That means things could be getting better and there still needs to be a correction.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/ab4f66bb3b2016189cc950e64846f598\" tg-width=\"685\" tg-height=\"443\"/></p><p>CNBC</p><p>Credit card debt is now above $1T and credit card interest rates have never been higher. Average credit card interest rate is 20.8%. This fall, the student loan payment moratorium is ending and will siphon off about $18B every month from the economy according to Jefferies. The US consumer has stayed strong, but this is going to put extreme stress on them.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/a7929b6ecc6877fba39f2c39aed90a64\" tg-width=\"1280\" tg-height=\"1034\"/></p><p><a href=\"https://laohu8.com/S/TREE\">LendingTree</a></p><p>Between the weaker consumer and the overpriced S&amp;P 500, I think we are going to get a large correction sometime, something like a 10-20% drop from peak to trough. I don&#39;t know when it&#39;s coming, but I personally think it will happen in the next 9 months as the rate hikes make their way through the economy, unemployment begins to rise, student loan payments take a large chunk out of monthly budgets, and credit card debt begins to really crush people. Greed will make way for fear at some point during that cycle, and equities will fall.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/67a4087d3d5f32889a3042f039183068\" tg-width=\"640\" tg-height=\"377\"/></p><p>CNN</p><p>This is talking about the indexes at large. There are still individual names that are undervalued. I’m also not selling my positions or anything. Usually I DCA weekly, but I stopped that about a month ago because things feel overheated. I will continue to build my cash position and might sell some covered calls on portions of my positions as a hedge. I will be ready to buy if the correction comes. If I’m wrong then I’ll have that cash to DCA at even higher prices than today and I’ll miss some upside, and that will be ok. Just wanted to share my thoughts on what I’m seeing and thinking.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>The Market Looks Poised For A Correction</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nThe Market Looks Poised For A Correction\n</h2>\n\n<h4 class=\"meta\">\n\n\n2023-06-29 08:02 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4614029-market-looks-poised-for-correction><strong>Seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>This euphoria seems off.In November 2021, I ignored blatant fundamentals that the market was obviously overbought and P/Es were overinflated. Given the significant increase in the risk-free rate of ...</p>\n\n<a href=\"https://seekingalpha.com/article/4614029-market-looks-poised-for-correction\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{".SPX":"S&P 500 Index",".IXIC":"NASDAQ Composite",".DJI":"道琼斯"},"source_url":"https://seekingalpha.com/article/4614029-market-looks-poised-for-correction","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2346816478","content_text":"This euphoria seems off.In November 2021, I ignored blatant fundamentals that the market was obviously overbought and P/Es were overinflated. Given the significant increase in the risk-free rate of return, it isn't a stretch to say that current prices are stretched even further now than they were then. I don’t want to make the mistake I made in 2022 again.Here are the basics. You can calculate the effective yield of your investment by taking the reciprocal of the price/earnings ratio (in other words, divide 1 by the P/E ratio). If you invest in a company with a P/E of 15, you would expect to make your money back in 15 years. That is a 6.67% yearly yield on your investment (which you can calculate by dividing 1 by 15).Right now, the forward P/E of the S&P 500 (NYSEARCA:SPY) is 19.4 and the Nasdaq (NASDAQ:QQQ) has be overbought or close to it for weeks. That P/E on the S&P 500 leads to an effective yield of 5.15%. Also right now, I can buy a 3-month T-bill that will pay me 5.34%. In other words, right now, I can invest in the S&P 500, which is a riskier investment than a T-Bill and receive a lower yield. That shouldn’t happen. Equities are inherently more risky than government treasuries, so there should be risk premium that you have to pay to buy stocks. In other words, when the yield on a risk-free alternative investment goes up, the P/E that investors are willing to pay for stocks should go down. You CERTAINLY should not be buying something that has higher risk and a lower yield.This graphic from the Financial Times tells the story quite well:Financial TimesNow, to be sure, we are much closer to the end of the rate hike cycle and so the discount rate isn't going to move higher like it did in 2022 to send things crashing down. That light blue line should be coming down in the future rather than continuing to decrease, but there should always be a gap between the dark blue line and the light blue line that represents the risk premium for equities. That gap illustrates the spread that people are willing to pay to take on risk. Even at a compressed spread of around 2%, that would mean the S&P 500 P/E should be around 13.6 right now.The earnings estimates might be off, and better earnings could justify this valuation, but every equity across the entire S&P 500 needs to beat estimates by about 30% to justify current prices. I also understand that the market looks forward, but the 1-year treasury yield is still 5.33% and the 2-year is at 4.76%. That means rates are not expected to come down very quickly, certainly not quick enough to justify this type of P/E ratio. The index is priced for perfection right now. It is overpriced right now. There should be a reversion to the mean for equity pricing. The tweet below describes the same thing in different terms.TwitterI actually see the Fed cutting sooner rather than later with the rate of disinflation. I think that the economy will slow but that economic indicators are actually, all things considered, doing pretty well. However, it can be both true that the market is overheated and above fair value AND that conditions are improving at the same time. That means things could be getting better and there still needs to be a correction.CNBCCredit card debt is now above $1T and credit card interest rates have never been higher. Average credit card interest rate is 20.8%. This fall, the student loan payment moratorium is ending and will siphon off about $18B every month from the economy according to Jefferies. The US consumer has stayed strong, but this is going to put extreme stress on them.LendingTreeBetween the weaker consumer and the overpriced S&P 500, I think we are going to get a large correction sometime, something like a 10-20% drop from peak to trough. I don't know when it's coming, but I personally think it will happen in the next 9 months as the rate hikes make their way through the economy, unemployment begins to rise, student loan payments take a large chunk out of monthly budgets, and credit card debt begins to really crush people. Greed will make way for fear at some point during that cycle, and equities will fall.CNNThis is talking about the indexes at large. There are still individual names that are undervalued. I’m also not selling my positions or anything. Usually I DCA weekly, but I stopped that about a month ago because things feel overheated. I will continue to build my cash position and might sell some covered calls on portions of my positions as a hedge. I will be ready to buy if the correction comes. If I’m wrong then I’ll have that cash to DCA at even higher prices than today and I’ll miss some upside, and that will be ok. Just wanted to share my thoughts on what I’m seeing and thinking.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":192408486433024,"gmtCreate":1688005204350,"gmtModify":1688005207665,"author":{"id":"4128529562415932","authorId":"4128529562415932","name":"Grumpy Cat","avatar":"https://community-static.tradeup.com/news/1a6e0322f5b01c133535886ac9ddb5ef","vip":1,"crmLevel":1,"crmLevelSwitch":0,"idStr":"4128529562415932","authorIdStr":"4128529562415932"},"htmlText":"\"Correction.\" Translation:&nbsp;a lot of people are going to lose a lot of money. Might be time to put my money into an interest account.","listText":"\"Correction.\" Translation:&nbsp;a lot of people are going to lose a lot of money. Might be time to put my money into an interest account.","text":"\"Correction.\" Translation: a lot of people are going to lose a lot of money. Might be time to put my money into an interest account.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/192408486433024","repostId":2346816478,"repostType":2,"repost":{"id":"2346816478","pubTimestamp":1687996927,"share":"https://ttm.financial/m/news/2346816478?lang=&edition=fundamental","pubTime":"2023-06-29 08:02","market":"us","language":"en","title":"The Market Looks Poised For A Correction","url":"https://stock-news.laohu8.com/highlight/detail?id=2346816478","media":"Seekingalpha","summary":"This euphoria seems off.In November 2021, I ignored blatant fundamentals that the market was obviously overbought and P/Es were overinflated. Given the significant increase in the risk-free rate of re","content":"<html><head></head><body><p>This euphoria seems off.</p><p>In November 2021, I ignored blatant fundamentals that the market was obviously overbought and P/Es were overinflated. Given the significant increase in the risk-free rate of return, it isn&#39;t a stretch to say that current prices are stretched even further now than they were then. I don’t want to make the mistake I made in 2022 again.</p><p>Here are the basics. You can calculate the effective yield of your investment by taking the reciprocal of the price/earnings ratio (in other words, divide 1 by the P/E ratio). If you invest in a company with a P/E of 15, you would expect to make your money back in 15 years. That is a 6.67% yearly yield on your investment (which you can calculate by dividing 1 by 15).</p><p>Right now, the forward P/E of the S&amp;P 500 (NYSEARCA:SPY) is 19.4 and the Nasdaq (NASDAQ:QQQ) has be overbought or close to it for weeks. That P/E on the S&amp;P 500 leads to an effective yield of 5.15%. Also right now, I can buy a 3-month T-bill that will pay me 5.34%. In other words, right now, I can invest in the S&amp;P 500, which is a riskier investment than a T-Bill and receive a lower yield. That shouldn’t happen. Equities are inherently more risky than government treasuries, so there should be risk premium that you have to pay to buy stocks. In other words, when the yield on a risk-free alternative investment goes up, the P/E that investors are willing to pay for stocks should go down. You CERTAINLY should not be buying something that has higher risk <em>and</em> a lower yield.</p><p>This graphic from the Financial Times tells the story quite well:</p><p></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/8cfcd232705774bb07305c97e7f40ca0\" tg-width=\"980\" tg-height=\"680\"/></p><p>Financial Times</p><p>Now, to be sure, we are much closer to the end of the rate hike cycle and so the discount rate isn&#39;t going to move higher like it did in 2022 to send things crashing down. That light blue line should be coming down in the future rather than continuing to decrease, but there should always be a gap between the dark blue line and the light blue line that represents the risk premium for equities. That gap illustrates the spread that people are willing to pay to take on risk. Even at a compressed spread of around 2%, that would mean the S&amp;P 500 P/E should be around 13.6 right now.</p><p>The earnings estimates might be off, and better earnings could justify this valuation, but every equity across the entire S&amp;P 500 needs to beat estimates by about 30% to justify current prices. I also understand that the market looks forward, but the 1-year treasury yield is still 5.33% and the 2-year is at 4.76%. That means rates are not expected to come down very quickly, certainly not quick enough to justify this type of P/E ratio. The index is priced for perfection right now. It is overpriced right now. There should be a reversion to the mean for equity pricing. The tweet below describes the same thing in different terms.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/6d730d045d9a8263b83e6c98437a2b2a\" tg-width=\"585\" tg-height=\"498\"/></p><p>Twitter</p><p>I actually see the Fed cutting sooner rather than later with the rate of disinflation. I think that the economy will slow but that economic indicators are actually, all things considered, doing pretty well. However, it can be both true that the market is overheated and above fair value AND that conditions are improving at the same time. That means things could be getting better and there still needs to be a correction.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/ab4f66bb3b2016189cc950e64846f598\" tg-width=\"685\" tg-height=\"443\"/></p><p>CNBC</p><p>Credit card debt is now above $1T and credit card interest rates have never been higher. Average credit card interest rate is 20.8%. This fall, the student loan payment moratorium is ending and will siphon off about $18B every month from the economy according to Jefferies. The US consumer has stayed strong, but this is going to put extreme stress on them.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/a7929b6ecc6877fba39f2c39aed90a64\" tg-width=\"1280\" tg-height=\"1034\"/></p><p><a href=\"https://laohu8.com/S/TREE\">LendingTree</a></p><p>Between the weaker consumer and the overpriced S&amp;P 500, I think we are going to get a large correction sometime, something like a 10-20% drop from peak to trough. I don&#39;t know when it&#39;s coming, but I personally think it will happen in the next 9 months as the rate hikes make their way through the economy, unemployment begins to rise, student loan payments take a large chunk out of monthly budgets, and credit card debt begins to really crush people. Greed will make way for fear at some point during that cycle, and equities will fall.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/67a4087d3d5f32889a3042f039183068\" tg-width=\"640\" tg-height=\"377\"/></p><p>CNN</p><p>This is talking about the indexes at large. There are still individual names that are undervalued. I’m also not selling my positions or anything. Usually I DCA weekly, but I stopped that about a month ago because things feel overheated. I will continue to build my cash position and might sell some covered calls on portions of my positions as a hedge. I will be ready to buy if the correction comes. If I’m wrong then I’ll have that cash to DCA at even higher prices than today and I’ll miss some upside, and that will be ok. Just wanted to share my thoughts on what I’m seeing and thinking.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>The Market Looks Poised For A Correction</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nThe Market Looks Poised For A Correction\n</h2>\n\n<h4 class=\"meta\">\n\n\n2023-06-29 08:02 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4614029-market-looks-poised-for-correction><strong>Seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>This euphoria seems off.In November 2021, I ignored blatant fundamentals that the market was obviously overbought and P/Es were overinflated. Given the significant increase in the risk-free rate of ...</p>\n\n<a href=\"https://seekingalpha.com/article/4614029-market-looks-poised-for-correction\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{".SPX":"S&P 500 Index",".IXIC":"NASDAQ Composite",".DJI":"道琼斯"},"source_url":"https://seekingalpha.com/article/4614029-market-looks-poised-for-correction","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2346816478","content_text":"This euphoria seems off.In November 2021, I ignored blatant fundamentals that the market was obviously overbought and P/Es were overinflated. Given the significant increase in the risk-free rate of return, it isn't a stretch to say that current prices are stretched even further now than they were then. I don’t want to make the mistake I made in 2022 again.Here are the basics. You can calculate the effective yield of your investment by taking the reciprocal of the price/earnings ratio (in other words, divide 1 by the P/E ratio). If you invest in a company with a P/E of 15, you would expect to make your money back in 15 years. That is a 6.67% yearly yield on your investment (which you can calculate by dividing 1 by 15).Right now, the forward P/E of the S&P 500 (NYSEARCA:SPY) is 19.4 and the Nasdaq (NASDAQ:QQQ) has be overbought or close to it for weeks. That P/E on the S&P 500 leads to an effective yield of 5.15%. Also right now, I can buy a 3-month T-bill that will pay me 5.34%. In other words, right now, I can invest in the S&P 500, which is a riskier investment than a T-Bill and receive a lower yield. That shouldn’t happen. Equities are inherently more risky than government treasuries, so there should be risk premium that you have to pay to buy stocks. In other words, when the yield on a risk-free alternative investment goes up, the P/E that investors are willing to pay for stocks should go down. You CERTAINLY should not be buying something that has higher risk and a lower yield.This graphic from the Financial Times tells the story quite well:Financial TimesNow, to be sure, we are much closer to the end of the rate hike cycle and so the discount rate isn't going to move higher like it did in 2022 to send things crashing down. That light blue line should be coming down in the future rather than continuing to decrease, but there should always be a gap between the dark blue line and the light blue line that represents the risk premium for equities. That gap illustrates the spread that people are willing to pay to take on risk. Even at a compressed spread of around 2%, that would mean the S&P 500 P/E should be around 13.6 right now.The earnings estimates might be off, and better earnings could justify this valuation, but every equity across the entire S&P 500 needs to beat estimates by about 30% to justify current prices. I also understand that the market looks forward, but the 1-year treasury yield is still 5.33% and the 2-year is at 4.76%. That means rates are not expected to come down very quickly, certainly not quick enough to justify this type of P/E ratio. The index is priced for perfection right now. It is overpriced right now. There should be a reversion to the mean for equity pricing. The tweet below describes the same thing in different terms.TwitterI actually see the Fed cutting sooner rather than later with the rate of disinflation. I think that the economy will slow but that economic indicators are actually, all things considered, doing pretty well. However, it can be both true that the market is overheated and above fair value AND that conditions are improving at the same time. That means things could be getting better and there still needs to be a correction.CNBCCredit card debt is now above $1T and credit card interest rates have never been higher. Average credit card interest rate is 20.8%. This fall, the student loan payment moratorium is ending and will siphon off about $18B every month from the economy according to Jefferies. The US consumer has stayed strong, but this is going to put extreme stress on them.LendingTreeBetween the weaker consumer and the overpriced S&P 500, I think we are going to get a large correction sometime, something like a 10-20% drop from peak to trough. I don't know when it's coming, but I personally think it will happen in the next 9 months as the rate hikes make their way through the economy, unemployment begins to rise, student loan payments take a large chunk out of monthly budgets, and credit card debt begins to really crush people. Greed will make way for fear at some point during that cycle, and equities will fall.CNNThis is talking about the indexes at large. There are still individual names that are undervalued. I’m also not selling my positions or anything. Usually I DCA weekly, but I stopped that about a month ago because things feel overheated. I will continue to build my cash position and might sell some covered calls on portions of my positions as a hedge. I will be ready to buy if the correction comes. If I’m wrong then I’ll have that cash to DCA at even higher prices than today and I’ll miss some upside, and that will be ok. Just wanted to share my thoughts on what I’m seeing and thinking.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":192407978303744,"gmtCreate":1688005080295,"gmtModify":1688005575120,"author":{"id":"4139683026970702","authorId":"4139683026970702","name":"Kbbaby","avatar":"https://community-static.tradeup.com/news/03a42197953698ebfdcac2cf8bdaa6f5","vip":1,"crmLevel":1,"crmLevelSwitch":0,"idStr":"4139683026970702","authorIdStr":"4139683026970702"},"htmlText":"Share your opinion about this news…","listText":"Share your opinion about this news…","text":"Share your opinion about this news…","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/192407978303744","repostId":2346816478,"repostType":2,"repost":{"id":"2346816478","pubTimestamp":1687996927,"share":"https://ttm.financial/m/news/2346816478?lang=&edition=fundamental","pubTime":"2023-06-29 08:02","market":"us","language":"en","title":"The Market Looks Poised For A Correction","url":"https://stock-news.laohu8.com/highlight/detail?id=2346816478","media":"Seekingalpha","summary":"This euphoria seems off.In November 2021, I ignored blatant fundamentals that the market was obviously overbought and P/Es were overinflated. Given the significant increase in the risk-free rate of re","content":"<html><head></head><body><p>This euphoria seems off.</p><p>In November 2021, I ignored blatant fundamentals that the market was obviously overbought and P/Es were overinflated. Given the significant increase in the risk-free rate of return, it isn&#39;t a stretch to say that current prices are stretched even further now than they were then. I don’t want to make the mistake I made in 2022 again.</p><p>Here are the basics. You can calculate the effective yield of your investment by taking the reciprocal of the price/earnings ratio (in other words, divide 1 by the P/E ratio). If you invest in a company with a P/E of 15, you would expect to make your money back in 15 years. That is a 6.67% yearly yield on your investment (which you can calculate by dividing 1 by 15).</p><p>Right now, the forward P/E of the S&amp;P 500 (NYSEARCA:SPY) is 19.4 and the Nasdaq (NASDAQ:QQQ) has be overbought or close to it for weeks. That P/E on the S&amp;P 500 leads to an effective yield of 5.15%. Also right now, I can buy a 3-month T-bill that will pay me 5.34%. In other words, right now, I can invest in the S&amp;P 500, which is a riskier investment than a T-Bill and receive a lower yield. That shouldn’t happen. Equities are inherently more risky than government treasuries, so there should be risk premium that you have to pay to buy stocks. In other words, when the yield on a risk-free alternative investment goes up, the P/E that investors are willing to pay for stocks should go down. You CERTAINLY should not be buying something that has higher risk <em>and</em> a lower yield.</p><p>This graphic from the Financial Times tells the story quite well:</p><p></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/8cfcd232705774bb07305c97e7f40ca0\" tg-width=\"980\" tg-height=\"680\"/></p><p>Financial Times</p><p>Now, to be sure, we are much closer to the end of the rate hike cycle and so the discount rate isn&#39;t going to move higher like it did in 2022 to send things crashing down. That light blue line should be coming down in the future rather than continuing to decrease, but there should always be a gap between the dark blue line and the light blue line that represents the risk premium for equities. That gap illustrates the spread that people are willing to pay to take on risk. Even at a compressed spread of around 2%, that would mean the S&amp;P 500 P/E should be around 13.6 right now.</p><p>The earnings estimates might be off, and better earnings could justify this valuation, but every equity across the entire S&amp;P 500 needs to beat estimates by about 30% to justify current prices. I also understand that the market looks forward, but the 1-year treasury yield is still 5.33% and the 2-year is at 4.76%. That means rates are not expected to come down very quickly, certainly not quick enough to justify this type of P/E ratio. The index is priced for perfection right now. It is overpriced right now. There should be a reversion to the mean for equity pricing. The tweet below describes the same thing in different terms.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/6d730d045d9a8263b83e6c98437a2b2a\" tg-width=\"585\" tg-height=\"498\"/></p><p>Twitter</p><p>I actually see the Fed cutting sooner rather than later with the rate of disinflation. I think that the economy will slow but that economic indicators are actually, all things considered, doing pretty well. However, it can be both true that the market is overheated and above fair value AND that conditions are improving at the same time. That means things could be getting better and there still needs to be a correction.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/ab4f66bb3b2016189cc950e64846f598\" tg-width=\"685\" tg-height=\"443\"/></p><p>CNBC</p><p>Credit card debt is now above $1T and credit card interest rates have never been higher. Average credit card interest rate is 20.8%. This fall, the student loan payment moratorium is ending and will siphon off about $18B every month from the economy according to Jefferies. The US consumer has stayed strong, but this is going to put extreme stress on them.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/a7929b6ecc6877fba39f2c39aed90a64\" tg-width=\"1280\" tg-height=\"1034\"/></p><p><a href=\"https://laohu8.com/S/TREE\">LendingTree</a></p><p>Between the weaker consumer and the overpriced S&amp;P 500, I think we are going to get a large correction sometime, something like a 10-20% drop from peak to trough. I don&#39;t know when it&#39;s coming, but I personally think it will happen in the next 9 months as the rate hikes make their way through the economy, unemployment begins to rise, student loan payments take a large chunk out of monthly budgets, and credit card debt begins to really crush people. Greed will make way for fear at some point during that cycle, and equities will fall.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/67a4087d3d5f32889a3042f039183068\" tg-width=\"640\" tg-height=\"377\"/></p><p>CNN</p><p>This is talking about the indexes at large. There are still individual names that are undervalued. I’m also not selling my positions or anything. Usually I DCA weekly, but I stopped that about a month ago because things feel overheated. I will continue to build my cash position and might sell some covered calls on portions of my positions as a hedge. I will be ready to buy if the correction comes. If I’m wrong then I’ll have that cash to DCA at even higher prices than today and I’ll miss some upside, and that will be ok. Just wanted to share my thoughts on what I’m seeing and thinking.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>The Market Looks Poised For A Correction</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nThe Market Looks Poised For A Correction\n</h2>\n\n<h4 class=\"meta\">\n\n\n2023-06-29 08:02 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4614029-market-looks-poised-for-correction><strong>Seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>This euphoria seems off.In November 2021, I ignored blatant fundamentals that the market was obviously overbought and P/Es were overinflated. Given the significant increase in the risk-free rate of ...</p>\n\n<a href=\"https://seekingalpha.com/article/4614029-market-looks-poised-for-correction\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{".SPX":"S&P 500 Index",".IXIC":"NASDAQ Composite",".DJI":"道琼斯"},"source_url":"https://seekingalpha.com/article/4614029-market-looks-poised-for-correction","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2346816478","content_text":"This euphoria seems off.In November 2021, I ignored blatant fundamentals that the market was obviously overbought and P/Es were overinflated. Given the significant increase in the risk-free rate of return, it isn't a stretch to say that current prices are stretched even further now than they were then. I don’t want to make the mistake I made in 2022 again.Here are the basics. You can calculate the effective yield of your investment by taking the reciprocal of the price/earnings ratio (in other words, divide 1 by the P/E ratio). If you invest in a company with a P/E of 15, you would expect to make your money back in 15 years. That is a 6.67% yearly yield on your investment (which you can calculate by dividing 1 by 15).Right now, the forward P/E of the S&P 500 (NYSEARCA:SPY) is 19.4 and the Nasdaq (NASDAQ:QQQ) has be overbought or close to it for weeks. That P/E on the S&P 500 leads to an effective yield of 5.15%. Also right now, I can buy a 3-month T-bill that will pay me 5.34%. In other words, right now, I can invest in the S&P 500, which is a riskier investment than a T-Bill and receive a lower yield. That shouldn’t happen. Equities are inherently more risky than government treasuries, so there should be risk premium that you have to pay to buy stocks. In other words, when the yield on a risk-free alternative investment goes up, the P/E that investors are willing to pay for stocks should go down. You CERTAINLY should not be buying something that has higher risk and a lower yield.This graphic from the Financial Times tells the story quite well:Financial TimesNow, to be sure, we are much closer to the end of the rate hike cycle and so the discount rate isn't going to move higher like it did in 2022 to send things crashing down. That light blue line should be coming down in the future rather than continuing to decrease, but there should always be a gap between the dark blue line and the light blue line that represents the risk premium for equities. That gap illustrates the spread that people are willing to pay to take on risk. Even at a compressed spread of around 2%, that would mean the S&P 500 P/E should be around 13.6 right now.The earnings estimates might be off, and better earnings could justify this valuation, but every equity across the entire S&P 500 needs to beat estimates by about 30% to justify current prices. I also understand that the market looks forward, but the 1-year treasury yield is still 5.33% and the 2-year is at 4.76%. That means rates are not expected to come down very quickly, certainly not quick enough to justify this type of P/E ratio. The index is priced for perfection right now. It is overpriced right now. There should be a reversion to the mean for equity pricing. The tweet below describes the same thing in different terms.TwitterI actually see the Fed cutting sooner rather than later with the rate of disinflation. I think that the economy will slow but that economic indicators are actually, all things considered, doing pretty well. However, it can be both true that the market is overheated and above fair value AND that conditions are improving at the same time. That means things could be getting better and there still needs to be a correction.CNBCCredit card debt is now above $1T and credit card interest rates have never been higher. Average credit card interest rate is 20.8%. This fall, the student loan payment moratorium is ending and will siphon off about $18B every month from the economy according to Jefferies. The US consumer has stayed strong, but this is going to put extreme stress on them.LendingTreeBetween the weaker consumer and the overpriced S&P 500, I think we are going to get a large correction sometime, something like a 10-20% drop from peak to trough. I don't know when it's coming, but I personally think it will happen in the next 9 months as the rate hikes make their way through the economy, unemployment begins to rise, student loan payments take a large chunk out of monthly budgets, and credit card debt begins to really crush people. Greed will make way for fear at some point during that cycle, and equities will fall.CNNThis is talking about the indexes at large. There are still individual names that are undervalued. I’m also not selling my positions or anything. Usually I DCA weekly, but I stopped that about a month ago because things feel overheated. I will continue to build my cash position and might sell some covered calls on portions of my positions as a hedge. I will be ready to buy if the correction comes. If I’m wrong then I’ll have that cash to DCA at even higher prices than today and I’ll miss some upside, and that will be ok. Just wanted to share my thoughts on what I’m seeing and thinking.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":192399468273784,"gmtCreate":1688002880381,"gmtModify":1688002884239,"author":{"id":"4126097619390902","authorId":"4126097619390902","name":"klarky","avatar":"https://community-static.tradeup.com/news/440ae307ae3a7b5cc1f7c25d579801d8","vip":1,"hat":"https://static.tigerbbs.com/b073a07f77dbe6b3bec6b12311fde6bd","crmLevel":5,"crmLevelSwitch":1,"idStr":"4126097619390902","authorIdStr":"4126097619390902"},"htmlText":"Torally agree, good article","listText":"Torally agree, good article","text":"Torally agree, good article","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":5,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/192399468273784","repostId":2346816478,"repostType":4,"repost":{"id":"2346816478","pubTimestamp":1687996927,"share":"https://ttm.financial/m/news/2346816478?lang=&edition=fundamental","pubTime":"2023-06-29 08:02","market":"us","language":"en","title":"The Market Looks Poised For A Correction","url":"https://stock-news.laohu8.com/highlight/detail?id=2346816478","media":"Seekingalpha","summary":"This euphoria seems off.In November 2021, I ignored blatant fundamentals that the market was obviously overbought and P/Es were overinflated. Given the significant increase in the risk-free rate of re","content":"<html><head></head><body><p>This euphoria seems off.</p><p>In November 2021, I ignored blatant fundamentals that the market was obviously overbought and P/Es were overinflated. Given the significant increase in the risk-free rate of return, it isn&#39;t a stretch to say that current prices are stretched even further now than they were then. I don’t want to make the mistake I made in 2022 again.</p><p>Here are the basics. You can calculate the effective yield of your investment by taking the reciprocal of the price/earnings ratio (in other words, divide 1 by the P/E ratio). If you invest in a company with a P/E of 15, you would expect to make your money back in 15 years. That is a 6.67% yearly yield on your investment (which you can calculate by dividing 1 by 15).</p><p>Right now, the forward P/E of the S&amp;P 500 (NYSEARCA:SPY) is 19.4 and the Nasdaq (NASDAQ:QQQ) has be overbought or close to it for weeks. That P/E on the S&amp;P 500 leads to an effective yield of 5.15%. Also right now, I can buy a 3-month T-bill that will pay me 5.34%. In other words, right now, I can invest in the S&amp;P 500, which is a riskier investment than a T-Bill and receive a lower yield. That shouldn’t happen. Equities are inherently more risky than government treasuries, so there should be risk premium that you have to pay to buy stocks. In other words, when the yield on a risk-free alternative investment goes up, the P/E that investors are willing to pay for stocks should go down. You CERTAINLY should not be buying something that has higher risk <em>and</em> a lower yield.</p><p>This graphic from the Financial Times tells the story quite well:</p><p></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/8cfcd232705774bb07305c97e7f40ca0\" tg-width=\"980\" tg-height=\"680\"/></p><p>Financial Times</p><p>Now, to be sure, we are much closer to the end of the rate hike cycle and so the discount rate isn&#39;t going to move higher like it did in 2022 to send things crashing down. That light blue line should be coming down in the future rather than continuing to decrease, but there should always be a gap between the dark blue line and the light blue line that represents the risk premium for equities. That gap illustrates the spread that people are willing to pay to take on risk. Even at a compressed spread of around 2%, that would mean the S&amp;P 500 P/E should be around 13.6 right now.</p><p>The earnings estimates might be off, and better earnings could justify this valuation, but every equity across the entire S&amp;P 500 needs to beat estimates by about 30% to justify current prices. I also understand that the market looks forward, but the 1-year treasury yield is still 5.33% and the 2-year is at 4.76%. That means rates are not expected to come down very quickly, certainly not quick enough to justify this type of P/E ratio. The index is priced for perfection right now. It is overpriced right now. There should be a reversion to the mean for equity pricing. The tweet below describes the same thing in different terms.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/6d730d045d9a8263b83e6c98437a2b2a\" tg-width=\"585\" tg-height=\"498\"/></p><p>Twitter</p><p>I actually see the Fed cutting sooner rather than later with the rate of disinflation. I think that the economy will slow but that economic indicators are actually, all things considered, doing pretty well. However, it can be both true that the market is overheated and above fair value AND that conditions are improving at the same time. That means things could be getting better and there still needs to be a correction.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/ab4f66bb3b2016189cc950e64846f598\" tg-width=\"685\" tg-height=\"443\"/></p><p>CNBC</p><p>Credit card debt is now above $1T and credit card interest rates have never been higher. Average credit card interest rate is 20.8%. This fall, the student loan payment moratorium is ending and will siphon off about $18B every month from the economy according to Jefferies. The US consumer has stayed strong, but this is going to put extreme stress on them.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/a7929b6ecc6877fba39f2c39aed90a64\" tg-width=\"1280\" tg-height=\"1034\"/></p><p><a href=\"https://laohu8.com/S/TREE\">LendingTree</a></p><p>Between the weaker consumer and the overpriced S&amp;P 500, I think we are going to get a large correction sometime, something like a 10-20% drop from peak to trough. I don&#39;t know when it&#39;s coming, but I personally think it will happen in the next 9 months as the rate hikes make their way through the economy, unemployment begins to rise, student loan payments take a large chunk out of monthly budgets, and credit card debt begins to really crush people. Greed will make way for fear at some point during that cycle, and equities will fall.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/67a4087d3d5f32889a3042f039183068\" tg-width=\"640\" tg-height=\"377\"/></p><p>CNN</p><p>This is talking about the indexes at large. There are still individual names that are undervalued. I’m also not selling my positions or anything. Usually I DCA weekly, but I stopped that about a month ago because things feel overheated. I will continue to build my cash position and might sell some covered calls on portions of my positions as a hedge. I will be ready to buy if the correction comes. If I’m wrong then I’ll have that cash to DCA at even higher prices than today and I’ll miss some upside, and that will be ok. Just wanted to share my thoughts on what I’m seeing and thinking.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>The Market Looks Poised For A Correction</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nThe Market Looks Poised For A Correction\n</h2>\n\n<h4 class=\"meta\">\n\n\n2023-06-29 08:02 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4614029-market-looks-poised-for-correction><strong>Seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>This euphoria seems off.In November 2021, I ignored blatant fundamentals that the market was obviously overbought and P/Es were overinflated. Given the significant increase in the risk-free rate of ...</p>\n\n<a href=\"https://seekingalpha.com/article/4614029-market-looks-poised-for-correction\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{".SPX":"S&P 500 Index",".IXIC":"NASDAQ Composite",".DJI":"道琼斯"},"source_url":"https://seekingalpha.com/article/4614029-market-looks-poised-for-correction","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2346816478","content_text":"This euphoria seems off.In November 2021, I ignored blatant fundamentals that the market was obviously overbought and P/Es were overinflated. Given the significant increase in the risk-free rate of return, it isn't a stretch to say that current prices are stretched even further now than they were then. I don’t want to make the mistake I made in 2022 again.Here are the basics. You can calculate the effective yield of your investment by taking the reciprocal of the price/earnings ratio (in other words, divide 1 by the P/E ratio). If you invest in a company with a P/E of 15, you would expect to make your money back in 15 years. That is a 6.67% yearly yield on your investment (which you can calculate by dividing 1 by 15).Right now, the forward P/E of the S&P 500 (NYSEARCA:SPY) is 19.4 and the Nasdaq (NASDAQ:QQQ) has be overbought or close to it for weeks. That P/E on the S&P 500 leads to an effective yield of 5.15%. Also right now, I can buy a 3-month T-bill that will pay me 5.34%. In other words, right now, I can invest in the S&P 500, which is a riskier investment than a T-Bill and receive a lower yield. That shouldn’t happen. Equities are inherently more risky than government treasuries, so there should be risk premium that you have to pay to buy stocks. In other words, when the yield on a risk-free alternative investment goes up, the P/E that investors are willing to pay for stocks should go down. You CERTAINLY should not be buying something that has higher risk and a lower yield.This graphic from the Financial Times tells the story quite well:Financial TimesNow, to be sure, we are much closer to the end of the rate hike cycle and so the discount rate isn't going to move higher like it did in 2022 to send things crashing down. That light blue line should be coming down in the future rather than continuing to decrease, but there should always be a gap between the dark blue line and the light blue line that represents the risk premium for equities. That gap illustrates the spread that people are willing to pay to take on risk. Even at a compressed spread of around 2%, that would mean the S&P 500 P/E should be around 13.6 right now.The earnings estimates might be off, and better earnings could justify this valuation, but every equity across the entire S&P 500 needs to beat estimates by about 30% to justify current prices. I also understand that the market looks forward, but the 1-year treasury yield is still 5.33% and the 2-year is at 4.76%. That means rates are not expected to come down very quickly, certainly not quick enough to justify this type of P/E ratio. The index is priced for perfection right now. It is overpriced right now. There should be a reversion to the mean for equity pricing. The tweet below describes the same thing in different terms.TwitterI actually see the Fed cutting sooner rather than later with the rate of disinflation. I think that the economy will slow but that economic indicators are actually, all things considered, doing pretty well. However, it can be both true that the market is overheated and above fair value AND that conditions are improving at the same time. That means things could be getting better and there still needs to be a correction.CNBCCredit card debt is now above $1T and credit card interest rates have never been higher. Average credit card interest rate is 20.8%. This fall, the student loan payment moratorium is ending and will siphon off about $18B every month from the economy according to Jefferies. The US consumer has stayed strong, but this is going to put extreme stress on them.LendingTreeBetween the weaker consumer and the overpriced S&P 500, I think we are going to get a large correction sometime, something like a 10-20% drop from peak to trough. I don't know when it's coming, but I personally think it will happen in the next 9 months as the rate hikes make their way through the economy, unemployment begins to rise, student loan payments take a large chunk out of monthly budgets, and credit card debt begins to really crush people. Greed will make way for fear at some point during that cycle, and equities will fall.CNNThis is talking about the indexes at large. There are still individual names that are undervalued. I’m also not selling my positions or anything. Usually I DCA weekly, but I stopped that about a month ago because things feel overheated. I will continue to build my cash position and might sell some covered calls on portions of my positions as a hedge. I will be ready to buy if the correction comes. If I’m wrong then I’ll have that cash to DCA at even higher prices than today and I’ll miss some upside, and that will be ok. Just wanted to share my thoughts on what I’m seeing and thinking.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":192398742937768,"gmtCreate":1688002806890,"gmtModify":1688002810101,"author":{"id":"4094219147101600","authorId":"4094219147101600","name":"MidnightTrader","avatar":"https://community-static.tradeup.com/news/ff1d23fa994aa398451eea50bc54fa60","vip":1,"hat":"https://static.tigerbbs.com/b0a2963eb37c60c5d6d4a8dbcd266952","crmLevel":2,"crmLevelSwitch":1,"idStr":"4094219147101600","authorIdStr":"4094219147101600"},"htmlText":"Thank you for this article and your insights. Pretty much confirms what I've been thinking! The mkt is so overbought it's crazy","listText":"Thank you for this article and your insights. Pretty much confirms what I've been thinking! The mkt is so overbought it's crazy","text":"Thank you for this article and your insights. Pretty much confirms what I've been thinking! The mkt is so overbought it's crazy","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":5,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/192398742937768","repostId":2346816478,"repostType":2,"repost":{"id":"2346816478","pubTimestamp":1687996927,"share":"https://ttm.financial/m/news/2346816478?lang=&edition=fundamental","pubTime":"2023-06-29 08:02","market":"us","language":"en","title":"The Market Looks Poised For A Correction","url":"https://stock-news.laohu8.com/highlight/detail?id=2346816478","media":"Seekingalpha","summary":"This euphoria seems off.In November 2021, I ignored blatant fundamentals that the market was obviously overbought and P/Es were overinflated. Given the significant increase in the risk-free rate of re","content":"<html><head></head><body><p>This euphoria seems off.</p><p>In November 2021, I ignored blatant fundamentals that the market was obviously overbought and P/Es were overinflated. Given the significant increase in the risk-free rate of return, it isn&#39;t a stretch to say that current prices are stretched even further now than they were then. I don’t want to make the mistake I made in 2022 again.</p><p>Here are the basics. You can calculate the effective yield of your investment by taking the reciprocal of the price/earnings ratio (in other words, divide 1 by the P/E ratio). If you invest in a company with a P/E of 15, you would expect to make your money back in 15 years. That is a 6.67% yearly yield on your investment (which you can calculate by dividing 1 by 15).</p><p>Right now, the forward P/E of the S&amp;P 500 (NYSEARCA:SPY) is 19.4 and the Nasdaq (NASDAQ:QQQ) has be overbought or close to it for weeks. That P/E on the S&amp;P 500 leads to an effective yield of 5.15%. Also right now, I can buy a 3-month T-bill that will pay me 5.34%. In other words, right now, I can invest in the S&amp;P 500, which is a riskier investment than a T-Bill and receive a lower yield. That shouldn’t happen. Equities are inherently more risky than government treasuries, so there should be risk premium that you have to pay to buy stocks. In other words, when the yield on a risk-free alternative investment goes up, the P/E that investors are willing to pay for stocks should go down. You CERTAINLY should not be buying something that has higher risk <em>and</em> a lower yield.</p><p>This graphic from the Financial Times tells the story quite well:</p><p></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/8cfcd232705774bb07305c97e7f40ca0\" tg-width=\"980\" tg-height=\"680\"/></p><p>Financial Times</p><p>Now, to be sure, we are much closer to the end of the rate hike cycle and so the discount rate isn&#39;t going to move higher like it did in 2022 to send things crashing down. That light blue line should be coming down in the future rather than continuing to decrease, but there should always be a gap between the dark blue line and the light blue line that represents the risk premium for equities. That gap illustrates the spread that people are willing to pay to take on risk. Even at a compressed spread of around 2%, that would mean the S&amp;P 500 P/E should be around 13.6 right now.</p><p>The earnings estimates might be off, and better earnings could justify this valuation, but every equity across the entire S&amp;P 500 needs to beat estimates by about 30% to justify current prices. I also understand that the market looks forward, but the 1-year treasury yield is still 5.33% and the 2-year is at 4.76%. That means rates are not expected to come down very quickly, certainly not quick enough to justify this type of P/E ratio. The index is priced for perfection right now. It is overpriced right now. There should be a reversion to the mean for equity pricing. The tweet below describes the same thing in different terms.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/6d730d045d9a8263b83e6c98437a2b2a\" tg-width=\"585\" tg-height=\"498\"/></p><p>Twitter</p><p>I actually see the Fed cutting sooner rather than later with the rate of disinflation. I think that the economy will slow but that economic indicators are actually, all things considered, doing pretty well. However, it can be both true that the market is overheated and above fair value AND that conditions are improving at the same time. That means things could be getting better and there still needs to be a correction.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/ab4f66bb3b2016189cc950e64846f598\" tg-width=\"685\" tg-height=\"443\"/></p><p>CNBC</p><p>Credit card debt is now above $1T and credit card interest rates have never been higher. Average credit card interest rate is 20.8%. This fall, the student loan payment moratorium is ending and will siphon off about $18B every month from the economy according to Jefferies. The US consumer has stayed strong, but this is going to put extreme stress on them.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/a7929b6ecc6877fba39f2c39aed90a64\" tg-width=\"1280\" tg-height=\"1034\"/></p><p><a href=\"https://laohu8.com/S/TREE\">LendingTree</a></p><p>Between the weaker consumer and the overpriced S&amp;P 500, I think we are going to get a large correction sometime, something like a 10-20% drop from peak to trough. I don&#39;t know when it&#39;s coming, but I personally think it will happen in the next 9 months as the rate hikes make their way through the economy, unemployment begins to rise, student loan payments take a large chunk out of monthly budgets, and credit card debt begins to really crush people. Greed will make way for fear at some point during that cycle, and equities will fall.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/67a4087d3d5f32889a3042f039183068\" tg-width=\"640\" tg-height=\"377\"/></p><p>CNN</p><p>This is talking about the indexes at large. There are still individual names that are undervalued. I’m also not selling my positions or anything. Usually I DCA weekly, but I stopped that about a month ago because things feel overheated. I will continue to build my cash position and might sell some covered calls on portions of my positions as a hedge. I will be ready to buy if the correction comes. If I’m wrong then I’ll have that cash to DCA at even higher prices than today and I’ll miss some upside, and that will be ok. Just wanted to share my thoughts on what I’m seeing and thinking.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>The Market Looks Poised For A Correction</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nThe Market Looks Poised For A Correction\n</h2>\n\n<h4 class=\"meta\">\n\n\n2023-06-29 08:02 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4614029-market-looks-poised-for-correction><strong>Seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>This euphoria seems off.In November 2021, I ignored blatant fundamentals that the market was obviously overbought and P/Es were overinflated. Given the significant increase in the risk-free rate of ...</p>\n\n<a href=\"https://seekingalpha.com/article/4614029-market-looks-poised-for-correction\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{".SPX":"S&P 500 Index",".IXIC":"NASDAQ Composite",".DJI":"道琼斯"},"source_url":"https://seekingalpha.com/article/4614029-market-looks-poised-for-correction","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2346816478","content_text":"This euphoria seems off.In November 2021, I ignored blatant fundamentals that the market was obviously overbought and P/Es were overinflated. Given the significant increase in the risk-free rate of return, it isn't a stretch to say that current prices are stretched even further now than they were then. I don’t want to make the mistake I made in 2022 again.Here are the basics. You can calculate the effective yield of your investment by taking the reciprocal of the price/earnings ratio (in other words, divide 1 by the P/E ratio). If you invest in a company with a P/E of 15, you would expect to make your money back in 15 years. That is a 6.67% yearly yield on your investment (which you can calculate by dividing 1 by 15).Right now, the forward P/E of the S&P 500 (NYSEARCA:SPY) is 19.4 and the Nasdaq (NASDAQ:QQQ) has be overbought or close to it for weeks. That P/E on the S&P 500 leads to an effective yield of 5.15%. Also right now, I can buy a 3-month T-bill that will pay me 5.34%. In other words, right now, I can invest in the S&P 500, which is a riskier investment than a T-Bill and receive a lower yield. That shouldn’t happen. Equities are inherently more risky than government treasuries, so there should be risk premium that you have to pay to buy stocks. In other words, when the yield on a risk-free alternative investment goes up, the P/E that investors are willing to pay for stocks should go down. You CERTAINLY should not be buying something that has higher risk and a lower yield.This graphic from the Financial Times tells the story quite well:Financial TimesNow, to be sure, we are much closer to the end of the rate hike cycle and so the discount rate isn't going to move higher like it did in 2022 to send things crashing down. That light blue line should be coming down in the future rather than continuing to decrease, but there should always be a gap between the dark blue line and the light blue line that represents the risk premium for equities. That gap illustrates the spread that people are willing to pay to take on risk. Even at a compressed spread of around 2%, that would mean the S&P 500 P/E should be around 13.6 right now.The earnings estimates might be off, and better earnings could justify this valuation, but every equity across the entire S&P 500 needs to beat estimates by about 30% to justify current prices. I also understand that the market looks forward, but the 1-year treasury yield is still 5.33% and the 2-year is at 4.76%. That means rates are not expected to come down very quickly, certainly not quick enough to justify this type of P/E ratio. The index is priced for perfection right now. It is overpriced right now. There should be a reversion to the mean for equity pricing. The tweet below describes the same thing in different terms.TwitterI actually see the Fed cutting sooner rather than later with the rate of disinflation. I think that the economy will slow but that economic indicators are actually, all things considered, doing pretty well. However, it can be both true that the market is overheated and above fair value AND that conditions are improving at the same time. That means things could be getting better and there still needs to be a correction.CNBCCredit card debt is now above $1T and credit card interest rates have never been higher. Average credit card interest rate is 20.8%. This fall, the student loan payment moratorium is ending and will siphon off about $18B every month from the economy according to Jefferies. The US consumer has stayed strong, but this is going to put extreme stress on them.LendingTreeBetween the weaker consumer and the overpriced S&P 500, I think we are going to get a large correction sometime, something like a 10-20% drop from peak to trough. I don't know when it's coming, but I personally think it will happen in the next 9 months as the rate hikes make their way through the economy, unemployment begins to rise, student loan payments take a large chunk out of monthly budgets, and credit card debt begins to really crush people. Greed will make way for fear at some point during that cycle, and equities will fall.CNNThis is talking about the indexes at large. There are still individual names that are undervalued. I’m also not selling my positions or anything. Usually I DCA weekly, but I stopped that about a month ago because things feel overheated. I will continue to build my cash position and might sell some covered calls on portions of my positions as a hedge. I will be ready to buy if the correction comes. If I’m wrong then I’ll have that cash to DCA at even higher prices than today and I’ll miss some upside, and that will be ok. Just wanted to share my thoughts on what I’m seeing and thinking.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"hasMoreComments":true,"newsSizeData":{"likeSize":71,"commentSize":5,"repostSize":4,"favoriteSize":2,"likeStatus":false,"favoriteStatus":false}}