4 ms·

This is a pretty solid argument for why tech isn't out of bounds, at most any stage. On the other hand, we've had 7 years of 16% growth in the S&P. At some poi

This is a pretty solid argument for why tech isn't out of bounds, at most any stage. On the other hand, we've had 7 years of 16% growth in the S&P. At some point, that will correct, and it will have a real effect on tech. We'll all declare the bubble "popped" at that point, and totally reasonable investments will fail, or at least become painfully illiquid for a while. 7 years feels like a long time to have a run like this. Just like every other time, nobody knows when we'll get that correction.

arielweisberg 11y ago
My math going back five years says it hasn't been 16% by a decent margin? Wouldn't P/E be a better heuristic? Either CAPE or just basic P/E?
- trjordan 11y ago
  I've got some serious end point bias going on, but the bottom was ~700 in March '09, and it's currently at 2,100. Triple in that time is actually 18% annualized (6.5th root of 3). There's definitely better ways of measuring "are we near a top", but "length of bull market" isn't meaningless. There have been a few longer ones, and only one ('49 - '61) that was nearly this productive at the 7 year mark. http://greenbackd.com/2013/04/17/bull-markets-since-1871-duration-and-magnitude/ http://greenbackd.com/2013/04/17/bull-markets-since-1871-dur...
vasilipupkin 11y ago
One thing that often gets lost in the analysis is the distinction between changes and levels. Yes, S&P has been rising for 7 years straight ( changes ), but it is not at particularly egregiously high levels relative to GDP or relative to whatever metric you prefer, since 2001
AYBABTME 11y ago
7 years ago was the middle of an economic crisis, I don't think it's abnormal to be going up for a while after that.
- david927 11y ago
  Except that you forget 7 years before that was the big 2001 crisis. So, the opposite is true: There is reason to believe it's a 7-year economic cycle.
  - hodwik 11y ago
    If only the market were that simple.

arielweisberg 11y ago

My math going back five years says it hasn't been 16% by a decent margin? Wouldn't P/E be a better heuristic? Either CAPE or just basic P/E?

trjordan 11y ago
I've got some serious end point bias going on, but the bottom was ~700 in March '09, and it's currently at 2,100. Triple in that time is actually 18% annualized (6.5th root of 3). There's definitely better ways of measuring "are we near a top", but "length of bull market" isn't meaningless. There have been a few longer ones, and only one ('49 - '61) that was nearly this productive at the 7 year mark. http://greenbackd.com/2013/04/17/bull-markets-since-1871-duration-and-magnitude/ http://greenbackd.com/2013/04/17/bull-markets-since-1871-dur...

vasilipupkin 11y ago

One thing that often gets lost in the analysis is the distinction between changes and levels. Yes, S&P has been rising for 7 years straight ( changes ), but it is not at particularly egregiously high levels relative to GDP or relative to whatever metric you prefer, since 2001

AYBABTME 11y ago

7 years ago was the middle of an economic crisis, I don't think it's abnormal to be going up for a while after that.

david927 11y ago
Except that you forget 7 years before that was the big 2001 crisis. So, the opposite is true: There is reason to believe it's a 7-year economic cycle.
- hodwik 11y ago
  If only the market were that simple.