4 ms·

More money enters when the market is hot. I expect the contribution percentage closely mirrors the price of the S&P. The graph doesn't show the 2007-8 crash but

More money enters when the market is hot. I expect the contribution percentage closely mirrors the price of the S&P. The graph doesn't show the 2007-8 crash but I'd also expect contributions dropped at that time, also providing a depressed baseline for the current gain. Of course, people would have been better served by contributing after the drop, and one could also be nervous about record dollars chasing the market now at its highest point.

lintiness 10y ago
along these lines, note how many news stories etc are currently touting the power of stock indices and index investing. given a shiller pe of ~28, i'd say most are in for a very rude awakening (again and forever). http://www.multpl.com/shiller-pe/ http://www.multpl.com/shiller-pe/
- jcdavis 10y ago
  Solely discussing stock valuations without also considering bond yields is a little misleading. With interest rates so low on a historical basis (albeit now possibly picking up), higher stock pricing is expected and isn't necessarily "overpriced" A good recent discussion of this: http://brooklyninvestor.blogspot.com/2016/11/bonds-down-stocks-up.html http://brooklyninvestor.blogspot.com/2016/11/bonds-down-stoc...
  - Jeema101 10y ago
    I'm not sure where that guy is getting his data, but I think the average stock market P/E when 10 year treasury rates are in the 4-6% range is more like 19. But maybe he's looking at 'forward P/E' or something. http://qvmgroup.com/invest/2013/06/22/sp-500-pes-versus-10-yr-treasury-rates-from-1957/ http://qvmgroup.com/invest/2013/06/22/sp-500-pes-versus-10-y...
- DoodleBuggy 10y ago
  Agreed, but bullish sentiment remains strong and most people are oblivious to valuation metrics. As long as people don't panic sell in the next crash, they should be able to ride it out and break even in a decade or two. Unless we end up like Japan, that is.

lintiness 10y ago

along these lines, note how many news stories etc are currently touting the power of stock indices and index investing. given a shiller pe of ~28, i'd say most are in for a very rude awakening (again and forever). http://www.multpl.com/shiller-pe/ http://www.multpl.com/shiller-pe/

jcdavis 10y ago
Solely discussing stock valuations without also considering bond yields is a little misleading. With interest rates so low on a historical basis (albeit now possibly picking up), higher stock pricing is expected and isn't necessarily "overpriced" A good recent discussion of this: http://brooklyninvestor.blogspot.com/2016/11/bonds-down-stocks-up.html http://brooklyninvestor.blogspot.com/2016/11/bonds-down-stoc...
- Jeema101 10y ago
  I'm not sure where that guy is getting his data, but I think the average stock market P/E when 10 year treasury rates are in the 4-6% range is more like 19. But maybe he's looking at 'forward P/E' or something. http://qvmgroup.com/invest/2013/06/22/sp-500-pes-versus-10-yr-treasury-rates-from-1957/ http://qvmgroup.com/invest/2013/06/22/sp-500-pes-versus-10-y...
DoodleBuggy 10y ago
Agreed, but bullish sentiment remains strong and most people are oblivious to valuation metrics. As long as people don't panic sell in the next crash, they should be able to ride it out and break even in a decade or two. Unless we end up like Japan, that is.