Generational Dynamics Forum - New Site

aeden wrote: Wed Jul 22, 2020 9:53 am ​“The market is looking at a billion of things that we only know a very small amount of,” Shen said in a telephone interview from San Francisco. “While the philosophical conversation is right in the sense that there should be some fundamentals relative to the price, how the market prices different fundamentals, different sentiment, different flows is pretty much a mystery to any one of us.”

John wrote: Thu Jun 18, 2020 4:17 pm ** 18-Jun-2020 World View: P/E ratio

Higgenbotham wrote: Thu Jun 18, 2020 12:09 pm > If you asked him about mean reversion, he would probably say
> adjust the mean PE up to 22 and carry on. Also, not to worry, LEI
> will mean revert next month, following the stock market.

You're absolutely right. These analysts on CNBC and FBN and elsewhere
on tv are complete airheads. I just heard Mike Santoli on CNBC react
to a statement by Jeremy Grantham that we're currently in a "Real
McCoy bubble" by saying some nonsense like most investors are being
very careful about what stocks they buy, so the current atmosphere has
absolutely no resemblance to a bubble.

As you point out, nobody every asks about the ACTUAL VALUE of a stock.
I like to give the example of buying an apartment building. You
estimate the rents and expenses for the next 30 years, do a present
value computation, and that is the ACTUAL VALUE of the apartment
building from an investor point of view.

The only thing comparable in the world of stocks is the P/E ratio,
which historically is 14. So the fair value of a stock is 14 times
reported earnings, but as you say, that's ignored. If the P/E ratio
today is 22, then the fair value of the stock is 22 times earnings.
I wish I were joking, but I'm not. These people are airheads.

Well, I shouldn't talk. I compare these people to myself. I'm a
pariah who tells what's actually going on, and so I'm hated and
shunned. Santoli is an airhead, but he tells everyone what they want
to hear. So Santoli is loved by everyone.

Gee, I wonder what it would be like to be loved by everyone? Is it
too late to predict that the Dow will go up to 100,000?

Enter Jeff Shen at BlackRock. According to a recent Bloomberg News article, Shen is leading a quant strategy to push the boundaries of returns as “value” stagnates and “growth” stocks explode higher.

Here’s a portion of the ideology that the strategy believes in, as per Shen:

The market is looking at a billion of things that we only know a very small amount of. While the philosophical conversation is right in the sense that there should be some fundamentals relative to the price, how the market prices different fundamentals, different sentiment, different flows is pretty much a mystery to any one of us.

For those who don’t speak Wall Street sales, allow me to translate: he doesn’t have a clue what’s happening.

Shen’s strategy is boldly seeking the riskiest stocks because they offer the most significant upside. (It’s a lot easier to be bold when you’re not gambling your life savings.)

If that doesn’t scream dot-com bubble, I don’t know what does.

aeden wrote: Wed Jul 22, 2020 12:54 pm Your correct H and utilized option 4 today