(03-25-2021, 11:06 AM)Otter Wrote: A P/E of 15 representing a benchmark for value was formulated when the Federal funds rate was 6%. Even then, investors would traditionally pay 20 or more for "blue chips" or "aristocrats."

When interest rates crater 75% and stay near historical lows for more than a decade, asset competition comes into play. Money ends up invested somewhere. It tends to go where the largest potential returns are, which can re-set traditional valuations that were measured against the expectation of treasuries yielding 6%.

I'm not saying everyone should go out and load up their portfolios with junk-rated equities with no revenues to speak of, but TINA is a real phenomenon, and I am not too keen on fighting the Fed. I sold my SPY puts last year pretty damn quick after the Fed opened the money floodgates. There are absolutely zero signals from the Fed of a near-term tightening of monetary policy. All market-directed statements from Powell and Yellen signal exactly the opposite.

(03-25-2021, 11:21 AM)vbin Wrote:

(03-25-2021, 11:06 AM)Otter Wrote: A P/E of 15 representing a benchmark for value was formulated when the Federal funds rate was 6%. Even then, investors would traditionally pay 20 or more for "blue chips" or "aristocrats."

When interest rates crater 75% and stay near historical lows for more than a decade, asset competition comes into play. Money ends up invested somewhere. It tends to go where the largest potential returns are, which can re-set traditional valuations that were measured against the expectation of treasuries yielding 6%.

I'm not saying everyone should go out and load up their portfolios with junk-rated equities with no revenues to speak of, but TINA is a real phenomenon, and I am not too keen on fighting the Fed. I sold my SPY puts last year pretty damn quick after the Fed opened the money floodgates. There are absolutely zero signals from the Fed of a near-term tightening of monetary policy. All market-directed statements from Powell and Yellen signal exactly the opposite.

Oh Grantham had something to say on this on the lines of just becouse one thing is bad we are to go for something utterly ludicrous?(worth listening to his interview with bloomberg) What you are saying makes sense but the pe of 35-60 is still not justifiable. What stops feds to realize they have been wrong all along and raise interest rates to 3% and let's the zombies die out in short term.

Apple just 2-3 years ago was reading below 20 pe when people were hating it for not innovating suddenly it's the best on the street( mostly after buffet bought)

(03-25-2021, 11:21 AM)vbin Wrote:

(03-25-2021, 11:06 AM)Otter Wrote: A P/E of 15 representing a benchmark for value was formulated when the Federal funds rate was 6%. Even then, investors would traditionally pay 20 or more for "blue chips" or "aristocrats."

When interest rates crater 75% and stay near historical lows for more than a decade, asset competition comes into play. Money ends up invested somewhere. It tends to go where the largest potential returns are, which can re-set traditional valuations that were measured against the expectation of treasuries yielding 6%.

I'm not saying everyone should go out and load up their portfolios with junk-rated equities with no revenues to speak of, but TINA is a real phenomenon, and I am not too keen on fighting the Fed. I sold my SPY puts last year pretty damn quick after the Fed opened the money floodgates. There are absolutely zero signals from the Fed of a near-term tightening of monetary policy. All market-directed statements from Powell and Yellen signal exactly the opposite.

Oh Grantham had something to say on this on the lines of just becouse one thing is bad we are to go for something utterly ludicrous?(worth listening to his interview with bloomberg) What you are saying makes sense but the pe of 35-60 is still not justifiable. What stops feds to realize they have been wrong all along and raise interest rates to 3% and let's the zombies die out in short term.

Apple just 2-3 years ago was reading below 20 pe when people were hating it for not innovating suddenly it's the best on the street( mostly after buffet bought)

(03-25-2021, 01:58 PM)Dividendwayfarer Wrote: As usual I added some (a tiny bit) NKE & TSM today.

(03-26-2021, 09:52 AM)I Yo Otter Wrote: Also, kudos to whomever bought the 4/1 $56 strike CAH covered calls I sold a few weeks back. Naturally the stock that has been flat/sideways for the past year decides to go straight up right after I sell some calls.

Need to figure out what to replace CAH with . . .