The chorus

.
DOUG  By Guest Blogger Doug Rowat
.

Anyone brave enough to scroll down to the blog’s Greek chorus will immediately encounter the familiar siren calls regarding what’ll bring the market to its knees.

T2 usually ranks high on the list. Central bank (over)stimulus is up there too. Virus mania has a permanent place of honour. But right near the top is the chorus’s other favourite bete noire: valuation. And the advice lately? Run for your lives, equities are expensive.

Indeed, in the simplest terms, markets are expensive. The trailing 12-month P/E of the S&P 500 sits at 24x, well above its historical 85-year average of about 16x. However, standalone P/E metrics are insufficient. Valuation must be viewed more broadly. When someone, particularly an anonymous know-it-all in the comment section, advises to sell everything because markets are “overpriced” consider the following:

  • Valuations frequently far exceed their historical averages and P/E multiples, in and of themselves, are actually poorly correlated with future market direction. Over the past 25 years, for a variety of reasons, including more investor emphasis on growth and technology stocks, trailing P/Es have actually spent the majority of their time above that long-term historical average P/E. In other words, these days, markets are almost always ‘expensive’.
  • Other important metrics, such as the PEG ratio, which is P/E divided by the earnings growth rate, aren’t overextended. The S&P 500’s PEG ratio, for example, currently sits at only about 1x. Generally speaking, a PEG ratio around 1x is reasonable. One could argue that earnings growth assumptions for the S&P 500 of 20%+ are too bullish, but the S&P 500 has experienced an earnings growth rate much greater than this for several quarters and even in the most recent quarter earnings grew at more than 40% y-o-y. But regardless, PEG, which better credits growth, gives a clearer valuation picture than P/E alone.
  • Relative valuation is always more important than absolute valuation. Are other asset classes offering potential returns that are even remotely competitive to equities? In the late 1990s, for instance, the S&P 500 had nosebleed valuations above 30x P/E, but this valuation danger was compounded by the fact that the 10-year US Treasury yield was also attractively north of 6%. In other words, equity investors could switch more to bonds, lower their risk and still bag a decent rate of return. Not only are P/Es not nearly as extended this time around, but the 10-year US Treasury yield sits at only a paltry 1.4%. A compelling ‘switch trade’ certainly doesn’t exist today.
  • This brings us to earnings yield, which is a useful metric for comparing the relative value of equities versus other asset classes. Earnings yield brings the value of the market’s earnings into better focus and can indicate whether the equity risk is worth it. Earnings yield divides earnings by price instead of the reverse and is usually compared to a risk-free benchmark such as the 10-year US Treasury yield mentioned above. If the earnings yield is less than the 10-year Treasury yield, a heavy weighting to equities poses a potential problem. Again, in the late 1990s, the 10-year Treasury yield was well above the S&P 500 earnings yield—a clear red flag. Today it’s very much the opposite—the earnings yield (3.9%) sits comfortably above the 10-year Treasury yield (1.4%).
  • Finally, valuations must always be put into context. Last year, for instance, the S&P 500, at times, traded at more than 30x P/E, but this was only because the “E” was temporarily subdued. Concluding that markets were too expensive last year based on P/E alone, naturally, would have been a critical error. Earnings have, of course, normalized significantly in the past 12 months so this is less of an issue at present, but it’s still worth highlighting the need to always be correctly interpreting valuation data.

So, are markets expensive? Only if one takes a narrow focus. Valuation requires nuanced analysis meaning it’s best to ditch the hysterical and oversimplified conclusions that I’m sure are awaiting me in the comment section (on Christmas Day no less).

But today’s not a day to dwell on market valuation fears.

Let’s sip eggnog instead. Heavy on the rum.

Doug Rowat, FCSI® is Portfolio Manager with Turner Investments and Senior Vice President, Private Client Group, Raymond James Ltd.

 

78 comments ↓

#1 Stephen Fowler on 12.25.21 at 11:17 am

You guys are the best, dispensing financial wisdom even on Christmas day

Thanks for all the many posts over the years. It has made a huge difference for us, and for many.

Merry Christmas.

#2 Cheese on 12.25.21 at 11:22 am

Still investing everything I can, high PE or not :)

Merry Christmas, wishing you all the best.

#3 VicPaul on 12.25.21 at 11:27 am

Thank you, Doug – for your time, expertise and willingness to share both for the financial literacy of a country.

Could you speak with Justin and Christia?

M58BC

#4 Dan on 12.25.21 at 11:27 am

Merry Christmas! Garth and team.

Thank for your valuable advice over the years and I wish you good health and good luck! Most of all thank you for your courage to say the right things in these volatile times.

#5 IHCTD9 on 12.25.21 at 11:34 am

Heavy on the rum.
——

Amen to that.

Merry Christmas all!

#6 Pro-vax, yes minister on 12.25.21 at 11:43 am

DELETED

#7 Ian on 12.25.21 at 11:50 am

Merry Christmas Doug,

Thanks for a year of sound fund management.

#8 Derek Comer on 12.25.21 at 11:52 am

Thanks for all the great advice you provide year round. I enjoy the droll sense of humour served with it as well .Now if you could impart some of this advice/wisdom to T2 and his gang , a country would be in your debt .

Best of the season to you all .

#9 RowatNation aka Prince Polo on 12.25.21 at 12:00 pm

Only demented Ebeneezers would publicly frown upon this charitable blog! Many thanks to the TI team for pumping out such solid advice over the past year. Here’s to plenty more in 2022.

#10 Andrewski on 12.25.21 at 12:03 pm

Merry Christmas to all the blog dogs. Another great post Doug.

#11 Ed on 12.25.21 at 12:16 pm

Eggnog it is with a splash of Kirkland spiced rum.Wishing a Merry Christmas to all at Turner Investments!
(and a lump of coal for our PM)

#12 Ponzius Pilatus on 12.25.21 at 12:21 pm

Re: Valuations
One of my favourite shows is “Dragon Den”.
And one thing that always stands out, are the crazy valuations that wannabe entrepreneurs want for their fledgling businesses.
And the Dragons always chide them for basing their valuations on expectations, rather than actual earnings.
Looks like the same caution is not applied to the high flyers listed on the stock exchanges.
Not good, IMHO.

#13 AntMan on 12.25.21 at 12:42 pm

Excellent analysis. Thank you for separating the signal from the noise. Merry Christmas.

#14 wallflower on 12.25.21 at 12:47 pm

Addicted to this blog.
(Need this be stated?)
I think it keeps me off the street, and the drugs that come with.

I highly recommend CBCGEM series Britannia to understand the pagan in all of us.

Best of the season and the new year to the entire Garth team.

#15 Dogman01 on 12.25.21 at 12:53 pm

Good talk on the social\politics of Bitcoin – Glen Greenwald

https://youtu.be/1rbu32PO5jY

Deplatforming by corporate financial institutions.
Lack of confidence in Local currency throughout the world.
Inflation
Cantillon effect and how powerful players engage in moral hazard and are bailed out by central banks.

#16 Dolce Vita on 12.25.21 at 1:05 pm

All I care about is that monthly dividends keep pouring in to cover inflation, living expenses and trips like this one to Venice without having to touch pensions money.

I don’t worry about share prices since I don’t have to sell any to make the above needed cash flow to happen.

Thanks to Garth and Crew, that’s a reality now from my Threadbare Portfolio.

P.S.

I liked it that you used “bête noire”. THAT was good since that’s what they are.

#17 OmiGRINCH on 12.25.21 at 1:12 pm

Christmas is CANCELLED!

I have stopped it. Nothing is happening today. Get over yourselves.

Get back to work right now and enjoy your doom-scrolling about the impossibility of chances for vaccines and testing. Have some meat loaf and potato chips and yes, Doug, lots of rum while you can still find it anywhere.

Oh. Bleeding hearts of the world UNITE!

#18 Linda on 12.25.21 at 1:15 pm

Love the ‘Grinch’ kitty:)

Merry Christmas to Garth & the team – your advice is the gift that keeps on giving!

#19 Stoph on 12.25.21 at 1:25 pm

Merry Christmas everyone!

PS: My preference is 1/2 brandy, 1/2 bourbon rather than rum in eggnog.

#20 OmiGRINCH on 12.25.21 at 1:29 pm

Look, I don’t wanna make waves, but this whole Christmas season is stupid, stupid, stupid!

Just enjoy all the FREE viruses I’ve given you :)

Christmas is CANCELLED!

#21 OmiGRINCH on 12.25.21 at 1:35 pm

Be grateful for the bonus pandemic wave I brought you this year.

It came without ribbons, it came without tags. It came without packages, boxes, or bags.

Hate, hate, hate. Double hate. Loathe entirely.

THAT’S the Christmas spirit!

#22 MD on 12.25.21 at 1:37 pm

What do you think the P/E for S&P would be without the artificial support and FED put.

#23 Dogman01 on 12.25.21 at 1:54 pm

Wow a great blog 365 days a year!

Do appreciate the Kitty posse.

——————————-
#18 Linda on 12.25.21 at 1:15 pm

The true gift that keeps on Giving “Jelly of the Month Club”
https://www.youtube.com/watch?v=1K8-kNuDgoA

————————————–

US Debt buyers
1960-70’s Germany and Europe
1980 -2000 Japan & Saudi’s
2000-2015 China

There seems to be no Greater Fools’ remaining, printer has to brrrrr.

Equities have a nice tailwind as who would buy a Govt Bond that pays less than Inflation, all that “Bond” money will flow to equities.

#24 Shawn Allen on 12.25.21 at 2:01 pm

Doug makes a great point with the ten year at 1.4%

That’s a P/E of 71!! for the ten year bond.

And as Warren Buffett has said about bonds, in this case the E will never grow.

Meanwhile the E on stock indexes will grow over time although it can also occasionally decline.

Volatility and various predictions of doom are like a fierce wind constantly trying to pry great but sometimes volatile investments out of our hands.

#25 CJohnC on 12.25.21 at 2:32 pm

That cat is the spitting image of the grinch. Great picture

Merry Christmas Doug and to the whole team at Turner Investments.

#26 Oakville Rocks! on 12.25.21 at 2:47 pm

Happy Christmas to all!

Informative post as usual.

Thanks.

#27 MicroGX on 12.25.21 at 3:11 pm

Cheers to that!

#28 Satori on 12.25.21 at 3:21 pm

Merry Christmas Garth, Sinan and Doug …and thank you to everyone here as well!! I immensely enjoy all your posts!!! It has been education and sooo enjoyable!

Cheers to you all!

#29 Doug Rowat on 12.25.21 at 3:23 pm

#22 MD on 12.25.21 at 1:37 pm
What do you think the P/E for S&P would be without the artificial support and FED put.

—-

Are the market returns artificial? You haven’t been on the sidelines for 19 months have you? That would not make for a happy holidays.

—Doug

#30 Doug Rowat on 12.25.21 at 3:27 pm

#19 Stoph on 12.25.21 at 1:25 pm
Merry Christmas everyone!

PS: My preference is 1/2 brandy, 1/2 bourbon rather than rum in eggnog.

—-

You had me at brandy.

—Doug

#31 David and Darlene Moore on 12.25.21 at 3:40 pm

Garth,

Love the cat pictures. I have read your blog each morning since 2008. (?) Found it in the comments on CBC, trying to stay alive then. We lost all our furry friends in the last three years. Two cats, beyond smart and a German Shepard, that could tell when you were lying. All got along, because we ask them too. Merry Christmas and thank you.

#32 Wrk.dover on 12.25.21 at 3:53 pm

I’ve substituted vodka instead of eggnog in my rum, while I consider that the posting was my most interesting Christmas gift Doug. Thank you.

#33 Ponzius Pilatus on 12.25.21 at 4:18 pm

#32 Wrk.dover on 12.25.21 at 3:53 pm
I’ve substituted vodka instead of eggnog in my rum, while I consider that the posting was my most interesting Christmas gift Doug. Thank you.
————-
Usually, I don’t mix drinks.
Mixed rum with Baileys last night.
Paying the price, today.

#34 crowdedelevatorfartz on 12.25.21 at 4:21 pm

Doug Cratchit
Thanks for the info (on Christmas day no less ).

Time for you to take the goose and head home to the family.

#35 STeve. French on 12.25.21 at 4:27 pm

Hi ho ho merry Christmas to all the blog dogs!!

The great smoking man sends his greetings from nectonite.

Tha ks for the blog Garth but sometimes you don’t let my posts through !

#36 OmiGRINCH on 12.25.21 at 5:12 pm

My heart’s a dead tomato splotched with moldy purple spots.

My soul is an appalling dump heap overflowing with the most disgraceful assortment of deplorable rubbish imaginable, mangled up in tangled up knots!

https://www.youtube.com/watch?v=nytpYtLtHpE

And yet I’m still better than all the deplorables here, heehee!

Christmas is CANCELLED!

#37 Penny Henny on 12.25.21 at 5:13 pm

I’m thinking now would be a good time to get covid, omicron preferably.
I’m 56 years old and relatively healthy.
I’ve had both shots of the vaccine and Omicron is proving to be a nothingburger.
Even in the deadlier first wave my chances of having a seriously bad reaction would have been around 1 %.
Now factor in that I’ve had two shots which reduces the chances of a serious illness from the virus (so I’m told).
And to repeat myself Omicron is a dud.
So why not build up a natural immunity instead of getting a booster every six months.
Anyone know of any Covid parties in the Niagara region?

#38 Den of iniquity on 12.25.21 at 5:27 pm

#12 Ponzius Pilatus on 12.25.21 at 12:21 pm
Re: Valuations
One of my favourite shows is “Dragon Den”.
And one thing that always stands out, are the crazy valuations that wannabe entrepreneurs want for their fledgling businesses.
And the Dragons always chide them for basing their valuations on expectations, rather than actual earnings.
Looks like the same caution is not applied to the high flyers listed on the stock exchanges.
Not good, IMHO.

———————————
Why doesn’t this surprise me? This show was mildly entertaining in the early years but I stopped watching it 7 or 8 years ago. It’s a slice of pathetic Canadiana. The best dragons left eons ago; the replacements have been weak and short-lived. The entrepreneurs are just as bad. Weak ideas. Little in the way of true innovation. I can’t believe DD is still on TV but since I don’t own one, how would I have known!

Watch Shark Tank if you need a fix! So much better quality offerings as I’m sure you know!

#39 Ebeneezer Screwged on 12.25.21 at 5:30 pm

#18 Linda on 12.25.21 at 1:15 pm
Love the ‘Grinch’ kitty:)

Merry Christmas to Garth & the team – your advice is the gift that keeps on giving!

Until it doesn’t!

#40 BillyBob on 12.25.21 at 5:33 pm

Tsk tsk. All these folks criticizing Canada, and on Christmas Eve, no less. Where is Faron to scold them that the country is “not crap”?

Incidentally, I never said Canada is crap. I said it’s a joke.

You’d think a pedant posing as a scientist would know the value of accurate attribution, but ah well.

Been an incredible comeback year, eagerly looking forward to the next. Merry Christmas to all! Even my balding angry little buddy, Faron. Here’s hoping 2022 is the year you Win The Internet! :-)

#41 TurnerNation on 12.25.21 at 5:37 pm

— Yep there’s no replacment for displacement :-) What to do with E-Waste:

https://twitter.com/SkyNews/status/1474334180712529920
@SkyNews – A man in Finland has decided to blow up his 2013 Tesla Model S using 30kg of dynamite after he was faced with a £16,000 repair bill.

– War on Small Business/UBI Watch. Yes in March 2020 the New System classified you as “Essential” or “Non Essential”. It has not changed, notice?
Guess which will become the new UBI Underclass as time wears on. Want access to a gym? Try in a prison.

https://www.kamloopsthisweek.com/local-news/kamloops-gym-owners-explain-why-they-remain-open-despite-public-health-order-mandating-they-close-4897678
“Kamloops gym owners explain why they remain open despite public health order mandating they close
No Limits Fitness co-owners Darren Maywood and Justin Grover say they represent five local gyms and are calling on the province to deem fitness “essential””

#42 Penny Henny on 12.25.21 at 5:39 pm

#40 BillyBob on 12.25.21 at 5:33 pm
Tsk tsk. All these folks criticizing Canada, and on Christmas Eve, no less. Where is Faron to scold them that the country is “not crap”?

Incidentally, I never said Canada is crap. I said it’s a joke.

You’d think a pedant posing as a scientist would know the value of accurate attribution, but ah well.

Been an incredible comeback year, eagerly looking forward to the next. Merry Christmas to all! Even my balding angry little buddy, Faron. Here’s hoping 2022 is the year you Win The Internet! :-)
/////////////////

Now you’re the one acting like an idiot.

#43 crowdedelevatorfartz on 12.25.21 at 5:45 pm

Best Youtube video.

Scammers try and take “little old lady’s” money.
What they dont know is the “little old lady” is a team of hackers that delete all the scammers files while they are talking.

20 minute video.
Listen to the first 2 minutes for the set up then jump to the 18 minute mark for the “reveal”.

Classic.

#44 crowdedelevatorfartz on 12.25.21 at 5:47 pm

Oops.
Heres the video link.

https://www.youtube.com/watch?v=eq8cKjdNpCo

#45 cramar on 12.25.21 at 5:50 pm

Let’s have an eggnog toast to the successful launch today of the Webb Telescope.

Cheers!

#46 Pandemic is over on 12.25.21 at 6:06 pm

Thanks Doug, very sensible as always.

#47 Toronto_CA on 12.25.21 at 6:11 pm

Thanks Doug.
I live in the UK now and am wondering if you think the FTSE250 in the UK is a decent buy relative to global markets? It seems to have better ratios and more potential, but that could be my new home country bias talking.

#48 ogdoad on 12.25.21 at 7:09 pm

Dude, few questions:

1) what are you doing writing a blog on Christmas? Garth, he’s not Bob Cratchit…

2) what am I doing responding to your post? haha…we got problems :)

Enjoy your rum!

Og

#49 Cici on 12.25.21 at 7:26 pm

Garth… you didn’t give the poor guy a day’s vacation for Christmas Day?

Happy holidays to you and family Doug… and hope you are getting a wicked bonus!

#50 TurnerNation on 12.25.21 at 7:53 pm

#37 Penny Henny, Comrade you have had too much to think tonight.
Resume watching your Telescreen and await further instruction. ;-)

#51 Albertaguy (sneaking) in AB on 12.25.21 at 7:59 pm

Merry Merry to one and all!

Linda, know you will love the Netflix instant classic “Robin Robin”

Cheeers!

#52 Interstellar Old Yeller on 12.25.21 at 9:16 pm

Merry Christmas, Doug! Thanks for the reassuring blog post on Christmas Day.

#53 cuke and tomato picker on 12.25.21 at 9:35 pm

Happy birthday Mr. Justin Trudeau.

#54 Barb on 12.25.21 at 10:34 pm

The cat looks totally ticked off!
Or is that Felix?

#55 Nonplused on 12.25.21 at 11:15 pm

Who can even tell what the multiple should be when the real risk free rate is negative? Maybe in this situation net asset value is all that matters, particularly if they are assets that go up with inflation? Earnings then become just a sweetener. Something with which to pay your capital gains taxes. On gains that really didn’t occur after adjusting for inflation.

#56 Mrs. Fool on 12.26.21 at 12:17 am

Merry Christmas!!!

Thanks Doug, Ryan and Garth for all what you do.

#57 Wrk.dover on 12.26.21 at 7:18 am

#33 Ponzius Pilatus on 12.25.21 at 4:18pm
Usually, I don’t mix drinks.
Mixed rum with Baileys last night.
Paying the price, today.
_________________________________

It’s from not enough water chasers.

The other reason not to live in GTA…you wouldn’t drink from that ‘lake’ or a plastic bottle would you?

#58 Kevin on 12.26.21 at 8:12 am

Years ago I used to follow all the market info. driving myself crazy and causing pre-retirement angst. I actually knew what Doug was talking about.
Then I handed over my hard earned cash to the crew down at the “Wee Bank”. Now I dont worry about any of it. I get some cash every month and the rest just keeps growing. I have bigger things to things to think about, IE, health and more health. I dont need to worry about money, I pay somebody else to do that for me.

So best wished to the whole gang down the street.

#59 Concerned Citizen on 12.26.21 at 9:37 am

Using low interest rates as a justification for high P/E’s is another way of saying low returns are expected going forward. In other words, since fixed income rates are comically low, I should bid up stock prices to the moon and beyond so that their expected returns can be comically low, too.

Earnings are not the be all and end all of valuation, of course. There is market cap to GDP (currently ~200% vs a historical 100% or below), price to book, price to revenue, etc.

A number of banks have put out historical analyses in the past several months showing current valuation measures across the board at the 95th to 100th percentile on a historical basis.

Whether its housing, stocks, junk bonds (what, you aren’t excited to earn -3% on a real basis to hold junk bonds?), etc., the central bankers have stolen so much from the future it’s sickening. It would not surprise me if the S&P 500 had a negative nominal return over the next decade. That is, if the central bankers actually stop with the QE – and let’s face it, they won’t.

Young people are particularly screwed. Bubble asset prices everywhere you look. It’s going to be exceedingly difficult for people to earn a decent – or even positive – return after inflation over the next decade, IMO.

#60 Dharma Bum on 12.26.21 at 10:07 am

It’s BOXING DAY!

Yayyyyy….lineups for cheap electronics – stereos and TVs.

75% off clothes at the mall.

Oh…sorry…I was having a “living in the 70’s” moment.

Never mind.

#61 crowdedelevatorfartz on 12.26.21 at 10:26 am

@#53 Cucumber
“Happy birthday Mr. Justin Trudeau.”

+++

Don’t get too close.
Your nose might get stuck.

#62 Jana Jana on 12.26.21 at 11:21 am

To avoid overpaying for equities don’t buy overpriced equities. BNS for example….a solid dividend from the smart money pays near 5% , boosts share value with buybacks, and what’s that ???? A P/E of 11. The index holds mostly dogs, overpriced at that. But pick through the 40 or so profitable stars and get great investable value. Look no more. CDN are leaving Canada behind, go with them.

#63 Doug Rowat on 12.26.21 at 12:13 pm

#59 Concerned Citizen on 12.26.21 at 9:37 am

—-

The anonymous hysteric I warned of.

I’m sure you wanted to spew that on Christmas Day, but that would have seemed crazy.

—Doug

#64 Shawn Allen on 12.26.21 at 12:24 pm

Concerned Citizen’s math…

#59 Concerned Citizen on 12.26.21 at 9:37 am

Using low interest rates as a justification for high P/E’s is another way of saying low returns are expected going forward. In other words, since fixed income rates are comically low, I should bid up stock prices to the moon and beyond so that their expected returns can be comically low, too.

***************************
Your math is exactly right. Returns by year are unpredictable but the market is certainly bidding returns down with high P/Es.

#65 Shawn Allen on 12.26.21 at 12:26 pm

Low returns ahead? And TINA

With high P/Es versus comically low bond yields, stocks may still be best.

But they may win by merely being “the tallest of the seven dwarfs”

#66 Shawn Allen on 12.26.21 at 12:30 pm

Concerned Citizen and spewing

Not that anyone cares, but to be clear I was supporting only his high P/E comment.

The notion that young people are screwed is ridiculous. There’s never been a better time to be young. Opportunity abounds. The standard of living keeps increasing.

#67 nurses on 12.26.21 at 12:39 pm

for folks unaware, asymptomatic nurses in Ontario that screen positive are being asked to come back to work do to the shortage. Yet asymptomatic NHL’s are asked to stay home and not play, lol

in addition, folks that have the vax and get exposed to the new variant are , and i quote; ‘super immune; as per health officials. YES, ya cant make this stuff up

good thing the masses have govt cheques coming in, keep the fridge full is numero uno

#68 Concerned Citizen on 12.26.21 at 1:31 pm

#59 Concerned Citizen on 12.26.21 at 9:37 am

—-

The anonymous hysteric I warned of.

I’m sure you wanted to spew that on Christmas Day, but that would have seemed crazy.

—Doug

*****

I have often found that when one can’t rebut an argument with facts, people often resort to ad hominem attacks.

Nevertheless, I appreciate the opportunity to post my “hysterical” fact-based views on this blog.

#69 Wrk.dover on 12.26.21 at 2:00 pm

Re going uppa in Golan Heights now?

#70 Dragonfly 58 on 12.26.21 at 2:39 pm

Shawn Allen, opportunity to borrow at low rates and build a false illusion of a higher standard of living perhaps.
But with prices outstripping incomes almost across the board the outlook for the lower 80% of us Beavers , regardless of age is hardly bright and cheery.
A few young people will get a in demand trade, work their tails off and short time at least do quite well.
That is until either they have an injury or just plain wear their body’s out at a relatively young age. Or something goes away in the field of their employment.
Then they will join the rest of us who have seen it all before, and all too clearly over the decades. A small group of big winners and a big group of the rest of us. Where did the Canada I grew up in in the 1960’s and 1970’s go ? When the choice is either live in the middle of nowhere or live in a tiny scrap of a place is the option for anyone who isn’t in the multi millionaire club then one can safely conclude the shark has been jumped for Canada

#71 All lies and manipulated u decide on 12.26.21 at 2:49 pm

#61 crowdedelevatorfartz on 12.26.21 at 10:26 am
@#53 Cucumber
“Happy birthday Mr. Justin Trudeau.”

+++
Don’t get too close.
Your nose might get stuck.
——————————–
LOL
You can’t fix stupid.
A complete attack on democracy.
A complete attack on our energy complex (ya shut it off you’ll freeze to death in short order)
A complete attack on business that sustain the country. (No corp wants to come here for business.)
Debt and spending (massive waist) that has pushed inflation through the roof. I see 20% in my business.
Foods gone through the roof and I buy my beef buy the side to get a deal now..
That’s why the guy above needs T2 likely (free money) I’m in the 1% and can think and protect myself with lots of $.
This clown has ram sacked this country. These are sad times.
Were plowing my facilities on the coast where its not suppose to have snow since 2013..Al Gore said. Call him.
Sad we have so many suckers.
That IS my biggest concern. Plastics, garbage in the environment and idiots are our problem.
There no way out with the thinking that going on..
Piece out to all the hard working Canadians that love this country, their family’s and to the Garth Crew top drawer stuff.

#72 Sail Away on 12.26.21 at 3:11 pm

#62 Jana Jana on 12.26.21 at 11:21 am

To avoid overpaying for equities don’t buy overpriced equities. BNS for example….a solid dividend from the smart money pays near 5% , boosts share value with buybacks, and what’s that ???? A P/E of 11. The index holds mostly dogs, overpriced at that. But pick through the 40 or so profitable stars and get great investable value. Look no more. CDN are leaving Canada behind, go with them.

———

Nothing wrong with BNS, but nothing special, either. 30% in the last year, but essentially flat for the 5 year and 10 year. So 4.5% long term return from dividend.

#73 Shawn Allen on 12.26.21 at 3:41 pm

Who’s fat?

Debt and spending (massive waist) that has pushed inflation through the roof. I see 20% in my business.

************
Freudian slip? Eat less to battle waist inflation.

#74 westcdn on 12.26.21 at 3:47 pm

I am always days behind on reading comments. I see people have said the similar thought long before I do – sorry about that, missed by that much.

I have stopped beating myself up over mistakes. I now call them learning experiences as long as no one else is harmed. Negligence is something I will not stand. I have a lot of learning experiences coming my way. I was being given instructions – you don’t know me do you? I listen but I have to find out for myself – instructions keep me alive.

I know I am expected to deliver so learning experiences teach me how to do it better. What more overseers think is beyond my control. Damage control is not productive but good things can come.

Having been an investigator, follow the money to decide. Cui bono – who benefits, was a good lead. Always keep in mind – people lie but listen anyway. The best lies are built on truth.

2022 looks tepid to me. I will be competing. In a world of a 5 second (it used to be 15) attention span I doubt people will listen without an image/brand. Hence, my contrarian ways may work.

Since Jan 1, 2015 till now, my non-RE assets have returned over 300% despite having suffered massive losses. I still have dead soldiers to employ against future tax grabs.

#75 Drinking on 12.26.21 at 4:09 pm

Yep, heavy on the rum! Cannot get over the best pic posted of Felix ever, lol, give that cat a bone!! :)

#76 Doug Rowat on 12.26.21 at 4:31 pm

#68 Concerned Citizen on 12.26.21 at 1:31 pm
#59 Concerned Citizen on 12.26.21 at 9:37 am

—-

The anonymous hysteric I warned of.

I’m sure you wanted to spew that on Christmas Day, but that would have seemed crazy.

—Doug

*****

I have often found that when one can’t rebut an argument with facts, people often resort to ad hominem attacks.

Nevertheless, I appreciate the opportunity to post my “hysterical” fact-based views on this blog.

—-

What would I rebut? Your argument is baffling. You suggest a “negative nominal return over the next decade”, but then leave yourself an out by saying that such negative returns depend on central banks stopping their QE stimulus, which apparently “they won’t” do. So what are you? Bearish? Bullish? Or just confused?

—Doug

#77 All lies and manipulated u decide on 12.26.21 at 4:59 pm

#22 MD on 12.25.21 at 1:37 pm
What do you think the P/E for S&P would be without the artificial support and FED put.
———————————-
I would venture a guess that you don’t understand how a market works.
Fed input, News are only short term noise in a longer trend.
The market discounts typically months ahead of news thats why news is a waist of time..
Fed could only be supportive of maybe a flash crashes as AI systems may may trigger stop loss’s on hedge funds ect. causing mass selling.
PEs are high for a reason. Housing is high for reason.
Mass psychology has far more to do with it all than anything. Fear / greed very powerful in markets.
Peeps that have stayed out of markets and RE for long term are kicking themselves hard.
You look at the clowns running the many countries and the answer is clear.
Monetary policy is always supportive of currency debasement. GLOBALLY.
Back up the truck on anything but cash bro.
And folks betting on a RE crash here…don’t bother.
I’m very well versed in the industry there’s way to much wind at its back.

#78 Concerned Citizen on 12.27.21 at 9:21 am

Doug, it’s true earnings have increased this year. But it’s also true that valuations have grown even more rich than they were pre-pandemic, and they were quite high to begin with. The numbers very clearly bear this out – Shiller P/E, Price/Sales, Price/Book, Tobin’s Q, and on and on. It’s not just me, a crank in the steerage section, pointing this out by the way.

My point is that the valuation expansion that we’re seeing in stocks, housing – you name it – is due to all the money printing/debt monetization by central banks. The only thing holding this up is the money printing/suppression of interest rates and price discovery. If for any reason – such as the central banks actually doing their job and fighting inflation – rates rise in a meaningful way, it’s a long, long way down to normalized valuation levels.

In my opinion, a bet on asset prices here is a bet that central banks will not follow their price stability mandates. That may very well prove to be an excellent bet. But I think you are patently wrong to suggest these valuations are in any way justified by the underlying strength of companies alone. Heck, probably 20% of the S&P 500 would go bankrupt tomorrow if the real rate on the 10-year bond were 0% (unlike the -4% it is now).

I apologize if my posts are interpreted by you as being snarky. I am just sick and tired of the government and Bank of Canada selling my future out from under me and my entire generation. Not only is that what they have done, but they have shown great enthusiasm in doing so.