Down goes the Dow

Ghost of Igloi wrote:...What would your methodology have said about the value of the market in March of 2000 and October 2007? Expected value as you noted, today 36% overvalued with a 3400 expected S&P 500.

By "methodology" I guess you mean relative to the best fit curve I drew. I'll note another difference between my best fit and theirs, apart from the length of record: they fit inflation-adjusted index values, and I fit raw values. My best fit also wasn't necessarily a mathematically robust best fit (in the least squares sense). But in any event, March 2000 was just over twice (~ 220%) the "expected value" from the best fit, and October 2007 was much closer to the best fit (~ 130%, or roughly 30% "overvalued" relative to my crude curve.

If I were trying to derive probabilities by comparing my best fit with actual data, then I would have been thinking the dot com bubble was a bubble of gigantic proportions with very high probability of a crash in the then-near future, and that in October 2007 there was a better than average chance of a decent drop in the then-near future.

Is that what you're trying to get out of me?

I note you haven't expressed any predictions in relation to the graph you shared, so it's still not obvious to me what you really want (or that you necessarily understand what you are asking for).

VS-SJW-IR-TS idiot wrote:

Igy, I have no idea what you are asking. Are you asking me to compare the actual index values at the peaks and troughs? What does that have to do with a prediction? No matter how you slice it, the market was up (or down) at those points. What's that got to do with the best fit curve you shared (or the one I generated and previously shared)?

(Sorry, but: It's not obvious to me you understand how to make a forecast or prediction, from available data or otherwise.)

I am toggling back and forth between my post and the chart I posted. The results comparatively on this chart was March 2000 121% above, with trend ~1024, and October 2007 65% above, with trend ~1100. I am asking you to do the same with your model. Just noting the actual performance at low are what I would call an inversion to the mean. Or, in this example ~875 at October 2002 low, and ~675 at the March 2009.

Inversion to the mean implies a move toward the best fit (if it represents the mean, which may not be strictly true), not overshooting past the mean in the opposite direction. Reversion to the mean from the high in 2000 would imply a move toward 1024, not past it to 875. I think you mean something more along the lines of "oscillating about the mean," which I think is fair to expect with some reasonable probability when the value is at some extreme variance from the mean, but not guaranteed.

In any case, the values you've asked for from my "model" or "methodology" (it is nothing like that, just a simple best fit curve of sorts) are +120% in 2000 and +30% in 2007, compared with +121% and +65% from the chart you've shared.

VS-SJW-IR-TS idiot wrote:

Inversion to the mean implies a move toward the best fit (if it represents the mean, which may not be strictly true), not overshooting past the mean in the opposite direction. Reversion to the mean from the high in 2000 would imply a move toward 1024, not past it to 875. I think you mean something more along the lines of "oscillating about the mean," which I think is fair to expect with some reasonable probability when the value is at some extreme variance from the mean, but not guaranteed.

In any case, the values you've asked for from my "model" or "methodology" (it is nothing like that, just a simple best fit curve of sorts) are +120% in 2000 and +30% in 2007, compared with +121% and +65% from the chart you've shared.

Would it then be fair to say, same comparative fit in 2000, but poorer fit in 2007?

Ghost of Igloi wrote:Would it then be fair to say,

(1) same comparative fit in 2000,

(2) but poorer fit in 2007?

(1) Nearly identical. Probably by coincidence. :-)

(2) Sure, poorer. Or better. Which one is poorer? that's the gazillion dollar question, because your plot shows current index values worse off than in the dot com bubble, whereas mine does not. Is "more optimistic" the same as "better" or is that "poorer?"

Maybe a question for the philosophers... :-D

My analysis would be the longer time horizon waters down aggressive monetary policy.

Here's GS in November 2020 predicting a SP500 of 4300 by 12/31/21.

We're at 4638 right now.

Pretty good prediction.

They got most of the details right...but they underestimated growth, they missed the dollar strength, and they incorrectly predicted a slack labor market.

And no sign of an inflation prediction.

But they got the guts of the thing right, so kudos.

"The strategists expect the Pfizer vaccine, and possibly others, will receive emergency use authorization by the end of January, and sufficient doses will be available for the U.S. population during the first half of 2021. They increased earnings estimates, mostly reflecting the better-than-expected results for the third quarter. They also are expecting better growth in the U.S. next year than the market does, at 5.3% versus the consensus forecast of 3.8%. A weakening U.S. dollar DXY, -0.11% and slack in the labor market should support S&P 500 sales and margins, they add."

https://www.marketwatch.com/story/goldman-sachs-has-just-boosted-its-s-p-500-target-heres-why-11605095051

And here’s one from last December. I guess we shouldn’t be surprised given his history.

Ghost of Igloi wrote:

Looking forward to NASDAQ as the worst major index in 2021! Oh, and S&P 500 1,500!

Big Dog Investments wrote:

And here’s one from last December. I guess we shouldn’t be surprised given his history.

Ghost of Igloi wrote:

Looking forward to NASDAQ as the worst major index in 2022! Oh, and S&P 500 1,500!

Big Dog Investments wrote:

And here’s one from last December. I guess we shouldn’t be surprised given his history.

Ghost of Igloi wrote:

Looking forward to NASDAQ as the worst major index in 2021! Oh, and S&P 500 1,500!

Big Dog!

Welcome back, even if you are just a nom de letsrun and we know you by other names.

Ghost of Igloi wrote:

Big Dog Investments wrote:

And here’s one from last December. I guess we shouldn’t be surprised given his history.

Coming in late 2022 .... "Looking forward to NASDAQ as the worst major index in 2023! Oh, and S&P 500 1,500!"

danube steak wrote:

Ghost of Igloi wrote:

Coming in late 2022 .... "Looking forward to NASDAQ as the worst major index in 2023! Oh, and S&P 500 1,500!"

Maybe, maybe not…oh, and more Build Back Better😷

danube steak wrote:

Ghost of Igloi wrote:

Coming in late 2022 .... "Looking forward to NASDAQ as the worst major index in 2023! Oh, and S&P 500 1,500!"

He already doubled down on stupid. Why not go for the idiot investor trifecta? Go big, or go home!

You go big when you register another handle. 😂

Just bought the best 3 month CD I could find.

It pays 0.3% per year in interest.

CDs and Bonds are not reflecting inflation at all yet.

Why?

Big Dog Investments wrote:

And here’s one from last December. I guess we shouldn’t be surprised given his history.

Ghost of Igloi wrote:

Looking forward to NASDAQ as the worst major index in 2021! Oh, and S&P 500 1,500!

Somebody uncork the champagne.

hah

the fed says it will taper quickly

which sparks a giant rally

no one said this was easy eh?

In other news, in my eastern city I'm hearing lots of talk of new infections. The Cornell thing was astonishing and I hear that Columbia is having similar mass infection events.

we're going to hear lots of news about huge numbers of infections. The UK is already at an all-time high of infections.

Question is so what.

If it's just a bad flu season then no biggie. We can hope hospitalizations and deaths will stay relatively low.

But this new wave will give the virus a few hundred million more petri dishes to mutate further.