01-28-2022, 09:27 AM
Why should the market go back to 4800 versus why should the market go to 3800 and be
<!-- SC_OFF --><div class="md"><p>Let's make a pros and cons list.</p> <p>Pro = let's get out of this 10% correction and go back to bull market where we slowly set new all time highs week after week</p> <p>Con = 10% correction roughly, what are reasons we are due for another 10% drop and then some?</p> <p>Disclaimer: I'm not going to "trade" or "change my investment" strategy based on any of this. It's just for fun/knowledge transfer/learning new perspectives in the community.</p> <p>A few weeks ago, the market decided a 37x P/E was ok. Then some new data/news came in and consensus changed and now we're hovering at a 25x P/E. Will we head back to the mean of 16x? What will it take for the market to justify a 37x P/E again? What's stopping us from heading to a 20x P/E?</p> <p><a href="https://www.multpl.com/s-p-500-pe-ratio">https://www.multpl.com/s-p-500-pe-ratio</a></p> <p>List anything you can think of. </p> <p>Cons:</p> <ul> <li><p>Fed funding rate increasing from 0.25% to 1.25% within the next 18 months</p></li> <li><p>inflation eating into profit margins/amount of free cash consumers have</p></li> <li><p>lingering long term effects of rampant money printing that happened past 18 months</p></li> <li><p>Fed announcing MBS purchases/QE coming to an end</p></li> <li><p>national debt is high</p></li> <li><p>productivity losses due to newly remote-first workforce</p></li> <li><p>labor shortage influencing how many projects companies can get done</p></li> <li><p>supply chain/chip shortages making business difficult</p></li> <li><p>CoVID restrictions/lockdowns/waves/variants</p></li> <li><p>geopolitical tensions like Ukraine/Russia, Taiwan/China</p></li> <li><p>mid-term elections coming up in US</p></li> <li><p>US housing market is broken in many areas due to increased demand and lowered supply</p></li> </ul> <p>Pros:</p> <ul> <li><p>Real GDP growth was reported strong</p></li> <li><p>Everything was fine as of January 4th (according to the market at least)</p></li> <li><p>some people have lots of cash sitting on the sidelines pent up from not being able to go anywhere during pandemic/just having all of their assets appreciate with inflation, etc.</p></li> <li><p>CoVID coming to an end</p></li> <li><p>strong job market</p></li> <li><p>companies might report strong earnings from increased sales during Q4 2020 of pandemic</p></li> </ul> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/waltwhitman83"> /u/waltwhitman83 </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/sebgj6/why_should_the_market_go_back_to_4800_versus_why/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/sebgj6/why_should_the_market_go_back_to_4800_versus_why/">[comments]</a></span>Kind Regards R
<!-- SC_OFF --><div class="md"><p>Let's make a pros and cons list.</p> <p>Pro = let's get out of this 10% correction and go back to bull market where we slowly set new all time highs week after week</p> <p>Con = 10% correction roughly, what are reasons we are due for another 10% drop and then some?</p> <p>Disclaimer: I'm not going to "trade" or "change my investment" strategy based on any of this. It's just for fun/knowledge transfer/learning new perspectives in the community.</p> <p>A few weeks ago, the market decided a 37x P/E was ok. Then some new data/news came in and consensus changed and now we're hovering at a 25x P/E. Will we head back to the mean of 16x? What will it take for the market to justify a 37x P/E again? What's stopping us from heading to a 20x P/E?</p> <p><a href="https://www.multpl.com/s-p-500-pe-ratio">https://www.multpl.com/s-p-500-pe-ratio</a></p> <p>List anything you can think of. </p> <p>Cons:</p> <ul> <li><p>Fed funding rate increasing from 0.25% to 1.25% within the next 18 months</p></li> <li><p>inflation eating into profit margins/amount of free cash consumers have</p></li> <li><p>lingering long term effects of rampant money printing that happened past 18 months</p></li> <li><p>Fed announcing MBS purchases/QE coming to an end</p></li> <li><p>national debt is high</p></li> <li><p>productivity losses due to newly remote-first workforce</p></li> <li><p>labor shortage influencing how many projects companies can get done</p></li> <li><p>supply chain/chip shortages making business difficult</p></li> <li><p>CoVID restrictions/lockdowns/waves/variants</p></li> <li><p>geopolitical tensions like Ukraine/Russia, Taiwan/China</p></li> <li><p>mid-term elections coming up in US</p></li> <li><p>US housing market is broken in many areas due to increased demand and lowered supply</p></li> </ul> <p>Pros:</p> <ul> <li><p>Real GDP growth was reported strong</p></li> <li><p>Everything was fine as of January 4th (according to the market at least)</p></li> <li><p>some people have lots of cash sitting on the sidelines pent up from not being able to go anywhere during pandemic/just having all of their assets appreciate with inflation, etc.</p></li> <li><p>CoVID coming to an end</p></li> <li><p>strong job market</p></li> <li><p>companies might report strong earnings from increased sales during Q4 2020 of pandemic</p></li> </ul> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/waltwhitman83"> /u/waltwhitman83 </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/sebgj6/why_should_the_market_go_back_to_4800_versus_why/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/sebgj6/why_should_the_market_go_back_to_4800_versus_why/">[comments]</a></span>Kind Regards R