# Another article on the over-heated indexes…



## Siwash (Sep 1, 2013)

The Globe published another piece on the inevitable drop in the over-heated equity markets… has anyone every been able to accurately predict this stuff?!

Isn't timing the markets a foolish endeavour?


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## wendi1 (Oct 2, 2013)

Well, I think so. But this is based on my own, sad inability to time the markets.

Maybe other people can, but not me.

But this article is by one of those "technical" investors who looks for patterns in the pricing graphs. May as well be checking the goat entrails.


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## RBull (Jan 20, 2013)

^agree and same here. 

I've yet to time them in 35 year of investing. Gave up trying back in the 80's.


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## Synergy (Mar 18, 2013)

Not sure who these guys are (Fx Empire), but one "technical" analysis sees the S&P 500 continue going higher - "if it breaks out of the 1850 level.

http://www.fxempire.com/technical/t...-forecast-january-20-2014-technical-analysis/

Coin toss in my opinion


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## Jagas (Feb 11, 2013)

If you predict a drop in the equity markets for long enough you will eventually be correct.


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## richard (Jun 20, 2013)

Siwash said:


> The Globe published another piece on the inevitable drop in the over-heated equity markets… has anyone every been able to accurately predict this stuff?!
> 
> Isn't timing the markets a foolish endeavour?


I can confidently tell you that the market will go through a drop of 10% or more some time in the next 5 years. I can't tell you how high it will go before that so the decline might leave it much higher than it is today.



Synergy said:


> Not sure who these guys are (Fx Empire), but one "technical" analysis sees the S&P 500 continue going higher - "if it breaks out of the 1850 level.
> 
> http://www.fxempire.com/technical/t...-forecast-january-20-2014-technical-analysis/
> 
> Coin toss in my opinion


Even if they had managed to poll every investor and figure out that 1850 is the breaking point that signifies a real change, opinions would change tomorrow so that would no longer be valid.


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## GoldStone (Mar 6, 2011)

*A must read story:*

*The US stock market is overvalued by 40%*






p.s. note the publication date


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## andrewf (Mar 1, 2010)

In Cape terms that claim didn't hold any water back in 2009. Today it does. But markets can remain over asked for years. See Canadian real estate.


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## richard (Jun 20, 2013)

The market is certainly over the value I would like it to be at today  There aren't a lot of better alternatives though which is why it keeps going up. The long-term returns we can expect from today's price levels are reasonable enough for me to invest.

Two things could cause the market to go up: short-term momentum which can last a few years if people get excited by the recent gains, forget their fears, and drive the market further (I'd say we're close to hitting that but not quite there), or rising profits and dividends which would make it very unlikely that it will ever drop much below today's levels.

When everyone believes that something can't happen it usually does. The number of people who are afraid of the market dropping makes that less likely. Just imagine where it would be today if they weren't afraid and they all bought in... Another year of 20%+ gains and we might see that happen again.


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## james4beach (Nov 15, 2012)

Trying to time these things can be a painful and futile exercise. Nobody can ever call "the" top, just as nobody can ever pick the bottom.

I strongly suggest reading this Grantham letter relating to this topic. He writes:


> To repeat an old story: in 1998 and 1999 I got about 1100 fulltime equity professionals to vote on two questions. Each and every one agreed that if the P/E on the S&P were to go back to 17 times earnings from its level then of 28 to 35 times, it would guarantee a major bear market. Much more remarkably, only 7 voted that it would not go back! Thus, more than 99% of the analysts and portfolio managers of the great, and the not so great, investment houses believed that there would indeed be “a major bear market” *even as their spokespeople, with a handful of honorable exceptions, reassured clients that there was no need to worry.*


Another important thing to remember is that the stock market is not the economy. The two can be disconnected and can move very differently, so never assume that stocks will reflect what the economy is doing.


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## Oldroe (Sep 18, 2009)

It's true you can't time the market perfect.

But you better take those opportunity's when they handed to you. Market correction are investments on sale. You better know what and where you will buy in a correction.

To buy in a correction you need to lower your avg cost/share, so a 10% correction is likely just market noise.


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## dubmac (Jan 9, 2011)

Jagas said:


> If you predict a drop in the equity markets for long enough you will eventually be correct.


Even a broken clock is correct - twice per day!

I suspect that there will be volatility - not sure when the next round of debt ceiling (debt screaming?) takes place in the US. I thought that it was around Feb 2014 - I could be wrong.


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