I watched this video on the way to work today. I really love your work and this was a subject I had very little knowledge of. Once I got to work I opened a book I’m studying and this is the very subject. This is the second time I’ve had similar knowledge being reinforced in this way. Thanks
Regarding min 25:00 yes PE ratio will come down drastically but like 2004-2007, not necessarily during the next two years. In hindsight, once PE crashes in e.g. 2027 it will still perfectly align with the cycles.
Will there be a Sale on Membership? I've been waiting for one to join. Do we get complete access to the cycles app, minus the Ai and intraday for Standard?
Thank you, very interesting. You were rightly careful to highlight this references the CAPE and not the S&P price action. My prior experience of looking at CAPE (and also Tobin's Q, using by Andrew Smithers) is that there is a (sometimes) massive difference between the CAPE and the price action. If one were to argue the peak in the CAPE is the peak in the S&P (which you do not), it might be right, but out by 2 years; or, it might be wrong (e.g. Trump actions boost earnings and/or inflation, leading to the 'E' rising and the 'P' not moving). I have been swayed by the charms of CAPE many times, and missed out on big movements to the upside. Still, I come back to it again, only for my hopes to be dashed on the rocks of despair.
Very good analysis.Does the Effective Federal Funds Rate also have an effective impact on stocks? Historically, when the Funds Rate is lowered, stocks will also fall. Perhaps the Funds Rate also has a cycle?
Nothing wrong with the P/E expanding if interest rates are coming down. Oops. Exactly the opposite has happened. It would be nice to see cycles using P/E with interest rates somehow. Great presentation as always Lars.
10 years of earnings in the CAPE is misleading, given that the index is now composed of much more growth stocks like Nvidia. Those companies are fairly certain to double their income next year. Those companies weren't as represented in the S&P 10 years ago.
We are repeating the 2003-2008 cycle of rising earnings and inflation. Look at what the cycle predicted back then (down like now) and what PE did (went sideways) while stocks went up straight
yes, as mentioned, rising earnings is another way to comply to the cycle, not necessary bringing stocks down. The cycle can be resolved by increasing earnings or stock prices coming down. Just everyone needs to make his own assumptions regarding that.
How do we make money $$ still to meet a real verified proof of a trader that makes money with cycles.. most prominent have been bearish since 2009 always looking for a top and a crash.. one day they will be right 😮
Cycles are one code in the tumbler, one ingredient in the recipe. Look for a combination of things like sentiment, cot positioning extremes, and valuation, paired with cycles. Then use technical tools for timing/entry confirmation.
![[SFM] Risky Recital](http://i.ytimg.com/vi/RzNkY1_Nk3o/mqdefault.jpg)
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Very interesting presentation. I loved how you pointed out the cycles are ALL red right now showing a very overbought market. Excellent work Lars.
I watched this video on the way to work today. I really love your work and this was a subject I had very little knowledge of.
Once I got to work I opened a book I’m studying and this is the very subject.
This is the second time I’ve had similar knowledge being reinforced in this way.
Thanks
Regarding min 25:00 yes PE ratio will come down drastically but like 2004-2007, not necessarily during the next two years. In hindsight, once PE crashes in e.g. 2027 it will still perfectly align with the cycles.
you are right, this is a very long-term cycle - but a condition worth watching - not for short term timing
Very interesting video. Thanks for the quality content, as always.
Excellent information - thank you.
Will there be a Sale on Membership? I've been waiting for one to join. Do we get complete access to the cycles app, minus the Ai and intraday for Standard?
Great work! Wow. TY!
Amazing analysis thanks 😊😊
Thank you, very interesting. You were rightly careful to highlight this references the CAPE and not the S&P price action. My prior experience of looking at CAPE (and also Tobin's Q, using by Andrew Smithers) is that there is a (sometimes) massive difference between the CAPE and the price action. If one were to argue the peak in the CAPE is the peak in the S&P (which you do not), it might be right, but out by 2 years; or, it might be wrong (e.g. Trump actions boost earnings and/or inflation, leading to the 'E' rising and the 'P' not moving). I have been swayed by the charms of CAPE many times, and missed out on big movements to the upside. Still, I come back to it again, only for my hopes to be dashed on the rocks of despair.
Very good analysis.Does the Effective Federal Funds Rate also have an effective impact on stocks? Historically, when the Funds Rate is lowered, stocks will also fall. Perhaps the Funds Rate also has a cycle?
Nothing wrong with the P/E expanding if interest rates are coming down. Oops. Exactly the opposite has happened. It would be nice to see cycles using P/E with interest rates somehow. Great presentation as always Lars.
German Precision
10 years of earnings in the CAPE is misleading, given that the index is now composed of much more growth stocks like Nvidia. Those companies are fairly certain to double their income next year. Those companies weren't as represented in the S&P 10 years ago.
One way the PE ratio might come down is simply by low PE value stocks rising more than growth stocks, thereby changing the composite PE in the index.
We are repeating the 2003-2008 cycle of rising earnings and inflation. Look at what the cycle predicted back then (down like now) and what PE did (went sideways) while stocks went up straight
yes, as mentioned, rising earnings is another way to comply to the cycle, not necessary bringing stocks down. The cycle can be resolved by increasing earnings or stock prices coming down. Just everyone needs to make his own assumptions regarding that.
But every other website shows me a current PE of 27-30, not 38 like during end 2020.
Hi, ensure you look at the CAPE (Shiller) PE ratio value. The ~27-30 is the raw PE value.
How do we make money $$ still to meet a real verified proof of a trader that makes money with cycles.. most prominent have been bearish since 2009 always looking for a top and a crash.. one day they will be right 😮
Cycles are one code in the tumbler, one ingredient in the recipe. Look for a combination of things like sentiment, cot positioning extremes, and valuation, paired with cycles. Then use technical tools for timing/entry confirmation.
...maybe it means end of the world (and unfortunately nowdays there are few reasons to believe on this)