Daily General Discussion and Advice Thread - January 23, 2022 Investing |
- Daily General Discussion and Advice Thread - January 23, 2022
- The plausible worst case scenario is not that bad (from where we already are)
- VTI + SPY for a “safer investment”
- Does this market crash strategy make sense?
- Compounding interest, how does ir work
| Daily General Discussion and Advice Thread - January 23, 2022 Posted: 23 Jan 2022 02:01 AM PST Have a general question? Want to offer some commentary on markets? Maybe you would just like to throw out a neat fact that doesn't warrant a self post? Feel free to post here! If your question is "I have $10,000, what do I do?" or other "advice for my personal situation" questions, you should include relevant information, such as the following:
Please consider consulting our FAQ first - https://www.reddit.com/r/investing/wiki/faq And our side bar also has useful resources. Be aware that these answers are just opinions of Redditors and should be used as a starting point for your research. You should strongly consider seeing a registered financial rep before making any financial decisions! [link] [comments] |
| The plausible worst case scenario is not that bad (from where we already are) Posted: 22 Jan 2022 02:39 PM PST ...as far as broad market indexes are concerned, and the calls for a 50% crash are completely absurd. Worst case scenario, market valuations return back to the high end of "normal" this year. Historically, forward P/E peaked around 16x to 17x. Ed Yardeni currently has 2023 S&P 500 earnings estimates of 250. So, if you assume that earnings meet 2022 estimates and 2023 estimates don't change much over the course of the year (a big assumption, I know), and you take your 2023 estimate of 250 and a normal-ish fwd P/E ratio of 17x, you then have a downside case scenario with a year end price target of 4,250. That's only a 3.4% decline from where we already are. It's simply not worth selling or making large changes to your portfolio (and missing potential upside) when the downside is only 3.5% from where we are today, 1/22/2022. And that's the downside. Currently, 2022 earnings estimates are at about 225, so with a 4,400 S&P 500 we're at a 19.5x FWD P/E ratio. Last year, we beat the early earnings estimates from January by over 15%. Also, there's potential for FWD P/E to remain elevated and not retrace all the way to 17x. If you assume we only drop to an 18x FWD P/E ratio, and 2023 earnings estimates shift up by only 5% to 262.5, that gives us a 2022 year end price of 4,725 which is a 7% increase from where we are today...a completely normal 12 month equity return. And remember that even companies like Netflix that are giving bad guidance are still crushing earnings estimates. Additionally, Netflix raised it's price by $2 the week before it got killed for earnings. I highly doubt a significant amount of people are going to cancel over that $2 increase. This is to say, there is real potential for earnings to meet or exceed expectations. There will certainly be volatility along the way, and even if the fed makes a "policy error", they are going to just pivot. But I believe Powell is going to successfully avoid having to do a huge pivot like in late 2018/early 2019 where rates went up too quickly, credit markets froze, and the fed had to reverse course. Overall, markets are going nowhere fast. There is just no way that with nosebleed valuations and rising rates, the market is going to have another double digit year in 2022. This is why Is old $20,000 in stocks and maxed out 2021/2022 Series I bonds in December and January. Even still, there is no better alternative, and with inflation as high as it is and rates near zero, TINA. [link] [comments] |
| VTI + SPY for a “safer investment” Posted: 22 Jan 2022 01:49 PM PST I'm currently 40% VTI, 30% SPY, and 30% VXUS in my non retirement account. My thought process is that being 30% in SPY, which is full of large established companies, provides a safer investment vs 70% VTI. Thoughts? Opinions? Does it really matter? I would switch to VOO but I'm currently negative on SPY. Invested in the last month. So I'd do that once we rebound. This account is for 10 year time frame I think. My Roth IRA is 70% 2065 target date and 30% vanguard growth fund for a more aggressive/risky approach while I'm young (23yo). Non retirement has 9k. Retirement has 37k. [link] [comments] |
| Does this market crash strategy make sense? Posted: 22 Jan 2022 03:28 PM PST Novice-intermediate Canadian investor here. I keep hearing warnings about an inevitable market crash that is set to happen relatively soon. In my TFSA is where I do my riskier investments. I'm wondering if I withdrew half the sum of my investment, threw it into a savings account to wait for that supposed market crash. Once (if) it does, buy back in (buy the f*cking dip) and reap the rebound growth. Is this a power play or should I just stick with the tried and true method of your traditional hedges (bonds, precious metals, REITs, etc)? [link] [comments] |
| Compounding interest, how does ir work Posted: 22 Jan 2022 12:08 PM PST Can someone explain this to me because I can't figure it out, have you ever seen those reels on Instagram or tictok where a guy is saying something along the lines of if you invest just 500 a month for 8 years with compounding interest you will have 1.8 million in 8 years, the math on that makes no sense, I myself invest 1200 a month, 1000 in the stock market and 200 in crypto so am I to assume I will be a multi millionaire in 10 years or so? Lol I really hope so but the math doesn't add up for me, am I missing something here? [link] [comments] |
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