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May Interest Rate Hikes & Stocks

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  1. #61
    Quote Originally Posted by huja:
    You'd think. It may shake out that way in the future but home prices in my metro area are still increasing - not based on Zillow estimates, but actual sales data.
    Interesting to hear. Where do you live (if you don't mind me asking)?

    Some property markets have already started to correct...

  2. #62

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    Quote Originally Posted by Gollygordon:
    Interesting to hear. Where do you live (if you don't mind me asking)?

    Some property markets have already started to correct...
    Within an hour commute to Manhattan.
    Gollygordon likes this.

  3. #63

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    Quote Originally Posted by Gollygordon:
    Interesting to hear. Where do you live (if you don't mind me asking)?

    Some property markets have already started to correct...
    https://www.npr.org/2022/05/12/10979..._boJf7GqE365g4

  4. #64

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    Quote Originally Posted by Gollygordon:
    No reason to think it should stop here though. Why would it? It's been hard to make sense of equity valuations for years, many didn't make sense in 2020, many still don't make sense.
    It should go back to the historic P/E ratio of 15-17. My largest ETF (VWRD) has a P/E ratio of 17.4 so I am confident this is the bottom (hahaha).

  5. #65

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    Quote Originally Posted by Philips:
    It should go back to the historic P/E ratio of 15-17. My largest ETF (VWRD) has a P/E ratio of 17.4 so I am confident this is the bottom (hahaha).
    Assets are ruling the world now, meaning it also rules consumption. With asset prices down, consumption goes down, which means the E in your P/E goes down. So stocks can continue to drop and your still at P/E 17 as E goes down.
    Gollygordon likes this.

  6. #66

    @Philips Just playing devil's advocate, if the market has demonstrated for some time that sentiment and liquidity drives valuations way in excess of historic PE on the upside, what makes you think the inverse shouldn't be true on the flipside?

    And if that logic holds for you, do you not then think liquidity, sentiment and valuations may continue to decline given that QT hasn't really kicked in yet and inflation is still on the up (above expectations as well)?

    Just curious to hear ppls views on this line of thinking...


  7. #67

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    First positive week in a while...

    The Dow finished up 6.2% for the week and snapped its longest losing streak, eight weeks, since 1923. The S&P 500 is 6.5% higher and the Nasdaq is up 6.8% on the week. Both indexes ended seven-week losing streaks.
    S&P 500, Dow snap losing streaks for best week since November 2020

    https://www.cnbc.com/2022/05/26/stoc...ndroidappshare

  8. #68

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    Quote Originally Posted by huja:
    In handful of months since I got my mortgage, I would have lost 20% of my purchasing power if I wanted to keep my monthly payment the same if buying a house today. The speed at which interest rates have shot up is enough to induce whiplash. So as the value of my equities take a beating, the cost of financing my house looks better and better in addition to the value of the house going up. In a Yin-Yang world.
    Quote Originally Posted by billyb:
    I don't understand this. Is that a fixed rate mortgage? Interest rates going up , wouldn't that put downward pressure on house values?
    Quote Originally Posted by huja:
    You'd think. It may shake out that way in the future but home prices in my metro area are still increasing - not based on Zillow estimates, but actual sales data.
    Zillow thinks my house has increased in value by 3% in the last 30 days. Zillow will again readjust the value as soon as several houses nearby go from "pending" to "sold" in the next month or so.
    I can only guess the value will jump further.

    Maybe this is the last gasp of the housing upcycle as people try to lock in rates below historical averages (about 5.5-6%). It's insane.

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