TIP338: Current Market Conditions - 27 February 2021 w/ Stig and Trey
The Investor's Podcast (We Study Billionaires) - The Investor’s Podcast Network
Stig Brodersen
4.6 • 3.6K Ratings
🗓️ 28 February 2021
⏱️ 61 minutes
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| 0:00.0 | You're listening to TI-P. |
| 0:30.0 | You're listening to the Investors Podcast where we study the financial markets and read the books that influence self-made billionaires the most. |
| 0:39.0 | We keep you informed and prepared for the unexpected. |
| 0:51.0 | Welcome to the Investors Podcast. I'm your host, Dick Brodison. |
| 0:54.0 | I'm always excited about doing these episodes but now more than ever because I'm sitting here alongside my co-host, Tray Lockaby. Tray, how are you today? |
| 1:03.0 | I'm doing great, Dick. I'm really happy to be here. There is so much going on in the markets today and I think we should dig in as much as we can because there's a lot to cover. |
| 1:13.0 | The way that Tray and I have talked about this episode is we're going to have three segments. The first one is just like an old look at the current market conditions. |
| 1:22.0 | We're going to talk in all kinds of directions on that one. Just talking about what we're seeing in the market right now, what's interesting to us and how we position ourselves. |
| 1:31.0 | And then in the second part, we'll be talking about our web application that we have on the Investors Podcast.com is called TAP Finance. We're going to talk about some of the tools that we have and what that signals to us in the market and how we should position ourselves. |
| 1:45.0 | And then at the very end, we have a question from Sean from the audience and it's about having the right portfolio for the right market conditions. |
| 1:52.0 | But let's just kick this episode off. One of the things that I can't help but think about is are we in a new normal for the stock market? |
| 2:01.0 | And I guess every time I hear the term like new normal, it's just painful to say, you know, every time you say you just know something's wrong, shout the after. |
| 2:10.0 | And we've seen the stock market just explode in 2020. Despite the pandemic, the Dow Jones industrial average is generated a 9.7 total return including dividends and that is trailing the 18.4% return for the S&P 500 again far behind nest act doing 45%. |
| 2:31.0 | And so try and I will sitting here mid February and the S&P 500 is up 4% then that's like a stop almost 8%. |
| 2:40.0 | And you know, I just can't help but think like how long can this go on. |
| 2:46.0 | And so if we look at the most obvious explanation of why all this is happening, we have to talk about the low interest rates and the expansion of the money supply. |
| 2:55.0 | And what's interesting is that billionaire Radellio has said that giving the current interest rate levels, he wouldn't be surprised if we in the foreseeable future would see stock markets trading around 50 times earnings. |
| 3:07.0 | And he wouldn't find anything weird about that if you only compare stocks and bonds. And just as a reference right now the S&P 500 is trading at almost 40 times earnings. |
| 3:18.0 | And the CLE is 35% the CLE taking into account inflation and normalized earnings. |
| 3:26.0 | So during those market conditions, you generally don't want to hold cash in your portfolio. |
| 3:31.0 | Simply because it's being debased at a relatively high rate at the moment. |
| 3:36.0 | And what I also want to say is because of these low interest rates, I know we always keep talking about those interest rates, |
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