SWP's back said:
I'm sorry but none of that makes any sense. You don't believe the market consensus (Warren Buffet included) that companies are hugely undervalued at present, shown by the market's P/E ratio for one (vs historic P/E ratios) and have great room for growth over the medium to long term based on your view that " over valued stock are better than cash" is flawed logic.
Well ermmm. No I have never heard anyone suggest that over valued stock IS better than cash. The very thought would be idiotic. I have never come across anyone that would use an idiotic fallacy such as that as a reason to invest in stock when you could always garner a similar dividend investing in bonds/gilts and have a (more or less) guaranteed capital value of your investment in the meantime. So if that is what you are being told then I would agree with you (that cash is better than over priced stock) but that in itself has absolutely nothing to do with the medium to long term prospects of the markets. Your comment on high inflation is also incorrect as even 5% is historically not classed as "high". You may be mixing up "high" with "above the rate of deposit based accounts".
My Warren Buffet comment was not wrong, it was fair comment. He is on record as living by the mantra of "be fearful when others are greedy, but be greedy when others are fearful."
As for showing you professional curtesy. No. I know nothing about you, your business, your agenda or your qualifications. I know mine, I know the records of the fund managers I have dialogue with and those of our investment committee and I would back myself to n-th degree on this topic. The present climate can indeed be a worrying one for a lay investor not receiving regular information, and comments such as yours serve no purpose other than to increase a feeling of unease, especially when backed by less than the water tight logic you use above and I do not find your comments helpful, especially when you haven't back them up with a worthwhile argument.
The price is the market consensus, as JMA said future value is all about educated guess work and the price proves there is currently no consensus that stocks are "massively undervalued" in the "long term" (exhibit "A" - the price) further you don't describe what you mean by "massively undervalued" 50%? and "long term" 12 months?
Your fail to understand the investment strategy yet you call it "idiotic", if I needed double digit returns in a <12 month period bonds would hardly constitute a good investment whilst a combination of a good % yield with a modest price uptick can achieve that, yes there are risks as we have seen recently, but that's your risk/reward ratio.
You cannot simply discount the link between high inflation = low p/e ratio, by implying a confusing historical inflation rates versus current p/e ratios; have a look at what p/e ratios where like back in those times of higher inflation and then tell me they still look "massively" undervalued on that measurement.
You are yet to highlight what sectors you are referring to.
You appear to be too focused on the forward price to see that the move upwards in stock prices may come from a lower base, thus a 20% upward move from prices 15% (not suggesting this will be the case) lower in 2 years isn't all that great, you cannot simply discount reasons behind why prices are here. You have offered no reasons why you think this is the bottom.
I could go on and on, for the record I have 20 years trading experience, spread across brokerages, hedge funds, and investment banks, I've not been fired yet so i guess my bosses trust my judgement (although stocks aren't my speciality) so would I get long here from a flat book? No. If i was already long would i stop out? Probably not. Do i think we are at the bottom? Nothing to suggest we are at present. Do I think the indices move higher at some point in the future? Yes. Do I know when? No, I could guess, what are your price targets? Could I be wrong? No, oh wait, abso-fucking-lutely, the thing to remember about trading is not how many times you are right but how much it costs you being wrong, right now I would rather leave profit on the table than donate it to the market.
I say again your "I am sure you know more than Warren Buffet" comment was a poor attempt to discredit another posters view, you should be able to debate your own views without reverting to this.
Hope you found this "more useful".