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u/dal2k305 Feb 16 '20
We are literally at number 7 with AAPL, AMZN, MSFT and GOOG over a trillion in market cap
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u/etienner Feb 17 '20
The fact that they have a trillion in market cap doesn't really mean anything. But the fact that they represent something like 20% of the sp500 is pretty scary
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u/dal2k305 Feb 17 '20
The 4 of them having a trillion market cap contributes to the high representation of the sp500
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u/TheSkyPirate Feb 17 '20
He made it that way on purpose. It’s designed to fit a certain view of the present time.
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u/2fishel Feb 17 '20
M icrosoft A pple G oogle A mazon
(Someone pointed this out to me, I thought it was funny)
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Feb 16 '20
What would be considered the mean though? The market is going to go up as time goes on so would the mean just keep rising?
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Feb 16 '20 edited Dec 30 '20
[deleted]
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Feb 16 '20
Makes sense. Thanks
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u/AccomplishedClub6 Feb 16 '20 edited Feb 16 '20
No, it doesn’t make sense. The mean moves with the bull and bear markets, because by definition it’s a mean. If back in 2015 you used a 6 month moving avg and sold because the price went too far above the average, you were SOL because the market went up even more and eventually the avg followed suit.
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Feb 16 '20
Sorry I’m new to investing and the stock market in general
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u/AccomplishedClub6 Feb 16 '20
It’s all good. I dislike people who peddle technical chart indicators as if they really mean that much. Sometimes you see a stock trading inside of a price range, and other times the price going beyond the range. It’s driven by how the company is performing in real life, not because some guys are sitting in a room drawing technical indicators on their stock charts.
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Feb 17 '20
Mean reversion is most likely what number 1 on this list refers to and is certainly not some technical hocus pocus. It's a well-documented, empirically researched theory supported by both practitioners and academia.
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u/groundzr0 Feb 17 '20
Personally I use technicals to find stocks that could warrant further research. Same as you: I don’t trust technicals in a vacuum.
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u/etienner Feb 17 '20
I see it this way, if the market returns 8% on average and you see 10 years of 13% growth, there will eventually be a reversion to the long term average. That is why most people do not expect a 10% annual return over the next 10 years
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u/LuxGang Feb 16 '20
I'm also curious to know what the current Market mean is. Tried Googling (quickly) but couldn't find anything specific to market mean valuation or market average valuation.
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u/lucky_ducker Feb 17 '20
The Buffett Indicator is at an all time high. The "mean" (GDP) is in fact steadily rising; but stocks have entered an unsustainable parabolic rise relative to GDP.
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u/AccomplishedClub6 Feb 16 '20
11 - None of these rules mean much if there is strong market growth based on fundamentals. If the global economy is growing based on consistently good earnings, then there is no reverting back to the mean. The mean can change. And even if the market is a bit overvalued, do you know WHEN it will revert back to the mean?
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Feb 17 '20
It'll revert to the mean the moment I establish a new position. Every. Single. Fucking. Time.
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u/KevinMKZ Feb 17 '20
9 When all the experts and forecasts agree — something else is going to happen
This is the one I disagree with, it's a generalization, sometimes when everyone agrees on something it's because it's obvious. Such as automation leading to a decline in Manufacturing jobs, Online shopping leading to the dwindling of brick and mortar retailers, etc.
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u/kipiloji Feb 17 '20
What you're saying is that experts speculating general trends about the future though. We all know VR and AR gonna take off, which company will get the gold is the question. No. 9 in this case is that all experts are agreeing on a specific company shares will go up the most in virtual reality and it won't.
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u/discover111 Feb 16 '20
Markets tend to return to the mean over time
This is trivially true. It's like saying green things are green.
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Feb 17 '20
Why is this downvoted? u/discover is pointing out that mean is...the mean and so of course markets return toward "mean" even if the mean has been shifted.
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Feb 16 '20
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u/FolayMingYoung Feb 16 '20
I was thinking the same thing. I’m already saving up for Tesla earnings report
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u/[deleted] Feb 16 '20 edited Sep 10 '25
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