Market Bipolarity: Exuberance versus Exhaustion!

[@jethin37]

There were many times in this video where I was like: wow what a fantastic piece of information I haven’t heard presented so clearly elsewhere! This is great stuff! I like how you’re able to be coherent in a video all in one take, not easy to do at all.

[@etfacetimehome]

Here's a Summary: In the third quarter of 2023, there have been significant developments in both the economy and the financial markets. Here are the key insights from the provided text: 1. **Initial Economic Uncertainty:** At the beginning of the year, there were two major concerns: inflation and the possibility of a recession. It was widely believed that inflation would persist, and a recession was looming. 2. **Positive Economic Surprises:** The economy proved to be more resilient than expected, with robust employment and economic numbers. Inflation came down earlier than anticipated. 3. **Market Response:** Stock markets performed well initially, with strong gains in the first half of the year. Bonds stabilized, but long-term rates started to rise in the third quarter. 4. **Market Bifurcation:** The third quarter showed a divided market. The first half was positive, with expectations of a soft landing and no recession. However, there was a shift in sentiment in the second half, leading to a more negative outlook. 5. **Sector Variations:** Not all sectors performed equally. Technology stocks, especially large-cap tech companies, were strong performers. Small-cap stocks and other sectors struggled. 6. **Global Performance:** India was the best-performing region, while Latin America and the Caribbean performed poorly. 7. **Risk Capital:** Risk capital, which had retreated from the markets in 2022, did not return strongly in 2023. IPOs, VC investments, and high-yield bond issuances all reflected cautious reentry. 8. **Inflation and Recession Concerns:** The consensus view on the risk of a recession decreased from the start of the year. Inflation had initially come down but showed signs of an uptick in the third quarter. 9. **Market Valuation:** When valuing the S&P 500 using a Monte Carlo simulation based on market expectations for earnings, risk-free rates, and equity risk premiums, it suggests that stocks are mildly overvalued. However, there is more downside risk than upside potential. 10. **Ongoing Uncertainty:** The two key uncertainties, inflation and the possibility of a recession, continue to dominate market sentiment. Expect more market volatility as consensus views shift based on economic data. 11. **Investor Sentiment:** Investor sentiment seems cautious, with many believing there is more downside risk in the market, possibly related to concerns about inflation and the economy. In summary, the third quarter of 2023 has shown a market characterized by ongoing economic uncertainties, sector variations, and cautious reentry of risk capital. The market remains sensitive to developments in inflation and the potential for a recession, leading to mood swings and volatility.

[@55nikhil55]

Thanks

[@herokorai8346]

Thanks AI 😊

[@chandrannatarajan6616]

Thank you professor for another wonderful explanation on Market and the Economy. Always a blessing to hear from you. Stay blessed always 🙏

[@brandonrich4956]

I LOVED your monte carlo simulation. Being uncertain about rates and earnings myself, it was a very clever way to gain some insight into the direction of risk.

[@krithikkumaran]

Thank you very much Professor. I started watching your videos and reading your blogs recently, every time you provide meaningful information. Though some of the concepts are deep for me to understand fully, eventually I will. Thank you again Sir.

[@0ExcelNinja]

Yo this guy knows his stuff 😮 JUST WOW👏 😲

[@saksham3130]

Thanks Professor for such an insightful video 🙏

[@louisalfieri3187]

This helps some of us immensely. We don’t all have time to get a second degree in finance and when you say things like “experts shouldn’t predict markets right now since the outlook is murky” to paraphrase… it helps. 🙏

[@surani1948]

Great details & fantastic logical analysis. Thank you very much. Always look forward to your presentation.

[@ritafong8587]

Love love all the video ❤

[@nebojsascepanovic7277]

Using your teachings on individual stocks I've come to conclusion that most of the shares are fairly valued most of the time. That was a surprise to me, until I realized that the same fact proves your point. Hard core value investors treat markets as manic depressive lunatic, your views make much more sense!

[@grahamburton9937]

Such great analysis. Thank you

[@tarundsingh]

such a clutter free pesentation. many thanks

[@ajraol9032]

Thank you Professor for making complicated stuff look easy ❤

[@e_anagnostou]

One more great explanation. Thanks, professor!

[@FRANKWHITE1996]

Hi! Welcome back

[@freewind1977]

A great indian teacher, a guru

[@theharsh2005]

Thank you , info no one gives.

[@pauljones9150]

Love your work Prof. I always wonder how you make you bell curve value bar graph charts. Would you ever make a video showing yourself making one? I presume they are made in Python? Or maybe R?

[@jasonzola3590]

The issue i have is the 12% earnings increase in 2024 and 2025. Those are some very goldilocks numbers. Love the monte carlo approach and use it extensively.

[@brandonrich4956]

Same. Even avoiding a recession with the price of capital being much higher I don't see where unusually high growth comes from.

[@Pawankpandey]

Than you professor for such an amazing work.

[@maksims.5604]

Hello Professor, thanks again for the analysis you provide! Could I kindly ask you to consider valuing the Novartis & Sandoz companies stock split which happened on Oct 04th? Big thank you for all your work and knowledge sharing!

[@choimc3184]

Thank you

[@blaquiere141]

I like what you do. One thing I would like even more is if you used the equal weight S&P 500 because the magnificent 7 weigh a lot in the actual S&P 500 index.

[@jamesstmanhattan]

Does it make sense to lock in the 30-year yield at the current 500 bps rate? I have some dry powder to deploy; the 500 bps risk-free seems like a no-brainer to me. Don't forget that since the plunge of 2022 the real return of the S&P is still -5-7%. Plus the tax advantages the Treasuries have.

[@drpkumar77]

Good morning Prof.Aswath...Fantastic insight and very crisp...Becoming a big fan of yours...Is it possible to do a similar valuation for Nifty please. Thanks once again for sharing knowledge.

[@KripalSingh-x2z]

Why have small caps , long term treasury and reits have tanked ?

[@michaelb4546]

I suspect the market is pricing in bad times for efficiently in the Small Cap and REITs. Bonds are crashing because there are more sellers than buyers. Countries are selling and banks are not buying.

[@edreygarcia2189]

Good afternoon profe, in your opinion there are any youtuber which are real profitable traders ?

[@pauljones9150]

I am not the Prof, but I would say know. Most of them make money selling membership and courses instead of actually making money. The closest you might get are the winners of the M6 competition and some time series forecasting papers suggest that using AI to find highly ranked and low ranked stocks may be worthwhile

[@edreygarcia2189]

@pauljones9150 Thank you very much, I have tried different so call gurus but they don't make money trading, they're business as you said it's selling courses. I've never heard about M6.

[@pauljones9150]

@@edreygarcia2189 The M6 is the 6th competition for finding the best time series forecasting techniques. It just finished in March, you can find posts of people's techniques and thoughts on the competition scattered on blogs around the internet

[@harryj1081]

How could it be mildly overvalued?

[@michaelb4546]

Based on the assumptions made in the video bro. But ultimately, they are just assumptions. I am of the belief that the value destruction of the world's collateral (US Treasuries) will not be resolved through a soft landing. But of course, I could be wrong.

[@altronauta]

🙏🤓

[@manubhatt3]

I firmly believe that there are many lagging indicators like housing and rent, that indicate that inflation is gonna come down. I don't know why or how the long term rates can be so high apart from the factor that investors don't like the fiscal situation of US govt.

[@sadagobans9269]

How does he collect all this data?

[@jasonwhiteley3612]

It’s pretty obvious the market is not efficient due to mutual funds are over paying for safety.There is also a reasonable chance long term profit margins will decrease due deglobalisation the retirement of baby boomers & increased regulation which would mean S&P 500 should be lower than it is by 25% or more.I know tech is deflationary but when it comes to valuing Nasdaq the market does not factor in the enormous amount dilution happening due to the public & mutual funds

[@franz5255]

equities are toast

[@social_trading187]

Professor left the chat

[@kk22001]

Now i understand why charlie called out of aswath "out of his mind". Prof is just theory but not practical.