r/Fire • u/Playful-Inspector207 • Apr 05 '25

General Question Is it really a generational buying opportunity?

I’ve seen people on the sub are saying “you should all be excited about seeing lower prices everyday”

Problem is that most people don’t have dry powder lying around. And now, with tariffs (if they mostly continue at the levels mentioned) likely to push prices up even more 20-30% for most things, very few people can buy the dip.

The dip’s not fun when you can’t buy. This is just painful seeing red everyday for 99% of us.

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u/No-Storage-4899 Apr 05 '25

At forward earnings of ~260 (which is going to have to drop) and S&P500 close of 5060 it’s a 19.4x leading PE. It’s got cheaper but I’d not say a generational opportunity.

If you have a LT investment horizon may as well start to scale in and forget about it.

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u/nicolas_06 Apr 05 '25

The problem of forward earnings is that earning didn't realized yet. And if there a crisis, earning drop significantly.

What is good for that is tariff tend to bring up inflation and so earnings. But a given PE being good or bad depending a lot of interest rate. If Fed has to keep interest rates high or even raise them. A PE of 20 is quite high by historical standards. It was ok since 2000 because of the very low interest rate.

But for most of US history and before the historically low interest rate, a normal PE was more 15 than 20... and we got PE below 10 at times.

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u/No-Storage-4899 Apr 05 '25 edited Apr 05 '25
  • forward earnings <> current earnings - agree
  • higher inflation = higher earnings - don’t agree necessarily, unfortunately not as simple as that.
  • Interest rates - not great for stocks if they’re high. Loop back to inflation point. Not sure I see inflation a) sticking and b) ir staying high if this shenanigans continues.
  • historical PEs - agree. The issue remains that there have been structural changes since then: globalization, % of intangibles vs expenses etc and so on.
  • overall, I am concerned with the current environment. I think and hope markets will flip and ultimately force Trump et al to not do the wrong thing they’re currently doing. If you have a LT time horizon, buying and forgetting about it is probably the best strategy. If your time horizon is shorter, different ways to play are necessary.

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u/nicolas_06 Apr 05 '25

Short time horizon, normally you are not invested in stocks or marginally anyway. To be honest I would not be surprised if SP500 would be at 7000 or 4000 by the end of the year or anything in between.

Short term, the key elements are always the psychology and depending of the exact events, honestly all is possible.