Comments on: An Index Fund Investor’s Dream: S&P 500 Earnings are at Record Lows http://steadfastfinances.com/blog/2009/05/18/an-index-fund-investors-dream-sp-500-earnings-are-at-record-lows/ A Personal Finance & Investing 101 blog that delves into current events, consumer education, and techniques to improve your bottom line. Wed, 17 Mar 2010 01:32:28 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Matt http://steadfastfinances.com/blog/2009/05/18/an-index-fund-investors-dream-sp-500-earnings-are-at-record-lows/comment-page-1/#comment-2446 Matt Tue, 19 May 2009 22:00:20 +0000 http://steadfastfinances.com/blog/?p=861#comment-2446 Absolutely! The main point of that old example is to buy when the market variables line up in your favor. It also illustrates that the best time to buy is not (usually) when everything seems rosy and calm. Absolutely! The main point of that old example is to buy when the market variables line up in your favor.

It also illustrates that the best time to buy is not (usually) when everything seems rosy and calm.

]]> By: SJ http://steadfastfinances.com/blog/2009/05/18/an-index-fund-investors-dream-sp-500-earnings-are-at-record-lows/comment-page-1/#comment-2444 SJ Tue, 19 May 2009 20:42:57 +0000 http://steadfastfinances.com/blog/?p=861#comment-2444 Well even in the "old farm" example if the farmer wants a lot of money for it then not a great deal lol. But I mean, I agree with you, it probably is a great time to be young and investing... Well even in the “old farm” example if the farmer wants a lot of money for it then not a great deal lol.

But I mean, I agree with you, it probably is a great time to be young and investing…

]]> By: Matt http://steadfastfinances.com/blog/2009/05/18/an-index-fund-investors-dream-sp-500-earnings-are-at-record-lows/comment-page-1/#comment-2439 Matt Tue, 19 May 2009 06:00:07 +0000 http://steadfastfinances.com/blog/?p=861#comment-2439 Yes, it's Earnings (per quarter) vs. Time. It's one of the more traditional ways to track the "health" of the economy, as well as setting the historical mean so we can find entry and exit points based on earnings growth. Quality might not be the best word to use, but for arguments sake, the best time to buy is when the quality (aka - prospect for future earnings growth) is at it's absolute worst. I'll use the "buying an old farm" example: The best time to buy a farm is when farmers have suffered a dust bowl, a 5 year drought, land is selling for 1/4 of what they were 5 years ago and nothing grows but weeds. By then, everyone who owned a farm is desperate to get out. At that point, the only thing that can happen for you is a prolonged state of flatline growth or the situation slowly improves. Years later when everyone wants to own a farm again, sell it back to willing buyers. Repeat cycle as necessary. Hope that helps... and I was also a poor grad student! Fortunately the tech bubble started in 98 and I bought semiconductors and crappy dot.com companies at the right time. Yes, it’s Earnings (per quarter) vs. Time. It’s one of the more traditional ways to track the “health” of the economy, as well as setting the historical mean so we can find entry and exit points based on earnings growth.

Quality might not be the best word to use, but for arguments sake, the best time to buy is when the quality (aka – prospect for future earnings growth) is at it’s absolute worst.

I’ll use the “buying an old farm” example:

The best time to buy a farm is when farmers have suffered a dust bowl, a 5 year drought, land is selling for 1/4 of what they were 5 years ago and nothing grows but weeds. By then, everyone who owned a farm is desperate to get out. At that point, the only thing that can happen for you is a prolonged state of flatline growth or the situation slowly improves. Years later when everyone wants to own a farm again, sell it back to willing buyers. Repeat cycle as necessary.

Hope that helps… and I was also a poor grad student! Fortunately the tech bubble started in 98 and I bought semiconductors and crappy dot.com companies at the right time.

]]> By: SJ http://steadfastfinances.com/blog/2009/05/18/an-index-fund-investors-dream-sp-500-earnings-are-at-record-lows/comment-page-1/#comment-2438 SJ Tue, 19 May 2009 05:05:08 +0000 http://steadfastfinances.com/blog/?p=861#comment-2438 I'm a poor 22 yr old grad student... I'm throwing what money I do have laying around into a roth ira and what not =) I am also not extremely bright... but this chart shows earnings vs. time? Doesn't that just mean the S&P quality has dropped? I mean, ignoring such things as pricing? I’m a poor 22 yr old grad student… I’m throwing what money I do have laying around into a roth ira and what not =)

I am also not extremely bright… but this chart shows earnings vs. time? Doesn’t that just mean the S&P quality has dropped? I mean, ignoring such things as pricing?

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