Last week, I put forth a Devil’s Advocate argument, Give Me High Gas Prices! The crux of the argument is that high gas prices spur demand from consumers for more fuel efficient cars, which in turn spurs more car manufacturers to fill that demand. The end result is that we get cars with outstanding MPGs, at which point, I can wish for low prices. My dollar goes further and it’s better for the environment. Cue the puppies, ponies, and rainbows!
A commenter brought up that of course it isn’t that simple. It never is. Nonetheless, I still believe there’s a good correlation there.
So this week, I’m going to make a devil’s advocate request for a stock market crash. Why on earth would I do such a mean and crazy thing like that?
I want to buy stocks on sale. I like paying between $17-19 for Facebook. I don’t like paying $45. I like paying in the $500-600 range for Google. I don’t like paying $900.
I’m a frugal guy and like to buy things on the cheap. With the S&P 500 recently climbing to all-time highs, I’m not finding a lot in the bargain bin. I’ve got some cash looking for a home and I can’t find anything that I know and trust at a great price.
I realize that I shouldn’t be so sensitive to the prices. After all, the underlying metrics like earnings are what matters, right? Well stocks look expensive according to the Shiller PE that takes earnings into account.
It may sound crazy, but in my ideal scenario, we’d have the exact inverse relationship to the gas scenario that I mentioned above. Stocks would stay low and for an extended period of time, while I build up a ton of shares. Then we’d see a huge spike and I could sell for millions.
One can dream right?