cape
The fair-value CAPE value is 17. That’s the mean value experienced over the history of the U.S. stock market. The median value is 16. The highest value we have seen is 44. The lowest is 5. Today’s CAPE value is 29. When the CAPE value is near 17, investors should expect to obtain a long-term return of something in the neighborhood of 6.5 percent real, the average long-term return. When it is below that, one can realistically expect a higher return. Q3 2022 hedge fund letters, conferences and more When it is above that, one needs to be prepared for a lower return. When the CAPE value hit 44 in ...
ValueWalk
Today’s CAPE value is 31. Did you even know that? It is my sense that most investors do not pay close attention to stock valuations. Most appreciate that valuations are high today. But stock valuations have been high for 25 years. So that’s hardly a shocking reality. I don’t get the sense that most investors fret too much over whether the CAPE is 25 or 30 or 35, or heaven help us all, 40, as it was in the late 1990s. Stock valuations are high. So what? Stock valuations are always high. It’s no biggie. There’s no news value in that reality. Q1 2022 hedge fund letters, conferences and more CAPE ...
ValueWalk
I have been arguing the merits of market timing for 19 years now. Shiller showed that the market is not efficient, as it was believed to be in the days when the Buy-and-Hold Model for understanding how stock investing works was being developed. Valuations affect long-term returns. So the value proposition of stocks is not fixed but variable. Investors seeking to keep their risk profile constant over time MUST lower their stock allocations a bit when prices get very high and increase them a bit when prices get very low to have any hope of doing so. Q2 2021 hedge fund letters, conferences and mo...
ValueWalk
You sometimes hear people say that those who live in democracies have no one but themselves to blame for the government they get. I feel that way about the models for understanding how stock investing works that come to dominate our thinking. If Buy-and-Hold is a bad model, as I believe it is, we all share in the blame for the harm that it does. Buy-and-Hold didn’t become popular by edict. We made it popular. Q2 2021 hedge fund letters, conferences and more Buy-And-Hold Is Bad NewsI of course have to note that the Buy-and-Holders came up with lots of wonderful stuff. Investors need to focus on...
ValueWalk
Today’s CAPE value is 38. The mean CAPE value is 17. Buy-and-Holders are okay with that. They believe that whatever value the market assigns to stocks is the value that should apply. Valuation-Informed Indexers do not agree. We believe that the fair-market valuation level is the best valuation level. So we would like to see a CAPE of 17 instead of 38. Q2 2021 hedge fund letters, conferences and more The Prospect Of A Massive Price CrashThere are so many ways in which the world would be a better place if today’s CAPE were 16. The most obvious is that we would not have the prospect of a massive ...
ValueWalk
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