robertshiller
ValueWalk
ValueWalk
ValueWalk
Robert Shiller’s Nobel-prize-winning research findings are amazing. He showed that valuations affect long-term returns. That means that stock investing risk is not constant but variable. It follows that market timing is mandatory for any investor who wants to keep his risk profile constant over time. It also follows that stock returns are to a large extent predictable over the long term. Shiller revolutionized our understanding of how stock investing works. Just about everything that we had come to believe in the pre-Shiller era re how stock investing works needs to be reexamined in light of h...
ValueWalk
The mistake that the Buy-and-Holders made in thinking that market timing is not 100 percent required for every investor is the worst mistake ever made in the history of personal finance. Market timing is price discipline. No market can function without price discipline. Take market timing out of the picture and sooner or later you are going to have a bull market. Have a bull market and you are going to have a bear market. Have a bear market and you are going to have an economic crisis, It’s all connected. Q1 2023 hedge fund letters, conferences and more Market Timing Is NecessarySo it’s worth ...
ValueWalk
I believe in market timing. I don’t just believe that it is something that might work now and again. I believe that it is absolutely essential at all times. Market timing is price discipline. It is the means by which the market gets prices right. If the market prices stocks too high, the value proposition offered by stocks is diminished. So informed investors lower their stock allocation, pulling stock prices down to where they should be. That’s market timing! If enough investors fail to do that (Buy-and-Holders discourage them from doing it), prices get so high that the only way the market ca...
ValueWalk
Buy-and-Holders believe that market timing is a bad idea. It never works, they claim. Investors are rational. So they always set stock prices as close to where they should be set as possible. Any individual who thinks that he is better able to ascertain the proper price of stocks than the market as a whole is fooling himself. Yale Economics Professor Robert Shiller disagrees. He believes that irrational exuberance is an important contributing factor to stock prices. He published research showing that today’s CAPE level predicts the stock return that will apply for the next 10 years because ove...
ValueWalk
I don’t believe that market timing is a bad idea. I believe that it’s the best idea there is. If Shiller’s Nobel-prize-winning research is legitimate research, irrational exuberance is a real thing. That means that stock investing risk is not stable but variable; stocks are more risky when prices are high. That means that investors who want to Stay the Course in a meaningful way MUST engage in market timing. Q4 2021 hedge fund letters, conferences and more No Market Can Survive Without Price DisciplineMarket timing is price discipline and no market can survive without price discipline. That’s ...
ValueWalk
I believe that Robert Shiller’s Nobel-prize-winning research revolutionizes the field of investment advice. Shiller showed that irrational exuberance is a thing. During the Buy-and-Hold Era, we treated all investment gains the same. Now we know that some stock gains are the product of economic productivity and thus are of lasting significance while other gains are only the product of investor emotion and thus will disappear when emotions shift. Q3 2021 hedge fund letters, conferences and more The Practical Benefits Of Shiller's ResearchKnowing this puts me ahead of Buy-and-Holders. It permits ...
ValueWalk
Robert Shiller’s Nobel-prize-winning research permits us to predict future stock returns. There’s a strong correlation between the CAPE value that applies today and the annualized real return that we will see for stocks over the next 10 years. It is something that all stock investors should be taking into consideration when setting their stock allocation. When the CAPE value is 8 (as it was in 1982), the most likely annualized return is 15 percent real. When the CAPE value is 44 (as it was in 2000), the most likely annualized return is a negative 1 percent real. Investors clearly do not want t...
ValueWalk
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