pricecrash
Stocks are today priced for a crash. They have been priced for a crash for a long, long time. So, if you want to ignore the warning sign that today’s CAPE value is sending out, I can’t entirely blame you. You certainly are in good company. A Price CrashStill, one day there will be a crash. It could be that it will be super soon. It could be that it will not be for some time yet. But if you believe that Robert Shiller’s Nobel-prize-winning research is legitimate research (I do), then you have to accept that irrational exuberance is a real thing and that today’s stock price is to a large extent ...
ValueWalk
I often advance the claim that we are living in the last days of Buy-and-Hold, that the Buy-and-Hold house of cards will come tumbling down in the wake of the next price crash, which I expect to see in the next year or two or three. I have had people tell me that that is not so, that Buy-and-Hold has been around for a long time and there is no reason to believe that it will not be around for a long time to come. Q4 2021 hedge fund letters, conferences and more It is certainly so that the basic concept of sticking with a single stock allocation at all times has been around for as far back as th...
ValueWalk
Today’s CAPE value is 37. The CAPE value in January 2000 was 44. The mean CAPE value is 16. That means that stocks were priced at more than two times their real value in January 2000 and are again priced at more than two times their real value today. Both price levels are scary high. The difference is that risk was a bit greater in January 2000. Today’s prices are bad. But at least they are not the worst that we have ever seen in history. Q1 2021 hedge fund letters, conferences and more Stocks Are More Risky TodayI don’t believe that. It’s true that today’s prices are not quite as bad as what ...
ValueWalk
The Shiller CAPE value is today at 30. That’s nearly double the fair-value CAPE value of 16. I think that’s dangerous. It was a CAPE value of 33 that brought on the Great Depression. I think that it is best for all investors if the CAPE always remains as close to fair-value levels as possible. When the CAPE is at fair-value levels, investors possess a good understanding of the true and lasting value of their stock portfolio, which makes their efforts at financial planning far more effective. A CAPE as high as the one that applies today signals a price crash in the not too distant future, which...
ValueWalk
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