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GMO: A CAPE Crusader--- A Defence Against The Dark Art
At heart of ragging debate these days, seems like.
Been going on for a while now...since probably 2011 until November. Resumed in 2012. And, of course, all the CAPE_Crusaders would have missed 2013 run up in US stock market, if they had timed their allocation based on P/E valuations.
I suspect CAPE_Crusaders would argue P/E valuation predictions are longer-term, based on following five-ten year returns. So, 2013 is just a blip here.
Another thing is that looking back at all the P/E plots, like Exhibit 1 below from Mr. Montier's paper, there have been many continuous years of "inflated" P/Es, like 50-60s and 80-90s. Would really hate to miss those years.
That said, though we've had pull backs, it's been a while since we had sustained period of "cheap" P/E, like the painful '70.
The conclusion then from all these folks is low expectations for real returns in foreseeable future, as summarized in GMO's latest forecast. (Site requires registration, but it is free...and void of pop-ups, etc...I highly recommend it.)
Comments
At heart of ragging debate these days, seems like.
Been going on for a while now...since probably 2011 until November. Resumed in 2012. And, of course, all the CAPE_Crusaders would have missed 2013 run up in US stock market, if they had timed their allocation based on P/E valuations.
I suspect CAPE_Crusaders would argue P/E valuation predictions are longer-term, based on following five-ten year returns. So, 2013 is just a blip here.
Another thing is that looking back at all the P/E plots, like Exhibit 1 below from Mr. Montier's paper, there have been many continuous years of "inflated" P/Es, like 50-60s and 80-90s. Would really hate to miss those years.
That said, though we've had pull backs, it's been a while since we had sustained period of "cheap" P/E, like the painful '70.
The conclusion then from all these folks is low expectations for real returns in foreseeable future, as summarized in GMO's latest forecast. (Site requires registration, but it is free...and void of pop-ups, etc...I highly recommend it.)