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Linus Wilson

 
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  • Anatomy Of A Market Bubble [View article]
    Wow you spent a long time on this article!
    Sep 20 08:40 AM | 10 Likes Like |Link to Comment
  • What Lies Ahead For Stocks? See What Today's Bond Prices Suggest [View article]
    This is a good post. Unfortunately, when bond and stock prices move in the same direction, there is little insurance in being both long bonds and long stocks.
    Aug 30 10:08 AM | Likes Like |Link to Comment
  • Nobel Prize Winner Shiller Is Damaging His Reputation With CAPE Ratio Talk [View article]
    Your table also shows the CAPE only forecast the dotcom bust but did not really see the 2007-2009 crisis coming or the post crash rally. A simple P/E ratio would have told you stocks in 1999-2000 were a "sucker's bet."
    Aug 25 04:26 PM | 2 Likes Like |Link to Comment
  • Nobel Prize Winner Shiller Is Damaging His Reputation With CAPE Ratio Talk [View article]
    JasonC: I like the table above. It just illustrates that the CAPE has been bearish from 1989, when Campbell and Shiller published their paper to the present day. I don't see how such a perma-bear ratio would help investors over this period. The index was about 250 in 1989 and stands near 2000 today and has been paying a good dividend too.
    Aug 25 04:21 PM | 2 Likes Like |Link to Comment
  • Nobel Prize Winner Shiller Is Damaging His Reputation With CAPE Ratio Talk [View article]
    JUDS1234567: A value investor should not forget about dividends. The S&P's dividend yield over this period was probably about 2 percent. 2 percent extra compounded over 14 years will more than double your returns. In addition, cherry picking market tops from the data is not really what I would call a statistically valid sample for projecting future returns.

    Buffett is also not too concerned about valuations. See http://cnb.cx/1vAHEUQ

    There is no flood of "shoe shine" professionals talking about stocks as in 2000. It was not hard to see that 2000 was a bubble. Shiller developed housing market data to spot the bursting of the housing bubble, which was also widely discussed. The smoking guns today only appear in the bond market not the stock market...

    Whether or not stocks are over valued, the CAPE has been a Cassandra for 25 years where stocks have overall seen huge appreciation. Shiller did not need CAPE to forecast the dotcom and housing crashes.
    Aug 24 11:29 AM | 1 Like Like |Link to Comment
  • Nobel Prize Winner Shiller Is Damaging His Reputation With CAPE Ratio Talk [View article]
    At the last boomer: If you have a low volatility asset you can boost its returns by leverage. Stocks are high volatility asset. Stocks usually beat bonds, but if you leverage bonds to a similar volatility as stocks there will be more periods where bonds beat stocks. Its more of a fair fight if you leverage bonds to mimic stocks or hold more cash with your stocks to mimic bonds in terms of volatility.
    Aug 24 11:00 AM | 2 Likes Like |Link to Comment
  • Nobel Prize Winner Shiller Is Damaging His Reputation With CAPE Ratio Talk [View article]
    You are one of the few people to have seen my photo and thought I am young. Thanks! :)
    Aug 23 10:16 PM | Likes Like |Link to Comment
  • Nobel Prize Winner Shiller Is Damaging His Reputation With CAPE Ratio Talk [View article]
    At the start of 1989 the S&P 500 index was 275. In January 1994 it was 465. Today it the index is at 1988. Those numbers don't include extra returns from dividends. If you listened to Dr. Shiller's magic formula, you would have missed out on all that price appreciation and dividends. The CAPE is like a stopped clock. It will be right twice a day. The rest of the time it is wrong.
    Aug 22 06:50 PM | 6 Likes Like |Link to Comment
  • Stein On Financial Stability In Monetary Policy [View article]
    Unfortunately, Jeremy Stein left the Fed before this article was published. That means his speech is at the margins of the Fed's thinking. He's a financial economist so his comments focus more on the financial effects of Fed policy. Unfortunately, political pressure and the dual mandate of the Fed may marginalize governors or presidents who spend too much time on the financial market effects of Fed policy. Clearly, the failure of the Fed leadership to seriously monitor and regulate financial markets contributed to the collapse of the housing market and double digit unemployment in the Great Recession.
    Aug 22 06:06 PM | Likes Like |Link to Comment
  • Nobel Prize Winner Shiller Is Damaging His Reputation With CAPE Ratio Talk [View article]
    At Northwest Investor: I agree that Shiller's excessive volatility work is more important than CAPE.

    I disagree that no one could capitalize on CAPE on the off chance it was predictive. The largest hedge funds are Macro funds which time the equity and other markets as a whole. If people know about a "winning strategy" it gets imitated. Anyone who does not think crowded trades are dangerous ignored the Quant meltdown of 2007 and the MBS market of 2006 to 2009.

    If you have a model that predicts something without a well defined time horizon, such as CAPE, for when the prediction will come true, it is wrong. Everything happens eventually... Investors who can't tell when they are wrong go broke.
    Aug 22 01:07 PM | 2 Likes Like |Link to Comment
  • Nobel Prize Winner Shiller Is Damaging His Reputation With CAPE Ratio Talk [View article]
    "In the long run we are all dead." I'm not even sure it even tells us anything about the long term. I don't think CAPE deserves to be mentioned in the same breath of P/E or price-to-book.
    Aug 22 12:06 PM | 3 Likes Like |Link to Comment
  • S&P 500 Summer Forecast - Part I: Obstacles Cleared [View article]
    May was a great month for the SPY and my fund. See http://seekingalpha.co...

    Mr. Kaminis was telling everybody to "sell, sell, sell" a couple of months ago http://seekingalpha.co...

    It seems he has thrown in the towel. Anyone who listened Mr. Kaminis would have missed the rally in the intervening weeks. My investors caught the rally to date.
    Jun 10 01:45 PM | 1 Like Like |Link to Comment
  • Stocks More Overvalued Than At 10 Of Last 18 Market Peaks [View article]
    It is not clear what the author defines as a peak or top. If you zoom into those charts you will see thousands of spikes and falls. Why did the author choose only 18 for his analysis? Also it is not clear from day to day if you are at a peak since stocks move up and move down. Just because stocks move down one day does not mean they will not reverse course and move up above the prior high. In short, I fear that this is another example of humans trying to see patterns in randomness.
    Apr 14 11:53 PM | Likes Like |Link to Comment
  • How To Beat High-Frequency Traders [View article]
    gelstretch: FLASH BOYS alleges that the exchanges and some brokerages were paid by HFTs so that the HFT could have preferential access to order flow and front run on the orders when the hit other exchanges. That seems like something a jury might find illegal under current statutes if it could be proven. If a trader pays a broker to tell you his customer orders before he makes them, that seems like the broker is conspiring against his customers and profiting from front running. Besides the ethical questions, investing in HFT seems to have huge operational risks right now even if places like Virtu only lose money in 1 in 1000 days.
    Apr 4 11:21 AM | 3 Likes Like |Link to Comment
  • How To Beat High-Frequency Traders [View article]
    This is a nice discussion without all the name calling. Small investors have little to worry about HFT in their brokerage accounts. Their brokerage fees are a more costly problem. See http://seekingalpha.co... or my paper helping smaller traders manage transaction costs at http://bit.ly/1dTJ34K

    I do believe some of the allegations in FLASH BOYS should be investigated since they affect the mutual funds in so many American's retirement portfolios.
    Apr 4 10:49 AM | Likes Like |Link to Comment
COMMENTS STATS
138 Comments
144 Likes