We first published a valuation based market forecast in September of 2010. At that time we used only the Shiller PE data to generate our forecast, and our analysis suggested investors should expect under 5% per year after inflation over the subsequent 10 year horizon. Over the 40 months since we have introduced..
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A fool thinks himself to be wise
As a team whose principals have spent thousands of hours accumulating academic credentials and experience in a fairly narrow field of expertise – public markets – we are endlessly fascinated with peoples’ optimism about their ability to succeed independently in this hyper-competitive domain.
Keep ReadingOne Factor to Rule Them All
Over the past few years there has been a loud and persistent chorus of complaints from market participants about the fact that markets are behaving like simple ‘risk on, risk off’ discounting mechanisms, where almost all of the risk seems to be emanating from a very small number of sources.
Keep ReadingBOE Paper Signals Worrisome Outlook for Equities Post QE
This article is about how central banks have orchestrated a large overshoot in asset prices, and what this means for likely future returns to stocks and bonds in particular. We’ve written on this topic before, but this article approaches the problem from the point of view of central bank policy rather than analyzing valuation metrics.
Keep ReadingPath Dependency in Financial Planning: Retirement Edition
Imagine for a moment sitting at the kitchen table, steaming coffee in hand. The sun is streaming in the windows, bacon is popping in the pan, and Rover drops the paper at your feet. A brilliant Saturday morning by any measure, but today is extra special. Now you’re retired!
Keep ReadingDon’t Fear the (Alpha) Reaper
Let us preface this article by saying that we can’t for the life of us figure out why any investor cares about beating the market in the first place. To us, the whole concept of beating the market is a red herring. The only people who should be concerned with beating the market are investment managers themselves, because their compensation is directly tied to this specific objective.
Keep ReadingStructural Diversification for All Seasons
Now that we are hip deep in our Dynamic Asset Allocation for Practitioners series (Parts I, II and III), it’s become evident that we may have skipped over some fundamental concepts in our rush to explore the more juicy material. This next series of posts is intended to lay the groundwork for how we think about the broader asset allocation problem.
Keep ReadingPlanning for Adverse Scenarios: Retirement Edition
Planning for Adverse Scenarios: Savings Edition
Let’s face it, it’s uncomfortable to acknowledge the fact that fate dominates many of the most meaningful outcomes in life. Take marriage for example. Raise your hand if you had planned in advance to meet the person you ended up marrying on the exact day you met them. No hands?
Keep ReadingPath Dependency in Financial Planning: Savings Edition
Imagine for a moment sitting at the kitchen table, steaming coffee in hand. The sun is streaming in the windows, bacon is popping in the pan, and Rover drops the paper at your feet. A brilliant Saturday morning by any measure, but today is extra special.
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