Retail

Triumph of the Ostriches

Throwing caution to the wind has been very profitable – so far. But if history is any guide, there are many reasons for investors to consider taking a much more cautious stance.

Here are the facts: according to every valuation metric that matters (i.e. with statistical significance through history), stocks are quite expensive.

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The Whole is Greater than the Sum of the Parts

One of the most mind-blowing implications of portfolio theory is that a well conceived portfolio has the potential to be much better, in terms of risk adjusted performance, than what we might expect from the sum of the individual portfolio holdings.

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What the Bull Giveth, the Bear Taketh Away

The question of whether to commit new funds to stocks here is nuanced and complex, not least because it isn’t obvious that traditional alternatives – bonds or cash – offer any better value. We are very near all-time low interest rates across most developed government bond markets, credit spreads are near all-time tights, and rates are negative out to 5 or more years in real terms.

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Valuation Based Equity Market Forecasts – Q1 2013 Update

To be crystal clear, the commentary below makes no assertions about whether markets will carry on higher from current levels. Expensive markets can get much more expensive in the intermediate term, and investors need look no further back than the late 2000s for just such an example.

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Predicting Markets, or Marketing Predictions

We know from studies of expert judgement that gurus who make nuanced predictions and hedge their bets attract much less attention than experts who spin dramatic predictions with unswerving confidence. As a result, firms are predisposed to encourage gurus to voice strong opinions and divergent views that stand out from the crowd.

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Don’t Take Our Word For It

Long-time readers will know that we periodically publish a statistical forecast for U.S. stock market returns over horizons from 5 to 30 years, which we generate from a variety of long-term valuation metrics.

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The Permanent Portfolio Turns Japanese

Our last few articles dealt with the Permanent Portfolio, a widely embraced static asset allocation concept proposed by Harry Browne in 1982. To review, the  simple Permanent Portfolio consists of equal weight allocations to cash (T-bills), Treasuries, stocks and gold to ward against the four major financial states of the world…

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Permanent Portfolio Shakedown Part II

In Part I of the Permanent Portfolio Shakedown we investigated the history of the approach, tracing it back to Harry Browne in 1982. The company he helped to found, The Permanent Portfolio Family of Funds, has been running their version of the strategy in a mutual fund for almost 30 years, with fairly impressive results.

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Permanent Portfolio Shakedown Part 1

The Permanent Portfolio is an asset allocation concept first introduced by Harry Browne in 1982. The Permanent Portfolio Family of Funds website has this to say about the strategy, which they have been running in mutual fund format for about 20 years.

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