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Robert Shiller
What hope can there be for motivated stock pickers – no matter how much they sweat and toil – to outperform the low-cost index funds that simply mechanically track the market? Well – in spite of the absurd rise of the Nobel-acclaimed, and highly promoted, Efficient Market Hypothesis that claims that individual investors can’t beat the market – it turns out there is plenty! Just ask Warren Buffett, for one. [Let me explain.] Words: 1574
February 5th, 2012 | Posted in Investing,Stock Indices | Read More »
[We have determined that] the current cyclically adjusted real yield of 5.28% is telling us that the stock market is expensive, at least by historical standards. [In addition,] …we have also determined that, relative to bonds, the real spread between stocks and bonds is 7.2% in terms of yields, i.e., stocks relative to bonds seem cheap. If stocks are expensive, and stocks relative to bonds seem cheap, this implies that bonds are also expensive. Everything is expensive! [Let me show you the math that confirms just that.] Words: 1590
October 6th, 2011 | Posted in Asset Allocation,Investing | Read More »
Do not raise the debt-ceiling. You heard me: block the debt ceiling vote. Don’t raise it. America’s out-of-control, a debt addict. It is time to detox – to deal with the collateral damage [now] before it’s too late. We need to fix America’s looming credit default, failing economy and our screwed-up banking system now – with a Good Depression. If we just kick the can down the road one more time, we’ll be trapped into repeating our 1930’s tragedy – a second Great Depression. [Let me explain.] Words: 1422
July 17th, 2011 | Posted in Economic Overview,Economy | Read More »
It is my contention that the price of gold rallies whenever the U.S. dollar’s real short-term interest rate is below 2%, falls whenever the real short rate is above 2%, and holds steady at the equilibrium rate of 2%. Furthermore, for every one percentage point real rates differ from 2%, gold moves by eight times that amount per year. So if the real rates are at 1%, gold will move up at an 8% annualized rate. If real rates are at 0%, then gold will move up at a 16% rate (that’s been about the story for the past decade). Conversely, if the real rate jumps to 3%, then gold will drop at an 8% rate. [Let me explain.] Words: 982
June 27th, 2011 | Posted in Gold/Silver,Investing | Read More »
Valuation-based forecasting models leave little doubt that stocks are priced to deliver very poor long-term returns and the cyclical bull market from 2009 is an extreme move that will almost certainly be followed by a violent correction. [Let me explain.] Words: 701
June 13th, 2011 | Posted in Investing,Stock Indices | Read More »
The Cyclically Adjusted Price Earnings Ratio, abbreviated as CAPE, or the more precise P/E10, closely tracks the real (inflation-adjusted) price of the S&P Composite. After dropping to 13.3 in March 2009, the P/E10 has rebounded to 23.0. The historical average is 16.39 raising concerns about the current price level of the S&P Composite. Let me explain. Words: 1298
March 28th, 2011 | Posted in Investing,Stock Indices | Read More »
Secular stock market declines have ranged in length from over 19 years to as few as 3 [and] the current decline is now in its 10th year. Every time the P/E10 has fallen from the top to the 2nd quintile [as it has done recently], it has ultimately declined to the 1st quintile and bottomed in single digits. Based on the latest 10-year earnings average, to reach a P/E10 in the high single digits would require [either] an S&P 500 price decline below 540 [or] for corporate earnings to make a strong and prolonged surge. [Which is it going to be and, if it is the former, when might it occur? Only time will tell! Let me explain.] Words: 1338
January 22nd, 2011 | Posted in Investing,Stock Indices | Read More »
One of the most controversial topics in investing is the price of gold… [with] many goldbugs say[ing]…that gold will soon break $2,000, then $5,000 and then $10,000 an ounce but, [frankly,] how can anyone reasonably calculate what the price of gold [should be when they don't understand the factors that drive gold? So let me explain.] Words: 992
December 20th, 2010 | Posted in Gold/Silver,Investing | Read More »
RBS is sounding the alarm on risk assets with a call that markets are at risk of falling off the edge of the cliff – by as much as 60-70%! They refer to equity investors as the “worst cult in history….which has no basis in fact, or history, but yet seems universally accepted.” They believe the current downturn could very well “destroy” this “cult”. They’re not just bullish on treasuries –they are super bulls with a 2% target on 10 year yields. Words: 1378
September 9th, 2010 | Posted in Asset Allocation,Investing | Read More »
The next decade will surely be especially turbulent, because that’s when markets and politics will sort out what the inevitable train wreck in the US entitlement programs will look like. Words: 713
July 3rd, 2010 | Posted in Investing,Stock Indices | Read More »
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