I personally think that taking into account metrics like Shiller CAPE goes against the bogleheads philosophy.
We essentially believe the efficient market theory, that active traders tend to make fair prices which reflect current market conditions.
Why not buy individual stocks? Because we believe the price of stocks is usually close to fair market value.
Why not buy individual sectors? Because we believe the price of securities in each sector already reflects all relevant information such as innovations, regulations, and other market forces.
Why not time the market? Because we believe the current price is already influenced by peoples feelings about where the market will go. If the future looks dim, that should already be reflected in the current prices. Unless you know something others don't, you will always be a step behind.
Why not change allocation or sell off equities because of a high Shiller CAPE? Because this arrogantly goes against the market. The Shiller CAPE is high because the market believes the underlying companies will grow, find new consumers, invent new technologies, and produce increasing profits. The world has confidence in AI, telecommunications, human entrepreneurship, increasing globalization, and increasing population. Why go against the market? Just float with the tides and expend as little energy as possible.
Buy VT!
Buy VT!
Buy VT!
We essentially believe the efficient market theory, that active traders tend to make fair prices which reflect current market conditions.
Why not buy individual stocks? Because we believe the price of stocks is usually close to fair market value.
Why not buy individual sectors? Because we believe the price of securities in each sector already reflects all relevant information such as innovations, regulations, and other market forces.
Why not time the market? Because we believe the current price is already influenced by peoples feelings about where the market will go. If the future looks dim, that should already be reflected in the current prices. Unless you know something others don't, you will always be a step behind.
Why not change allocation or sell off equities because of a high Shiller CAPE? Because this arrogantly goes against the market. The Shiller CAPE is high because the market believes the underlying companies will grow, find new consumers, invent new technologies, and produce increasing profits. The world has confidence in AI, telecommunications, human entrepreneurship, increasing globalization, and increasing population. Why go against the market? Just float with the tides and expend as little energy as possible.
Buy VT!
Buy VT!
Buy VT!
Statistics: Posted by blimp — Wed Oct 23, 2024 1:03 am — Replies 153 — Views 14306