james22

I understand it means the previous high water mark, rkbabang, I don't understand the thinking that anything below that represents a bargain.

Yeah, Austin too. Where I'm looking...

Because home values remain so far below their peak levels in so many areas, it is still possible for buyers to find bargains. http://zillow.mediaroom.com/2014-07-21-Home-Values-in-Dozens-of-U-S-Housing-Markets-will-not-Fully-Recover-Until-2017-or-Later I don't understand this. What meaning does peak level have? Fair value is the only meaningful measure. Measures: http://fortune.com/2014/07/18/housing-recovery-us/

Wut? My home bought in 2002 fell 45% in appraised value during the crisis. It has started the slow climb since...still -25% from price paid. My guesstimate is it will take another 10 years to return to par. Perhaps longer. Why I would like to take a 50 year mortgage (ok, 30) @ historically low rates to free up investment capital & let the real estate market pay my home equity. Pay down the house as late as they will let me. My investment in the home has been an unmitigated disaster. A 20+ year sunk cost. But not my investment portfolio. Hope that helps My impression is that housing prices have largely recovered. Not to the overvaluation of pre-crisis, no, but to fair value. Sorry to hear of your experience.

Wut?

Thanks for the feedback. James - what do you mean with 'Tilt your index funds/ETFs?' What Packer16 said (plus momentum and quality, if can). See: http://www.etf.com/sections/index-investor-corner/18883-swedroe-look-at-value-quality-a-momentum.html Search http://www.bogleheads.org/forum/ for tilting, DFA, the Larry/Swedroe portfolio, etc..

Tilt your index funds/ETFs. Consider GLRE, TPRE, Y.

$120k from some retirement floated into his account yesterday – didn't know what to do with it – had no "no-brainer" to buy in today's market – hard in the big securities now Interesting.

Thanks for this. I'm a Hussman fan, believing (still) this time isn't different, but a good reminder: ...the history that took place is only one version of what it could have been. If you accept this, then the relevance of history to the future is much more limited than may appear to be the case.

"Events, dear boy, events."

http://www.cracked.com/quick-fixes/robin-williams-why-funny-people-kill-themselves/

Against this troubling backdrop, it’s no wonder investors are worried that the bull market might end in 2008. But Wall Street’s top equity strategists are quick to dismiss such fears. http://davidstockmanscontracorner.com/heres-what-wall-street-bulls-were-saying-in-december-2007-read-and-take-cover/

I am not defensive because I believe markets predictable, but because I believe markets are too incredibly complex and unstable for central banks to manage.

http://blogs.reuters.com/great-debate/2014/05/05/elites-talk-inequality-public-talks-growth/

http://blogs.telegraph.co.uk/finance/andrewlilico/100027182/inequality-isnt-a-problem-its-a-driver-of-progress/

If you believe that value matters but valuations do not necessarily mean revert, you should move your portfolio of risky assets around pretty aggressively as valuations shift among the various risky assets. But you should keep a fairly constant allocation to risky assets over time except in the rare instances where valuations are so extreme that risky assets are actually priced to lose out to lower-risk assets. That strategy will outperform a naïve strategy over time, but if valuations do mean revert, it is substantially sub-optimal. If valuations mean revert, you can improve the risk/reward trade-offs of your portfolio substantially by adjusting how much risk you take through time, taking more risk when the return to risk is high, and less when it is low. - GMO

Saudi Aramco's value has been estimated at up to US$10 trillion in the Financial Times, making it the world's most valuable company. http://en.wikipedia.org/wiki/Saudi_Aramco#cite_note-8

For the median stock, the overvaluation is more extreme than in 2000. http://www.hussmanfunds.com/wmc/wmc140421.htm

LUK

When the SV/ISV expected returns are 15%. Edited: Just checked - expected returns currently -5.1/2.8%... http://globaleconomicanalysis.blogspot.com/2014/04/gmo-7-year-real-return-equity-forecast.html

Do you not think it fair to assume an economics professor is not making a data mining error? (If you think this time is different, reject reversion to the mean, complex and adaptive systems unknowable, etc, that is another argument.)

I think it evidence Hussman is unlikely to be data mining (or curve fitting).

Because he's demonstrated his research chops in another field? http://management.fortune.cnn.com/2011/04/26/john-hussman-cracking-the-autism-code/

Oh, I agree. And why I am fully invested in my Roth IRA and taxable accounts where I can still find opportunities (I'll be buying LUK Monday). But my 401k is essentially limited to TSM/TIM and TBM indices. At today's (or last year's) valuation, I'd think it unlikely I'd keep any TSM/TIM gains. Edited to add: “Ms. Schroeder argues that to Mr. Buffett, cash is not just an asset class that is returning next to nothing. It is a call option that can be priced. When he thinks that option is cheap, relative to the ability of cash to buy assets, he is willing to put up with super-low interest rates, said Ms. Schroeder, who followed Mr. Buffett for years before she became his biographer. “He thinks of cash differently than conventional investors,” Ms. Schroeder says. “This is one of the most important things I learned from him: the optionality of cash. He thinks of cash as a call option with no expiration date, an option on every asset class, with no strike price.” It is a pretty fundamental insight. Because once an investor looks at cash as an option – in essence, the price of being able to scoop up a bargain when it becomes available – it is less tempting to be bothered by the fact that in the short term, it earns almost nothing. Suddenly, an investor’s asset allocation decisions are not simply between earning nothing in cash and earning something in bonds or stocks. The key question becomes: How much can the cash earn if I have it when I need it to buy other assets that are cheap, versus the upfront cost of holding it?” http://www.businessinsider.com/cash-as-a-call-option-2012-9

A simpler model, racemize: Here's a historical fact that I don't recommend as a timing tool or investment strategy, but is true nonetheless. Had an investor sold the S&P 500 index anytime it reached a price/peak earnings ratio of 19 (i.e. 19 times the highest level of earnings achieved to-date), and then simply sat in Treasury bills, possibly for years, reinvesting in stocks only when the S&P eventually declined to 14 times earnings, that investor would have captured the entire historical return enjoyed by S&P 500, with substantially lower volatility and risk exposure. Even easier, suppose that an investor sold the S&P 500 at 19 times record earnings, and just sat out of the market until the S&P 500 eventually dropped 30% from its prior highs (say, on a weekly-closing basis). Nothing more. Just sell at the first point of overvaluation and then sit around waiting for a plunge. That strategy would have placed an investor out of the stock market nearly 30% of the time, yet would have produced total returns of 13.03% annually since 1940 (versus 11.90% for a buy-and-hold approach), and 13.67% since 1970 (versus 12.96% for a buy-and-hold). http://www.hussmanfunds.com/wmc/wmc060508.htm