James Montier: A CAPE Crusader ─ A Defence Against the Dark Arts

[dcollon]

Lastest from James Montier

Montier_CAPE_Crusader.pdf

[Josh4580]

Dcollon, this was a great paper by Montier.

 

I believe everything he talks about in regards to the market valuation.  We are historically significantly overvalued on all major metrics that have a strong correlation with future returns for the S&P 500. 

 

However, I am still finding cheap stocks to buy such as HRTPY & AWLCF.

 

I am keeping a large % of my money in cash and bonds however. 

[racemize]

Does anyone know of a study where any of the proposed valuation measures could be used to determine asset allocation between stocks and cash with market-beating returns?  If not, I just don't understand the point of articles like this.

 

I would love there to be such a study, but I strongly suspect that the opportunity cost of waiting for the reversion would be much higher than the cost of predicted downturns.

 

 

[blainehodder]

Does anyone know of a study where any of the proposed valuation measures could be used to determine asset allocation between stocks and cash with market-beating returns?  If not, I just don't understand the point of articles like this.

 

I would love there to be such a study, but I strongly suspect that the opportunity cost of waiting for the reversion would be much higher than the cost of predicted downturns.

 

This is Hussman's biggest mistake in my opinion.  The obvious solution is moving your money to markets that offer attractive long term returns. Not to hold cash.