Comments on: US stock market returns – what is in store? http://www.investmentpostcards.com/2008/02/27/us-stock-market-returns-%e2%80%93-what-is-in-store/ Prieur du Plessis’s international investment blog Sun, 29 Jan 2012 22:06:48 +0000 hourly 1 http://wordpress.org/?v=3.1.1 By: Stockerhttp://www.investmentpostcards.com/2008/02/27/us-stock-market-returns-%e2%80%93-what-is-in-store/comment-page-1/#comment-1371 Stocker Thu, 28 Feb 2008 19:50:58 +0000 http://www.investmentpostcards.com/2008/02/27/us-stock-market-returns-%e2%80%93-what-is-in-store/#comment-1371 Back out Financials and I am not sure I agree with this, you can find plenty of stocks at 3-5 year valution lows.Grantham just lost the subadvisory relationship on three different funds at Vanguard, btw. Smart guy but his shop is not that great, according to what Brennan just did by firing him. Back out Financials and I am not sure I agree with this, you can find plenty of stocks at 3-5 year valution lows.

Grantham just lost the subadvisory relationship on three different funds at Vanguard, btw. Smart guy but his shop is not that great, according to what Brennan just did by firing him.

]]> By: MarketBeat Blog - WSJ.com : Blog Roll -- Coping With Depressionhttp://www.investmentpostcards.com/2008/02/27/us-stock-market-returns-%e2%80%93-what-is-in-store/comment-page-1/#comment-1370 MarketBeat Blog - WSJ.com : Blog Roll -- Coping With Depression Thu, 28 Feb 2008 18:51:06 +0000 http://www.investmentpostcards.com/2008/02/27/us-stock-market-returns-%e2%80%93-what-is-in-store/#comment-1370 [...] by historical standards not in cheap territory, arguing for luke-warm long-term returns,” he writes. “Although the research results offer no guidance as to calling market tops and bottoms, they [...] [...] by historical standards not in cheap territory, arguing for luke-warm long-term returns,” he writes. “Although the research results offer no guidance as to calling market tops and bottoms, they [...]

]]> By: ruthhttp://www.investmentpostcards.com/2008/02/27/us-stock-market-returns-%e2%80%93-what-is-in-store/comment-page-1/#comment-1366 ruth Thu, 28 Feb 2008 16:35:34 +0000 http://www.investmentpostcards.com/2008/02/27/us-stock-market-returns-%e2%80%93-what-is-in-store/#comment-1366 The S&P dividend yield competes against interest rates for capital. So, I'd like to see the dividend yield analysis repeated with attention paid to the interest rates of the same time period. Perhaps use the spreads (between short and long term rates) and then analyze 10-year returns. Would the 10-year returns be correlated with the spread? Or with interest rates directly? Should we be watching valuations or interest rates? The S&P dividend yield competes against interest rates for capital. So, I’d like to see the dividend yield analysis repeated with attention paid to the interest rates of the same time period. Perhaps use the spreads (between short and long term rates) and then analyze 10-year returns. Would the 10-year returns be correlated with the spread? Or with interest rates directly? Should we be watching valuations or interest rates?

]]> By: Prieur du Plessishttp://www.investmentpostcards.com/2008/02/27/us-stock-market-returns-%e2%80%93-what-is-in-store/comment-page-1/#comment-1365 Prieur du Plessis Thu, 28 Feb 2008 14:54:43 +0000 http://www.investmentpostcards.com/2008/02/27/us-stock-market-returns-%e2%80%93-what-is-in-store/#comment-1365 This is a comment by Don Bishop:"Warren Buffett has understood the theme of this article for at least 40 years. In 1969, 3 years after Shiller's PE graph peaked, Buffett liquidated his investment partnership, and so had cash with which to buy cheap stocks during the 1973-74 bear market. In 2003, 3 years after the 2000 PE peak, Buffett started raising serious amounts of cash, which grew to $47 billion by last year. He understands that the best long term returns are produced by buying cheap stocks, and stocks are not yet cheap." This is a comment by Don Bishop:

“Warren Buffett has understood the theme of this article for at least 40 years. In 1969, 3 years after Shiller’s PE graph peaked, Buffett liquidated his investment partnership, and so had cash with which to buy cheap stocks during the 1973-74 bear market. In 2003, 3 years after the 2000 PE peak, Buffett started raising serious amounts of cash, which grew to $47 billion by last year. He understands that the best long term returns are produced by buying cheap stocks, and stocks are not yet cheap.”

]]> By: Dax Speculatorhttp://www.investmentpostcards.com/2008/02/27/us-stock-market-returns-%e2%80%93-what-is-in-store/comment-page-1/#comment-1363 Dax Speculator Thu, 28 Feb 2008 13:02:19 +0000 http://www.investmentpostcards.com/2008/02/27/us-stock-market-returns-%e2%80%93-what-is-in-store/#comment-1363 Those who bet in "it’s time in the market" have to be very patient and healthy to get the expected profits if they get to buy crazy valuations like the ones in the dot.com mania: those guys who bought Cisco above the 70 area have a lot of time to wait for there profits.I think the problem with investors is the lack of patience in order to the market to give them what they expect, low or high valuations.I'm waiting for the low ones but I'm aware that the market can do one or two more up legs, no problem with that... Those who bet in “it’s time in the market” have to be very patient and healthy to get the expected profits if they get to buy crazy valuations like the ones in the dot.com mania: those guys who bought Cisco above the 70 area have a lot of time to wait for there profits.

I think the problem with investors is the lack of patience in order to the market to give them what they expect, low or high valuations.

I’m waiting for the low ones but I’m aware that the market can do one or two more up legs, no problem with that…

]]> By: Guy M. Lernerhttp://www.investmentpostcards.com/2008/02/27/us-stock-market-returns-%e2%80%93-what-is-in-store/comment-page-1/#comment-1358 Guy M. Lerner Thu, 28 Feb 2008 02:45:24 +0000 http://www.investmentpostcards.com/2008/02/27/us-stock-market-returns-%e2%80%93-what-is-in-store/#comment-1358 PdP: Once again, I like the research; although not a value guy, I do appreciate and understand the concept.You said: "It seems to be a case of so many pundits, so many views." I am one of those pundits, and I couldn't agree more. There is so much noise out there.You said: "It is one thing to trade the market’s rallies and corrections, but this is easier said than done, with very few investors actually getting it right with any degree of consistency." I agree that market timing is very, very hard to do but most investors (professionals and non-professionals alike) are inconistent in their returns because they lack consistency and discipline in their approach.You said: " 'it’s time in the market, not timing the market” that counts". I agree with this to a point. I think most investors become traders when they get a winner and short circuit their investments to make them a trade. On the other hand, traders never want to have a trade turn into an investment. In any case, I think time in the market does reward those who choose to play but you have to know what those times are.In the end, an active approach (not buy and hold), with proper risk allocation and diversification across markets, should win out. There are some exquisitely simple strategies out there that beat buy and hold S&P500 with about 1/5th the risk; all you need is a monthly chart, a 10 period simple MA, and the ability to make 4 trades a year.In any case, that's my two cents. The work you presented is definitely cool and clearly an antithesis to our "I want it now" world we live in. PdP: Once again, I like the research; although not a value guy, I do appreciate and understand the concept.

You said: “It seems to be a case of so many pundits, so many views.” I am one of those pundits, and I couldn’t agree more. There is so much noise out there.

You said: “It is one thing to trade the market’s rallies and corrections, but this is easier said than done, with very few investors actually getting it right with any degree of consistency.” I agree that market timing is very, very hard to do but most investors (professionals and non-professionals alike) are inconistent in their returns because they lack consistency and discipline in their approach.

You said: ” ‘it’s time in the market, not timing the market” that counts”. I agree with this to a point. I think most investors become traders when they get a winner and short circuit their investments to make them a trade. On the other hand, traders never want to have a trade turn into an investment. In any case, I think time in the market does reward those who choose to play but you have to know what those times are.

In the end, an active approach (not buy and hold), with proper risk allocation and diversification across markets, should win out. There are some exquisitely simple strategies out there that beat buy and hold S&P500 with about 1/5th the risk; all you need is a monthly chart, a 10 period simple MA, and the ability to make 4 trades a year.

In any case, that’s my two cents. The work you presented is definitely cool and clearly an antithesis to our “I want it now” world we live in.

]]> By: Sugamhttp://www.investmentpostcards.com/2008/02/27/us-stock-market-returns-%e2%80%93-what-is-in-store/comment-page-1/#comment-1353 Sugam Wed, 27 Feb 2008 21:52:48 +0000 http://www.investmentpostcards.com/2008/02/27/us-stock-market-returns-%e2%80%93-what-is-in-store/#comment-1353 Wonderful article, clearly shows how many people forget what exactly value is... This clearly shows that recent sell-off in the markets are no way related to Value investing not working but on the other hand is a part of the process.. Wonderful article, clearly shows how many people forget what exactly value is… This clearly shows that recent sell-off in the markets are no way related to Value investing not working but on the other hand is a part of the process..

]]> By: Allanhttp://www.investmentpostcards.com/2008/02/27/us-stock-market-returns-%e2%80%93-what-is-in-store/comment-page-1/#comment-1351 Allan Wed, 27 Feb 2008 14:10:22 +0000 http://www.investmentpostcards.com/2008/02/27/us-stock-market-returns-%e2%80%93-what-is-in-store/#comment-1351 Thanks for a very informative look at the S&P 500. I was discussing this very subject with a friend the other day and we ended off with the dilemma of timing and the discipline required to sit on the sidelines for what could be a considerable wait. Thanks for a very informative look at the S&P 500. I was discussing this very subject with a friend the other day and we ended off with the dilemma of timing and the discipline required to sit on the sidelines for what could be a considerable wait.

]]> By: Michael Mennellhttp://www.investmentpostcards.com/2008/02/27/us-stock-market-returns-%e2%80%93-what-is-in-store/comment-page-1/#comment-1349 Michael Mennell Wed, 27 Feb 2008 13:07:13 +0000 http://www.investmentpostcards.com/2008/02/27/us-stock-market-returns-%e2%80%93-what-is-in-store/#comment-1349 Thanks for excellent research. Very enlightening. Simple and clear. I certainly will heed this info when making decisions. Feel this bear market has a long life (4yrs?)left in it. Thanks for excellent research. Very enlightening. Simple and clear. I certainly will heed this info when making decisions. Feel this bear market has a long life (4yrs?)left in it.

]]> By: Mr. Obvioushttp://www.investmentpostcards.com/2008/02/27/us-stock-market-returns-%e2%80%93-what-is-in-store/comment-page-1/#comment-1348 Mr. Obvious Wed, 27 Feb 2008 13:06:10 +0000 http://www.investmentpostcards.com/2008/02/27/us-stock-market-returns-%e2%80%93-what-is-in-store/#comment-1348 I believe the idea of using 10 years of past earnings originated with Benj. Graham. I assume that using shorter periods produces wider variability in resultant returns, but the four-year business cycle seems like a good reason to look at PEs based on rolling four or eight years (2x the cycle) periods. Did your group look at other rolling earnings periods, Prieur? I believe the idea of using 10 years of past earnings originated with Benj. Graham. I assume that using shorter periods produces wider variability in resultant returns, but the four-year business cycle seems like a good reason to look at PEs based on rolling four or eight years (2x the cycle) periods. Did your group look at other rolling earnings periods, Prieur?

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