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SHILLER: The Market Is At One Of Its Most Expensive Levels Of All Time…| Business Insider

Joe Weisenthal on Yale Professor Robert Shiller’s CAPE pricing model:

So while it’s true that the market is very expensive right now, based on his measure, [Shiller] notes that it’s difficult to use this information to actually time the market. Just because it’s expensive, doesn’t mean it will go down. Furthermore, the market has been expensive based on his measure for the past 20 years excluding the period of the recent crash, which raises the question of whether there’s been some fundamental change to the economy or markets that would warrant higher valuations.

Read more at SHILLER: The Market Is At One Of Its Most Expensive Levels Of All Time, And There's One Thing Can Take It Down | Business Insider.

2 Replies to “SHILLER: The Market Is At One Of Its Most Expensive Levels Of All Time…| Business Insider”

  1. Re: Shiller’s latest observation that you cover, and risk management :

    Should one be inclined to want to buy/hold when shares are “cheap” but sell when they appear “very expensive” ?

    How does one re-act if shares do change direction / tumble – after being apparently at ” very expensive ” levels – and ‘preemptive/rational’ risk-reduction investment management is absent ?

    George Soros is reported as having a relatively huge PUT position on the S&P 500 American index. This significant presence may not be simply discarded/written-off; it may point to prudent ‘risk-management, may it not, in the circumstances?

      1. Stocks can remain cheap (or expensive) for decades. Attempting to time the market because of valuation is impractical.
      2. It depends on your strategy. If you buy and hold good stocks for the long term, like Buffett, then the falls are merely buying opportunities. If you have a shorter time frame, your biggest problem is differentiating between primary and secondary movements. Experts have accurately predicted about 20 of the last 3 primary movements.
      3. Who is right: Soros or Buffett? There is a buyer and seller on each side of every trade.

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