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13-02-2014, 10:40 AM
Henry Blodget's "The Wall Street Self Defence Manual" describes why he favours Passsive Investing over Active Investing.
But he also said:-
(When the U.S. stock market is extremely expensive, for example, you might reduce your target allocation to U. S. stocks.)*
Then he tells us why.
*As you probably noticed, this would be a form of active management. I no longer regard valuation as being a particular helpful tool in predicting near-term price direction, but I am still persuaded by the work of Yale professor Robert Shiller, economist Andrew Smithers, money manager Jeremy Grantham, and others, over the long term, market valuations do regress to means. Thus it seems sensible to modestly adjust target asset allocations based on valuation extremes (overweighting asset classes that are very cheap and underweighting those that are very expensive). If eventually, i am persuaded that doing so is worthless or harmful, I'll abandon the practice. In the meantime, it still seems sensible. Old habits die hard.
NB:
From my experience so far, over the long term, market valuations do regress to means, is true. So what's the meaning of long term? How long? 5 years, 10 years, 15 years or 20 years? i don't know. i can't know. Therefore i just have to take it as it is and be careful to remember to prepare for it all the time; less i am caught off guard.
But he also said:-
(When the U.S. stock market is extremely expensive, for example, you might reduce your target allocation to U. S. stocks.)*
Then he tells us why.
*As you probably noticed, this would be a form of active management. I no longer regard valuation as being a particular helpful tool in predicting near-term price direction, but I am still persuaded by the work of Yale professor Robert Shiller, economist Andrew Smithers, money manager Jeremy Grantham, and others, over the long term, market valuations do regress to means. Thus it seems sensible to modestly adjust target asset allocations based on valuation extremes (overweighting asset classes that are very cheap and underweighting those that are very expensive). If eventually, i am persuaded that doing so is worthless or harmful, I'll abandon the practice. In the meantime, it still seems sensible. Old habits die hard.
NB:
From my experience so far, over the long term, market valuations do regress to means, is true. So what's the meaning of long term? How long? 5 years, 10 years, 15 years or 20 years? i don't know. i can't know. Therefore i just have to take it as it is and be careful to remember to prepare for it all the time; less i am caught off guard.
WB:-
1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.
Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.
NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.
Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.
NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
