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Berkshire Hathaway Inc. Message Board

  • jad1148 jad1148 Oct 11, 2013 4:51 AM Flag

    OT - Thanks TF

    For posting the link to the gurufocus article over on the other board:

    « Market Valuations and Expected Returns – Oct. 9, 2013 »

    Nothing really new for you and I, but it is nice to have all those opinions summarized in one place.

    I'm still hopeful that my Hunt for Red October will bear fruit.

    I would like to dial in one last course correction on my retirement portfolio this year before I flip the autopilot switch and leave the flight deck.

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    • Arma - 3 hours ago
      Nice piece, Vera.

      The market is overvalued.

      The problem, as always, is what to do—if anything—in response to what a valuation model suggests; these models may inform us but they predict nothing.

      While it is easy to consider the model's information at market extremes (2000 highs and 1982 lows) it is useless in the middle of the curve near the means, since one cannot guess the direction.

      An example of this failure is John Hussman (who uses these and other metrics, and who writes a terrific weekly). He is a very bright and conscientious money manager who seems too-smart-by-half with his cavalcade of ever-adjusting market variables (ensembles) that dictate his positions.

      Hussman's problem is his endless tinkering and rear-view model-making (which necessarily must always be rear-view)—he often adjusts weekly, looks at transient market action which is often noise, makes individual, temporary stock picks (taking on those particular risks), and uses short positions which can get you killed. This all leads to added expense, that gets passed on to the investor in a higher than needed expense ratio, and fund underperformance partly due to that expense and partly to all his managerial tinkerings.

      Perhaps Hussman would be more successful if he just chose one fairly robust metric—like Shiller, whom he admires—and simply scaled the amount of long equity held to given PE 10 points. For example, hold only 25% equity when over PE 24, hold 75% when under PE 12, and 50% during any other time. While this too has problems he would have done better (certainly from the 2009 lows) with this simple, though arbitrary, valuation approach, as it is cost effective and does respect valuations, as he does.


    • baltbear Oct 11, 2013 11:10 PM Flag

      To me, it's going to take 6 months for this "whether front " to pass. If the GOP screws up enough,, there may be some massive buying ops coming.

    • uuuzzzzz may want to wait for a deeper correction. IMF floating idea of 10% tax on savings to reduce debts. Anyone think Oblama and Yellen want some redistribution. The berkie puppettzzz boast of the great one bernank but they won;t like a 10% wealth tax. the US puppett press did not report on this. it was a french newspaper.

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