(by thinking differently)
Ken Fisher and Elisabeth Dell inge
Spent about 25 min reading this. Would have bought it. But to me, it was sloppy writing couched in seemingly smart language
First the positives - the book correctly states we should not pay too much attention to short term news. That interest rate direction is over emphasized. That war and climate change may not have as high an impact on investment as is claimed (though jury out on climate change impact ).
Re: Book Review - Beat the crowd: How you can out invest the herd
The authors also claim contrarians may also have a herd mentality (but that would not make them contrarians, wouod it?)
For us, the rubber meets the road (you may insert your favorite cliche here) when the authors discuss the uselessness of P/E ratios as a predictor of future returns. And they use 1-3 yr returns to prove their case. As our GS readers well know, in the short term, the market is a speculative, but in the long run its a weighing machine. (Thanks Warren).
Re: Book Review - Beat the crowd: How you can out invest the herd
The authors lost more credibility when they used bogus Math to pooh pooh the Case Shiller PE ratio. They use the mother of all bull markets ending in 2000 to make the case that the market can continue to climb higher with high case Shiller ratio. Ever heard of exception that makes the rule?
Re: Book Review - Beat the crowd: How you can out invest the herd
They also use 1 to 2 year returns to show that high case Shiller p to e ratios can lead to high returns. Once again discarding Investing 101 - need to use 5 to 10 yrs return.
They also claim the 10 yr inflation adjusted earnings is useless. Since who cares what happened 10 yrs ago. It's the forward earnings that matter. Well, forward earnings have no relationship with actual earnings - always inflated. Also, the whole point of using 10 yr earnings is to account for a couple of business cycles.
This book probably won't be useful to the avid readers of Business threads in GS.
The opinions expressed are those of the OP, and not of GS.
Thank you.
Re: Book Review - Beat the crowd: How you can out invest the herd
This threads is now officially open for comments. Consecutive comments may be disallowed.
Re: Book Review - Beat the crowd: How you can out invest the herd
If I may be the first to take advantage of the Comments period - which will remain active for one business week.
The authors correctly criticized Robert Shiller for waffling on the ratios predictability of market direction. We have similarly criticized the good Professor.
I would also like to make another point, if I may. Yes, in the short term high PE ratios may provide high returns at times. But that does not mean you go out and buy expensive stocks for the short term. No you dont. Expensive sticks underperformed in the shot and long term. The R2 is just closer to one the longer the invetment horizon.
Thank you.
Re: Book Review - Beat the crowd: How you can out invest the herd
^ and right on cue the market is 10 pct off the high of 2134 set in 2015. The case Shiller p to e at the high? Circa 27.5. It now rests probably at 25.
Re: Book Review - Beat the crowd: How you can out invest the herd
^ 
Re: Book Review - Beat the crowd: How you can out invest the herd
Ya allah yeah shaks khud apnay aap se hee baatain kerta rehta hai. I am very concerned
Re: Book Review - Beat the crowd: How you can out invest the herd
There appears to have been some movement in this forgotten thread. And the movement came from high places.