Worried About PE Ratios?

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William Million
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Worried About PE Ratios?

Post by William Million »

Many recent posts about high PE ratios. This is rarely a predictor of the future (and CAPE PE10 even less so).

Keep in mind that May/June 2009 PEs topped out over 100 - this was one of the best opportunities to buy. During the entire ride up, CAPE PE10 Robert Shiller has bemoaned the overvalued stock market.
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Re: Worried About PE Ratios?

Post by arcticpineapplecorp. »

William Million wrote: Mon Jun 14, 2021 10:32 am Many recent posts about high PE ratios. This is rarely a predictor of the future (and CAPE PE10 even less so).

Keep in mind that May/June 2009 PEs topped out over 100 - this was one of the best opportunities to buy. During the entire ride up, CAPE PE10 Robert Shiller has bemoaned the overvalued stock market.
if there are many posts already about hig PE ratios what makes this post different and/or is there a need for another post about PE ratio?

If PEs are not a predictor of the future, then why would I be worried about the future based on current PEs?

if you have an asset allocation (mix of stocks and bonds) you may be buying bonds rather than stocks if your stocks have risen. When stocks fall you'll be buying stocks. Asset allocation works. You follow it and it allows you to (mostly) buy lower and sell higher in a mechanical way. You don't have to worry about PEs then.
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events.
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Taylor Larimore
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Re: Worried About PE Ratios?

Post by Taylor Larimore »

William Million wrote: Mon Jun 14, 2021 10:32 am Many recent posts about high PE ratios. This is rarely a predictor of the future (and CAPE PE10 even less so).

Keep in mind that May/June 2009 PEs topped out over 100 - this was one of the best opportunities to buy. During the entire ride up, CAPE PE10 Robert Shiller has bemoaned the overvalued stock market.
William Million:

One of the many advantages of being a Stay the Course investor is that "PE" and other ratios are meaningless.

Best wishes.
Taylor"
Jack Bogle's Words of Wisdom: "Stay the Course. No matter what happens, stick to your program. I've said "Stay the course" a thousand times, and I meant it every time. It is the most important single piece of investment wisdom I can give to you."
Last edited by Taylor Larimore on Mon Jun 14, 2021 10:43 am, edited 1 time in total.
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Tamalak
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Re: Worried About PE Ratios?

Post by Tamalak »

Come on. 2009 doesn't count. Earnings were practically negative.. the signal 'broke'!
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Re: Worried About PE Ratios?

Post by Thesaints »

Taylor Larimore wrote: Mon Jun 14, 2021 10:42 am One of the many advantages of being a Stay the Course investor is that "PE" and other ratios are meaningless.

Best wishes.
Taylor"
Jack Bogle's Words of Wisdom: "Stay the Course. No matter what happens, stick to your program. I've said "Stay the course" a thousand times, and I meant it every time. It is the most important single piece of investment wisdom I can give to you."
It certainly makes sense: If one doesn't steer the ship, they cannot cause a collision. They can't avoid one either, though...
am
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Re: Worried About PE Ratios?

Post by am »

The market could crash or have poor returns even if pe ratios are low, intermediate or high. They are not actionable or meaningful.
Da5id
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Re: Worried About PE Ratios?

Post by Da5id »

Thesaints wrote: Mon Jun 14, 2021 10:49 am
Taylor Larimore wrote: Mon Jun 14, 2021 10:42 am One of the many advantages of being a Stay the Course investor is that "PE" and other ratios are meaningless.

Best wishes.
Taylor"
Jack Bogle's Words of Wisdom: "Stay the Course. No matter what happens, stick to your program. I've said "Stay the course" a thousand times, and I meant it every time. It is the most important single piece of investment wisdom I can give to you."
It certainly makes sense: If one doesn't steer the ship, they cannot cause a collision. They can't avoid one either, though...
I'm unaware of any steering mechanism (market timing presumably) that doesn't just make things worse though. That doesn't (to me) mean that valuations are meaningless in terms of future return expectations. But valuations are sufficiently weak predictors that attempts to take advantage of them tactically is historically not a successful strategy.
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Re: Worried About PE Ratios?

Post by Thesaints »

What about the other thread, where it was demonstrated mathematically that P/E and changes in P/E are one of the two ingredients (the other being earnings growth) in calculating the return from stocks investments ?
True, one can't look at P/E alone and know whether to buy, or sell, but that is one of the most important parameters in making the choice anyway.
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Re: Worried About PE Ratios?

Post by NiceUnparticularMan »

Well, there is in fact a correlation between higher P/E ratios and lower forward returns. The problem is the relationship is weak enough that you can't really use it for market timing purposes and such.

But, actually expecting the same returns when P/E ratios are high as they averaged when they were low is not really a good idea. We can't rule out the possibility that will be true, but the data says the better bet is they will likely be lower.
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Re: Worried About PE Ratios?

Post by Thesaints »

Da5id wrote: Mon Jun 14, 2021 10:52 am I'm unaware of any steering mechanism (market timing presumably) that doesn't just make things worse though. That doesn't (to me) mean that valuations are meaningless in terms of future return expectations. But valuations are sufficiently weak predictors that attempts to take advantage of them tactically is historically not a successful strategy.
You are certainly aware that P/E are the basis on which we calculate the range of possible future returns from the investment. If one has no idea of what that range is, how do they even begin to calculate their optimal asset allocation ?
NiceUnparticularMan wrote: Mon Jun 14, 2021 10:55 am Well, there is in fact a correlation between higher P/E ratios and lower forward returns. The problem is the relationship is weak enough that you can't really use it for market timing purposes and such.

But, actually expecting the same returns when P/E ratios are high as they averaged when they were low is not really a good idea. We can't rule out the possibility that will be true, but the data says the better bet is they will likely be lower.
and the part in bold is extremely important !
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Re: Worried About PE Ratios?

Post by tvubpwcisla »

There is always something to worry about. Stay the course!

:moneybag
Stay invested my friends.
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Re: Worried About PE Ratios?

Post by NiceUnparticularMan »

Thesaints wrote: Mon Jun 14, 2021 10:55 am What about the other thread, where it was demonstrated mathematically that P/E and changes in P/E are one of the two ingredients (the other being earnings growth) in calculating the return from stocks investments ?
True, one can't look at P/E alone and know whether to buy, or sell, but that is one of the most important parameters in making the choice anyway.
That truly is just math. Meaning it is true if you could predict both E and P/E going forward, you could predict P.

But that is no easier than just predicting P.
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Re: Worried About PE Ratios?

Post by Da5id »

Thesaints wrote: Mon Jun 14, 2021 10:56 am
Da5id wrote: Mon Jun 14, 2021 10:52 am I'm unaware of any steering mechanism (market timing presumably) that doesn't just make things worse though. That doesn't (to me) mean that valuations are meaningless in terms of future return expectations. But valuations are sufficiently weak predictors that attempts to take advantage of them tactically is historically not a successful strategy.
You are certainly aware that P/E are the basis on which we calculate the range of possible future returns from the investment. If one has no idea of what that range is, how do they even begin to calculate their optimal asset allocation ?
P/E is not the basis of anything I do, calculation or otherwise. Historical range of returns are all we know, the future is not knowable. The current high US P/E (or CAPE, or whatnot) could become the new normal for reasons we can't predict. Or the US could go back to somewhere in the 20s by a crash or by slower growth.

There is no such thing as an optimal asset allocation prospectively. My asset allocation is selected based on risks, not returns per se.
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Re: Worried About PE Ratios?

Post by Thesaints »

NiceUnparticularMan wrote: Mon Jun 14, 2021 10:58 am
Thesaints wrote: Mon Jun 14, 2021 10:55 am What about the other thread, where it was demonstrated mathematically that P/E and changes in P/E are one of the two ingredients (the other being earnings growth) in calculating the return from stocks investments ?
True, one can't look at P/E alone and know whether to buy, or sell, but that is one of the most important parameters in making the choice anyway.
That truly is just math. Meaning it is true if you could predict both E and P/E going forward, you could predict P.

But that is no easier than just predicting P.
But you don't need to be able to predict. When you enter a randomly picked Greek restaurant you can't know whether the chef is good, or bad. You do know you will eat Greek food, though.
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Re: Worried About PE Ratios?

Post by NiceUnparticularMan »

Thesaints wrote: Mon Jun 14, 2021 10:56 am
NiceUnparticularMan wrote: Mon Jun 14, 2021 10:55 am Well, there is in fact a correlation between higher P/E ratios and lower forward returns. The problem is the relationship is weak enough that you can't really use it for market timing purposes and such.

But, actually expecting the same returns when P/E ratios are high as they averaged when they were low is not really a good idea. We can't rule out the possibility that will be true, but the data says the better bet is they will likely be lower.
and the part in bold is extremely important !
Sorta, although I keep landing in more or less the same place.

I don't think you can do better than using a Target fund from a reliable company, or perhaps something in the range of traditional Bogleheads' approaches (depending on how much complexity you want to deal with, and that is taking on a lot of behavioral risk).

But the results going forward may not be nearly as good as similar investors have enjoyed in the recent past.

So, it is entirely possible we're going to eventually be having a lot of tough conversations about why a Target/Bogleheads approach is no longer leading to the same happy results as it used to.

But that doesn't mean there is something better.
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Re: Worried About PE Ratios?

Post by NiceUnparticularMan »

Thesaints wrote: Mon Jun 14, 2021 11:04 am
NiceUnparticularMan wrote: Mon Jun 14, 2021 10:58 am
Thesaints wrote: Mon Jun 14, 2021 10:55 am What about the other thread, where it was demonstrated mathematically that P/E and changes in P/E are one of the two ingredients (the other being earnings growth) in calculating the return from stocks investments ?
True, one can't look at P/E alone and know whether to buy, or sell, but that is one of the most important parameters in making the choice anyway.
That truly is just math. Meaning it is true if you could predict both E and P/E going forward, you could predict P.

But that is no easier than just predicting P.
But you don't need to be able to predict. When you enter a randomly picked Greek restaurant you can't know whether the chef is good, or bad. You do know you will eat Greek food, though.
I'll admit I don't know what that metaphor means.

But I would agree if you buy stocks, you know you are buying stocks, and you know will get the return from being an owner of such stocks. Whatever it ends up being.
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Re: Worried About PE Ratios?

Post by Thesaints »

If you have no idea about how much return you might get, how do you decide how much stocks to buy ?

Here’s another metaphor for you:
“Tomorrow’s chance of rain: 50%”
Is it a useless forecast ? It doesn’t tell you whether it will rain or not; useless, right ?
Compare to “Tomorrow’s chance of rain: 90%”.
Maybe now you can see that there is an information value in getting the first forecast instead of the second.
Knowing something about the future is always better than knowing nothing.
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Re: Worried About PE Ratios?

Post by Da5id »

Thesaints wrote: Mon Jun 14, 2021 11:42 am If you have no idea about how much return you might get, how do you decide how much stocks to buy ?

Here’s another metaphor for you:
“Tomorrow’s chance of rain: 50%”
Is it a useless forecast ? It doesn’t tell you whether it will rain or not; useless, right ?
Compare to “Tomorrow’s chance of rain: 90%”.
Maybe now you can see that there is an information value in getting the first forecast instead of the second.
Knowing something about the future is always better than knowing nothing.
The weather analogy is not particularly on point. You can much more easily act on a weather forecast in a useful way.

Historically, funds which attempted to tactically allocate based on leading indicators like P/E, including at Vanguard, have failed and closed. Individuals who have tried to time the market based on those indicators have likewise trailed the market. How, precisely, do you propose acting on these P/E ratios today? If there is not a specific action that one might take, what is the point?
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Re: Worried About PE Ratios?

Post by klaus14 »

What matters is the forward P/E. And forward into the future after covid recovery.

2022 EPS Estimate for SP500 is like 205. It translates to EO 2021 forward p/e of 20.7 if SP500 closes at today's price.
20.7 is high compared to pre-pandemic forward p/e of 19.5 but not that much.

And if you calculate Equity Risk Premium as (forward E/P minus 10Y TIPS Yield), you'll see that it is higher now (1/20.7 - -0.90% = 5.7%) compared to pre-pandemic (1/19.5 - -0.14% = 5.3%) . This means you should have higher stock allocation now compared to Jan 2020.
Last edited by klaus14 on Mon Jun 14, 2021 12:08 pm, edited 3 times in total.
My investment algorithm: https://www.bogleheads.org/forum/viewtopic.php?f=10&t=351899&p=6112869#p6112869
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Re: Worried About PE Ratios?

Post by NiceUnparticularMan »

Thesaints wrote: Mon Jun 14, 2021 11:42 am If you have no idea about how much return you might get, how do you decide how much stocks to buy ?
For long-term investment purposes, I buy stocks and REITs because I assume the owners of productive assets are more at risk than lenders to those owners, and are likely to get higher long term returns as a result. I only buy other things for specific risk management purposes.

Estimating the specific returns I will get from stocks is more about how much I should be investing now in order to meet my future long-term spending goals. If my estimates go down, I can choose between reducing my future long-term spending goals, plan to spend less in the short-to-medium term, or plan to increase our income (or of course some combination of two or all three).

So in terms of allocations between equities and risk-management instruments, I don't really need to know much.

In terms of planning over all of investing, shorter-term spending, long-term spending, and work, I'd love to know a lot. But I end up just doing a lot of WAGing for lack of a working crystal ball.
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Re: Worried About PE Ratios?

Post by HomerJ »

Thesaints wrote: Mon Jun 14, 2021 11:42 amHere’s another metaphor for you:
“Tomorrow’s chance of rain: 50%”
Is it a useless forecast ? It doesn’t tell you whether it will rain or not; useless, right ?
Compare to “Tomorrow’s chance of rain: 90%”.
Maybe now you can see that there is an information value in getting the first forecast instead of the second.
Knowing something about the future is always better than knowing nothing.
Except that it more like

"Tomorrow's chance of rain is 10%-80%"

compared to "Tomorrow chance of rain is 20%-90%"

In both scenarios, I'm going to take an umbrella just in case. Just like I invest... Prepare for bad times, hope for good times.

The error bands on "how much return we might get" based on PE are so large it's meaningless.

Predicting "2%-16%" 10-year returns isn't much different from predicting "1%-15%" returns.

In either case, I'm going to plan around low returns and/or the risk of a crash that takes a while to recover... Because that's the safe bet.

I don't need to quantify the risk that 10-year returns will be low. I just plan around low returns going forward, and I'll adjust to what I actually get.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
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Re: Worried About PE Ratios?

Post by Thesaints »

Da5id wrote: Mon Jun 14, 2021 11:46 am
Thesaints wrote: Mon Jun 14, 2021 11:42 am If you have no idea about how much return you might get, how do you decide how much stocks to buy ?

Here’s another metaphor for you:
“Tomorrow’s chance of rain: 50%”
Is it a useless forecast ? It doesn’t tell you whether it will rain or not; useless, right ?
Compare to “Tomorrow’s chance of rain: 90%”.
Maybe now you can see that there is an information value in getting the first forecast instead of the second.
Knowing something about the future is always better than knowing nothing.
The weather analogy is not particularly on point. You can much more easily act on a weather forecast in a useful way.

Historically, funds which attempted to tactically allocate based on leading indicators like P/E, including at Vanguard, have failed and closed. Individuals who have tried to time the market based on those indicators have likewise trailed the market. How, precisely, do you propose acting on these P/E ratios today? If there is not a specific action that one might take, what is the point?
You could estimate a range of possible returns going forward, which is based on current P/E. Compare it to the return you need to achieve your objective and reduce/add to your stock allocation as needed. For instance.
NiceUnparticularMan wrote: Mon Jun 14, 2021 12:04 pm Estimating the specific returns I will get from stocks is more about how much I should be investing now in order to meet my future long-term spending goals. If my estimates go down, I can choose between reducing my future long-term spending goals, plan to spend less in the short-to-medium term, or plan to increase our income (or of course some combination of two or all three).
Yes. And planning to increase your income (from investments) corresponds to increasing your allocation of stocks. How much you need to increase it ? That depends on the projected returns from stocks. How do you estimate a range of projected returns from stocks ? It is based on P/E and a few other things.
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Re: Worried About PE Ratios?

Post by HomerJ »

Thesaints wrote: Mon Jun 14, 2021 1:32 pm
Da5id wrote: Mon Jun 14, 2021 11:46 am
Thesaints wrote: Mon Jun 14, 2021 11:42 am If you have no idea about how much return you might get, how do you decide how much stocks to buy ?

Here’s another metaphor for you:
“Tomorrow’s chance of rain: 50%”
Is it a useless forecast ? It doesn’t tell you whether it will rain or not; useless, right ?
Compare to “Tomorrow’s chance of rain: 90%”.
Maybe now you can see that there is an information value in getting the first forecast instead of the second.
Knowing something about the future is always better than knowing nothing.
The weather analogy is not particularly on point. You can much more easily act on a weather forecast in a useful way.

Historically, funds which attempted to tactically allocate based on leading indicators like P/E, including at Vanguard, have failed and closed. Individuals who have tried to time the market based on those indicators have likewise trailed the market. How, precisely, do you propose acting on these P/E ratios today? If there is not a specific action that one might take, what is the point?
You could estimate a range of possible returns going forward, which is based on current P/E. Compare it to the return you need to achieve your objective and reduce/add to your stock allocation as needed.
Nothing you wrote there is actionable.

What you do mean, "the return you need" to meet your objective? Let's assume one is 5-10 years out from retirement, and actually has a good idea of what the objective is (someone who is 30-40 has only the most basic idea of how much they will need/want in retirement)

How exactly do you change your stock allocation if someone tells you...

"Hey, expected return over the next 10 years is now -2% to 12% instead of 0% to 14%".
NiceUnparticularMan wrote: Mon Jun 14, 2021 12:04 pm Estimating the specific returns I will get from stocks is more about how much I should be investing now in order to meet my future long-term spending goals. If my estimates go down, I can choose between reducing my future long-term spending goals, plan to spend less in the short-to-medium term, or plan to increase our income (or of course some combination of two or all three).
Yes. And planning to increase your income (from investments) corresponds to increasing your allocation of stocks. How much you need to increase it ? That depends on the projected returns from stocks. How do you estimate a range of projected returns from stocks ? It is based on P/E and a few other things.
No, you can't PLAN to increase your income from investments. That's not under your control. Just increasing your allocation to stocks does not guarantee your income will increase. It can actually have the opposite result.

Stick with what you can (somewhat) control. Spending less, your wage income, working longer.

Asset allocation should be based on risk management, not expected returns with plus/minus 8% error bands.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
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Re: Worried About PE Ratios?

Post by HomerJ »

Let's do a concrete example.

Say I'm currently 50/50 with $1.5 million, and I'm shooting to retire with $2 million.

I'm saving $30k a year, and I'm hoping to retire in 5-10 years.

Looks like my required return on my entire portfolio is:

5 years: saved $150k, need portfolio to grow 23% (4.3% a year)
6 years: saved $180k, need portfolio to grow 21% (3.3% a year)
7 years: saved $210k, need portfolio to grow 19% (2.5% a year)
8 years: saved $240k, need portfolio to grow 17% (2.0% a year)
9 years: saved $270k, need portfolio to grow 15% (1.6% a year)
10 years: saved $300k, need portfolio to grow 13% (1.2% a year)

Someone tells me stock expected returns are now 4% (-4% to 12% range) instead of 6% (-2% to 14% range), how should I change my asset allocation?
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
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Re: Worried About PE Ratios?

Post by sureshoe »

I think everyone is expecting a lot of inflation.
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Re: Worried About PE Ratios?

Post by NiceUnparticularMan »

Thesaints wrote: Mon Jun 14, 2021 1:32 pm
Da5id wrote: Mon Jun 14, 2021 11:46 am
Thesaints wrote: Mon Jun 14, 2021 11:42 am If you have no idea about how much return you might get, how do you decide how much stocks to buy ?

Here’s another metaphor for you:
“Tomorrow’s chance of rain: 50%”
Is it a useless forecast ? It doesn’t tell you whether it will rain or not; useless, right ?
Compare to “Tomorrow’s chance of rain: 90%”.
Maybe now you can see that there is an information value in getting the first forecast instead of the second.
Knowing something about the future is always better than knowing nothing.
The weather analogy is not particularly on point. You can much more easily act on a weather forecast in a useful way.

Historically, funds which attempted to tactically allocate based on leading indicators like P/E, including at Vanguard, have failed and closed. Individuals who have tried to time the market based on those indicators have likewise trailed the market. How, precisely, do you propose acting on these P/E ratios today? If there is not a specific action that one might take, what is the point?
You could estimate a range of possible returns going forward, which is based on current P/E. Compare it to the return you need to achieve your objective and reduce/add to your stock allocation as needed. For instance.
NiceUnparticularMan wrote: Mon Jun 14, 2021 12:04 pm Estimating the specific returns I will get from stocks is more about how much I should be investing now in order to meet my future long-term spending goals. If my estimates go down, I can choose between reducing my future long-term spending goals, plan to spend less in the short-to-medium term, or plan to increase our income (or of course some combination of two or all three).
Yes. And planning to increase your income (from investments) corresponds to increasing your allocation of stocks. How much you need to increase it ? That depends on the projected returns from stocks. How do you estimate a range of projected returns from stocks ? It is based on P/E and a few other things.
The implied error bars on forward-looking returns are enormous.

So, allocation changes are just dancing within the error bars anyway.

Now, something like doubling your investment rate has very predictable consequences for returns. But it can also be costly in important ways.
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Re: Worried About PE Ratios?

Post by Nathan Drake »

Da5id wrote: Mon Jun 14, 2021 11:46 am
Thesaints wrote: Mon Jun 14, 2021 11:42 am If you have no idea about how much return you might get, how do you decide how much stocks to buy ?

Here’s another metaphor for you:
“Tomorrow’s chance of rain: 50%”
Is it a useless forecast ? It doesn’t tell you whether it will rain or not; useless, right ?
Compare to “Tomorrow’s chance of rain: 90%”.
Maybe now you can see that there is an information value in getting the first forecast instead of the second.
Knowing something about the future is always better than knowing nothing.
The weather analogy is not particularly on point. You can much more easily act on a weather forecast in a useful way.

Historically, funds which attempted to tactically allocate based on leading indicators like P/E, including at Vanguard, have failed and closed. Individuals who have tried to time the market based on those indicators have likewise trailed the market. How, precisely, do you propose acting on these P/E ratios today? If there is not a specific action that one might take, what is the point?
If there’s a large skew between P/E relative to historical norms it may make sense to start investing new money into those undervalued areas (value, exUS, or EM)

Sure, you can’t time the shifts, but at extreme levels of spreads the odds are in your favor for a mean reversion
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Re: Worried About PE Ratios?

Post by Da5id »

Nathan Drake wrote: Mon Jun 14, 2021 5:17 pm If there’s a large skew between P/E relative to historical norms it may make sense to start investing new money into those undervalued areas (value, exUS, or EM)

Sure, you can’t time the shifts, but at extreme levels of spreads the odds are in your favor for a mean reversion
You says "may make sense" and "odds are in your favor". I'm highly dubious. While one might come up with a backtested strategy to do this, I'd personally have no faith that timing based actions would work prospectively. And without details, I don't even know what your comment means. If one comes up with a precise definition of "extreme" and a precise plan I suppose it would be something to discuss.
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Re: Worried About PE Ratios?

Post by Nathan Drake »

Da5id wrote: Mon Jun 14, 2021 6:02 pm
Nathan Drake wrote: Mon Jun 14, 2021 5:17 pm If there’s a large skew between P/E relative to historical norms it may make sense to start investing new money into those undervalued areas (value, exUS, or EM)

Sure, you can’t time the shifts, but at extreme levels of spreads the odds are in your favor for a mean reversion
You says "may make sense" and "odds are in your favor". I'm highly dubious. While one might come up with a backtested strategy to do this, I'd personally have no faith that timing based actions would work prospectively. And without details, I don't even know what your comment means. If one comes up with a precise definition of "extreme" and a precise plan I suppose it would be something to discuss.

Remain highly dubious if you wish.

The spreads for P/E for Intl vs US were extremely high in the late 80s, corresponding to now a multi-decade outperformance of US ending today with a similar spread in the opposite direction.

I don't think there's any backtest that will adequately prove this out in the short term, but I'm a long-term investor and I do believe valuations absolutely matter, and they matter more strongly the more the spreads get to extreme levels such as now.

Some people wish to put their fingers in their ears and pretend like valuations never matter and you can't use them to make tactical tilts. Those investors would have done poorly had they not heeded some warnings during periods of high exuberance.
Da5id
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Re: Worried About PE Ratios?

Post by Da5id »

Nathan Drake wrote: Mon Jun 14, 2021 6:27 pm Some people wish to put their fingers in their ears and pretend like valuations never matter and you can't use them to make tactical tilts. Those investors would have done poorly had they not heeded some warnings during periods of high exuberance.
I believe that insulting/belittling language "put their fingers in their ears and pretend" isn't called for.

I also think that vague advice unsupported by details is not very useful or actionable. I don't say that valuations aren't meaningful. I just say that there isn't a clear way to make them actionable. No need for the tone, IMO.
Nathan Drake
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Re: Worried About PE Ratios?

Post by Nathan Drake »

Da5id wrote: Mon Jun 14, 2021 6:33 pm
Nathan Drake wrote: Mon Jun 14, 2021 6:27 pm Some people wish to put their fingers in their ears and pretend like valuations never matter and you can't use them to make tactical tilts. Those investors would have done poorly had they not heeded some warnings during periods of high exuberance.
I believe that insulting/belittling language "put their fingers in their ears and pretend" isn't called for.

I also think that vague advice unsupported by details is not very useful or actionable. I don't say that valuations aren't meaningful. I just say that there isn't a clear way to make them actionable. No need for the tone, IMO.
There is nothing insulting or belittling about it. The data clearly shows that we are at very high levels of exuberance right now. It can go even higher. However, those wishing to protect themselves from long-term draw-downs probably need to make sure that they are adequately diversified in areas that aren't as exuberant, and even a slight tilt could prove very useful over the coming decade. This isn't the first time we've seen markets get this heated, and it has never ended well over long periods of time.
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Re: Worried About PE Ratios?

Post by Marseille07 »

Nathan Drake wrote: Mon Jun 14, 2021 6:40 pm There is nothing insulting or belittling about it. The data clearly shows that we are at very high levels of exuberance right now. It can go even higher. However, those wishing to protect themselves from long-term draw-downs probably need to make sure that they are adequately diversified in areas that aren't as exuberant, and even a slight tilt could prove very useful over the coming decade. This isn't the first time we've seen markets get this heated, and it has never ended well over long periods of time.
P/E can be misleading. I think other posters already tried to point it out.
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Re: Worried About PE Ratios?

Post by Da5id »

Nathan Drake wrote: Mon Jun 14, 2021 6:40 pm
Da5id wrote: Mon Jun 14, 2021 6:33 pm
Nathan Drake wrote: Mon Jun 14, 2021 6:27 pm Some people wish to put their fingers in their ears and pretend like valuations never matter and you can't use them to make tactical tilts. Those investors would have done poorly had they not heeded some warnings during periods of high exuberance.
I believe that insulting/belittling language "put their fingers in their ears and pretend" isn't called for.

I also think that vague advice unsupported by details is not very useful or actionable. I don't say that valuations aren't meaningful. I just say that there isn't a clear way to make them actionable. No need for the tone, IMO.
There is nothing insulting or belittling about it. The data clearly shows that we are at very high levels of exuberance right now. It can go even higher. However, those wishing to protect themselves from long-term draw-downs probably need to make sure that they are adequately diversified in areas that aren't as exuberant, and even a slight tilt could prove very useful over the coming decade. This isn't the first time we've seen markets get this heated, and it has never ended well over long periods of time.
Come now, if you don't feel that "Some people wish to put their fingers in their ears and pretend like..." isn't belittling then meh.

And again, it isn't at ALL obvious or actionable. I believe you are not at all correct in that. Have you any speculation as why all-in-one funds run by say Vanguard aren't changing their allocation despite Vanguard's forecasts about better returns for international in the coming decade? Given how clearly right it is according to you to do so? Did they not get the memo? Or perhaps it is because the history of tactically and dynamically tilting isn't good. You may "pretend like" you can tactically tilt and know when to adjust your holdings and by how much, but historically that doesn't seem a useful thing to do. IMO of course.

I own 40% international. But I own that regardless of current valuations, and intend to own it still when international valuations are higher and US lower whenever that appears. I believe the impulse to dynamically tilt and otherwise tinker is not a good one for investors in the long term...
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Re: Worried About PE Ratios?

Post by Nathan Drake »

Da5id wrote: Mon Jun 14, 2021 6:47 pm
Nathan Drake wrote: Mon Jun 14, 2021 6:40 pm
Da5id wrote: Mon Jun 14, 2021 6:33 pm
Nathan Drake wrote: Mon Jun 14, 2021 6:27 pm Some people wish to put their fingers in their ears and pretend like valuations never matter and you can't use them to make tactical tilts. Those investors would have done poorly had they not heeded some warnings during periods of high exuberance.
I believe that insulting/belittling language "put their fingers in their ears and pretend" isn't called for.

I also think that vague advice unsupported by details is not very useful or actionable. I don't say that valuations aren't meaningful. I just say that there isn't a clear way to make them actionable. No need for the tone, IMO.
There is nothing insulting or belittling about it. The data clearly shows that we are at very high levels of exuberance right now. It can go even higher. However, those wishing to protect themselves from long-term draw-downs probably need to make sure that they are adequately diversified in areas that aren't as exuberant, and even a slight tilt could prove very useful over the coming decade. This isn't the first time we've seen markets get this heated, and it has never ended well over long periods of time.
Come now, if you don't feel that "Some people wish to put their fingers in their ears and pretend like..." isn't belittling then meh.

And again, it isn't at ALL obvious or actionable. I believe you are not at all correct in that. Have you any speculation as why all-in-one funds run by say Vanguard aren't changing their allocation despite Vanguard's forecasts about better returns for international in the coming decade? Given how clearly right it is according to you to do so? Did they not get the memo? Or perhaps it is because the history of tactically and dynamically tilting isn't good. You may "pretend like" you can tactically tilt and know when to adjust your holdings and by how much, but historically that doesn't seem a useful thing to do. IMO of course.

I own 40% international. But I own that regardless of current valuations, and intend to own it still when international valuations are higher and US lower whenever that appears. I believe the impulse to dynamically tilt and otherwise tinker is not a good one for investors in the long term...
It could be actionable. That's a personal decision. I have decided to sell a significant portion of my exposure to US TSM into other assets that appear to me to have more attractive valuations. I do think if you have the standard baseline level of diversification as suggested by Vanguard, you will also be fine. I do not think that a 60/40 US Only investors will do well in the coming decade. This is a fairly popular portfolio.

Vanguard of course has to act in a more timid manner when it comes to constructing a portfolio. That's fine. But I choose to be more aggressive on the basis of investing in assets with higher expected returns.
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Re: Worried About PE Ratios?

Post by UpperNwGuy »

My IPS says to ignore valuations, so that's what I do. It saves me a lot of unnecessary worry.
Da5id
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Re: Worried About PE Ratios?

Post by Da5id »

UpperNwGuy wrote: Mon Jun 14, 2021 7:11 pm My IPS says to ignore valuations, so that's what I do. It saves me a lot of unnecessary worry.
Same. And in fact, I think that is really a good choice. EVEN if it were possible to eke out slightly higher returns if one did everything perfectly in response to valuations (which I don't believe to be true), it would introduce considerable complexity to the IPS and considerable opportunity for behavioral error. The IPS would presumably have to cover valuations of many things (US, Int'l, EM, maybe interest rates, maybe subsections of markets like SCV, etc), and how to allocate assets with a wide array relative valuations of those asset classes. If the IPS is not unambiguously nailed down in advance, that would be even worse in terms of tinkering and introducing "feelings" into the inevitable issues with market timing. IMO for market timing "The only winning move is not to play".
Nathan Drake
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Re: Worried About PE Ratios?

Post by Nathan Drake »

Da5id wrote: Mon Jun 14, 2021 7:17 pm
UpperNwGuy wrote: Mon Jun 14, 2021 7:11 pm My IPS says to ignore valuations, so that's what I do. It saves me a lot of unnecessary worry.
Same. And in fact, I think that is really a good choice. EVEN if it were possible to eke out slightly higher returns if one did everything perfectly in response to valuations (which I don't believe to be true), it would introduce considerable complexity to the IPS and considerable opportunity for behavioral error. The IPS would presumably have to cover valuations of many things (US, Int'l, EM, maybe interest rates, maybe subsections of markets like SCV, etc), and how to allocate assets with a wide array relative valuations of those asset classes. If the IPS is not unambiguously nailed down in advance, that would be even worse in terms of tinkering and introducing "feelings" into the inevitable issues with market timing. IMO for market timing "The only winning move is not to play".
You can still tactically tilt without having to change or rebalance regularly or worry about valuations much.

They aren’t going to change overnight. My tactical tilts won’t need much tinkering at all, it’s on autopilot.
Da5id
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Re: Worried About PE Ratios?

Post by Da5id »

Nathan Drake wrote: Mon Jun 14, 2021 7:21 pm
Da5id wrote: Mon Jun 14, 2021 7:17 pm
UpperNwGuy wrote: Mon Jun 14, 2021 7:11 pm My IPS says to ignore valuations, so that's what I do. It saves me a lot of unnecessary worry.
Same. And in fact, I think that is really a good choice. EVEN if it were possible to eke out slightly higher returns if one did everything perfectly in response to valuations (which I don't believe to be true), it would introduce considerable complexity to the IPS and considerable opportunity for behavioral error. The IPS would presumably have to cover valuations of many things (US, Int'l, EM, maybe interest rates, maybe subsections of markets like SCV, etc), and how to allocate assets with a wide array relative valuations of those asset classes. If the IPS is not unambiguously nailed down in advance, that would be even worse in terms of tinkering and introducing "feelings" into the inevitable issues with market timing. IMO for market timing "The only winning move is not to play".
You can still tactically tilt without having to change or rebalance regularly or worry about valuations much.

They aren’t going to change overnight. My tactical tilts won’t need much tinkering at all, it’s on autopilot.
You say so. I think it requires explicit and detailed entry and exit conditions and monitoring for those. Otherwise it is seat of the pants.
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Re: Worried About PE Ratios?

Post by Nathan Drake »

Da5id wrote: Mon Jun 14, 2021 7:22 pm
Nathan Drake wrote: Mon Jun 14, 2021 7:21 pm
Da5id wrote: Mon Jun 14, 2021 7:17 pm
UpperNwGuy wrote: Mon Jun 14, 2021 7:11 pm My IPS says to ignore valuations, so that's what I do. It saves me a lot of unnecessary worry.
Same. And in fact, I think that is really a good choice. EVEN if it were possible to eke out slightly higher returns if one did everything perfectly in response to valuations (which I don't believe to be true), it would introduce considerable complexity to the IPS and considerable opportunity for behavioral error. The IPS would presumably have to cover valuations of many things (US, Int'l, EM, maybe interest rates, maybe subsections of markets like SCV, etc), and how to allocate assets with a wide array relative valuations of those asset classes. If the IPS is not unambiguously nailed down in advance, that would be even worse in terms of tinkering and introducing "feelings" into the inevitable issues with market timing. IMO for market timing "The only winning move is not to play".
You can still tactically tilt without having to change or rebalance regularly or worry about valuations much.

They aren’t going to change overnight. My tactical tilts won’t need much tinkering at all, it’s on autopilot.
You say so. I think it requires explicit and detailed entry and exit conditions and monitoring for those. Otherwise it is seat of the pants.
It’s the same concept as fundamental indexing and diversifying across factors. You will naturally be less exposed to areas that get overvalued, since by their very nature won’t overlap all at once
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Re: Worried About PE Ratios?

Post by HomerJ »

Nathan Drake wrote: Mon Jun 14, 2021 7:04 pmI have decided to sell a significant portion of my exposure to US TSM into other assets that appear to me to have more attractive valuations.
You just made this decision recently?

What changed?

Why didn't you go deeper into International a few years ago?

Are you going for individual countries? Like Russia with it's extremely low CAPE?
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
Nathan Drake
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Re: Worried About PE Ratios?

Post by Nathan Drake »

HomerJ wrote: Mon Jun 14, 2021 7:36 pm
Nathan Drake wrote: Mon Jun 14, 2021 7:04 pmI have decided to sell a significant portion of my exposure to US TSM into other assets that appear to me to have more attractive valuations.
You just made this decision recently?

What changed?

Why didn't you go deeper into International a few years ago?

Are you going for individual countries? Like Russia with it's extremely low CAPE?
I've always had a significant portion of international - 50% or so. I'm just now even more tilted to international (60%) with a higher portion allocated to EM. The only recent change I made was when I read about factor investing and decided to sell half my US TSM and go into US SCV for factor exposure (which I never had previously).

I don't do individual countries because I believe in broad based investing - I like the idea of investing in China just as much as I do Europe and Japan but for different reasons.
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Re: Worried About PE Ratios?

Post by Da5id »

Nathan Drake wrote: Mon Jun 14, 2021 7:25 pm
Da5id wrote: Mon Jun 14, 2021 7:22 pm You say so. I think it requires explicit and detailed entry and exit conditions and monitoring for those. Otherwise it is seat of the pants.
It’s the same concept as fundamental indexing and diversifying across factors. You will naturally be less exposed to areas that get overvalued, since by their very nature won’t overlap all at once
I have no idea what you are talking about. You don't seem to be giving details, and I don't know what you mean. I had the sense that you were dynamically changing your allocations in response to valuations, and that you felt it was foolish to do otherwise. Now I'm gathering that you don't do that, but I have no idea what you are doing. Having a fixed allocation will also cause balancing from better performing to worse performing asset classes, if that is all you mean great. I do that by holding a fixed percentage of US vs Int'l. Your very vagueness makes your point murky.
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Re: Worried About PE Ratios?

Post by Nathan Drake »

Da5id wrote: Mon Jun 14, 2021 7:44 pm
Nathan Drake wrote: Mon Jun 14, 2021 7:25 pm
Da5id wrote: Mon Jun 14, 2021 7:22 pm You say so. I think it requires explicit and detailed entry and exit conditions and monitoring for those. Otherwise it is seat of the pants.
It’s the same concept as fundamental indexing and diversifying across factors. You will naturally be less exposed to areas that get overvalued, since by their very nature won’t overlap all at once
I have no idea what you are talking about. You don't seem to be giving details, and I don't know what you mean. I had the sense that you were dynamically changing your allocations in response to valuations, and that you felt it was foolish to do otherwise. Now I'm gathering that you don't do that, but I have no idea what you are doing. Having a fixed allocation will also cause balancing from better performing to worse performing asset classes, if that is all you mean great. I do that by holding a fixed percentage of US vs Int'l. Your very vagueness makes your point murky.
Instead of investing based purely on market cap, I split my portfolio into us vs intl and then further into small cap value on the US and EM for intl

The idea is to diversify across factors/regions of the market that have similar long term expected returns, or even a premium above market beta, but where they tend to not be as highly correlated over longer periods of time
Da5id
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Re: Worried About PE Ratios?

Post by Da5id »

Nathan Drake wrote: Mon Jun 14, 2021 8:02 pm
Da5id wrote: Mon Jun 14, 2021 7:44 pm
Nathan Drake wrote: Mon Jun 14, 2021 7:25 pm
Da5id wrote: Mon Jun 14, 2021 7:22 pm You say so. I think it requires explicit and detailed entry and exit conditions and monitoring for those. Otherwise it is seat of the pants.
It’s the same concept as fundamental indexing and diversifying across factors. You will naturally be less exposed to areas that get overvalued, since by their very nature won’t overlap all at once
I have no idea what you are talking about. You don't seem to be giving details, and I don't know what you mean. I had the sense that you were dynamically changing your allocations in response to valuations, and that you felt it was foolish to do otherwise. Now I'm gathering that you don't do that, but I have no idea what you are doing. Having a fixed allocation will also cause balancing from better performing to worse performing asset classes, if that is all you mean great. I do that by holding a fixed percentage of US vs Int'l. Your very vagueness makes your point murky.
Instead of investing based purely on market cap, I split my portfolio into us vs intl and then further into small cap value on the US and EM for intl

The idea is to diversify across factors/regions of the market that have similar long term expected returns, or even a premium above market beta, but where they tend to not be as highly correlated over longer periods of time
I've not drunk the factor Kool-Aid myself, but sure it is a reasonable strategy for those who can stick with the underperformance over potentially *very* long periods waiting for the premia to appear. But it doesn't IMO relate to your point above that "Some people wish to put their fingers in their ears and pretend like valuations never matter and you can't use them to make tactical tilts".

One can have a fixed allocation that includes SCV, EM, bonds, etc. That doesn't imply tactical tilts in response to valuations. Again, you are not giving details about how you specifically use those "tactical tilts". And I'm still not clear on why that doesn't require something like a detailed IPS describing how those tilts are done in response to valuations or shooting from the hip based on feelings. So whatever I guess, you don't have to explain yourself. But if you are going to throw stones at those who are too obtuse to use valuations to make tactical tilts a better explanation would seem to me to be warranted.
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Re: Worried About PE Ratios?

Post by Nathan Drake »

Da5id wrote: Mon Jun 14, 2021 8:20 pm
Nathan Drake wrote: Mon Jun 14, 2021 8:02 pm
Da5id wrote: Mon Jun 14, 2021 7:44 pm
Nathan Drake wrote: Mon Jun 14, 2021 7:25 pm
Da5id wrote: Mon Jun 14, 2021 7:22 pm You say so. I think it requires explicit and detailed entry and exit conditions and monitoring for those. Otherwise it is seat of the pants.
It’s the same concept as fundamental indexing and diversifying across factors. You will naturally be less exposed to areas that get overvalued, since by their very nature won’t overlap all at once
I have no idea what you are talking about. You don't seem to be giving details, and I don't know what you mean. I had the sense that you were dynamically changing your allocations in response to valuations, and that you felt it was foolish to do otherwise. Now I'm gathering that you don't do that, but I have no idea what you are doing. Having a fixed allocation will also cause balancing from better performing to worse performing asset classes, if that is all you mean great. I do that by holding a fixed percentage of US vs Int'l. Your very vagueness makes your point murky.
Instead of investing based purely on market cap, I split my portfolio into us vs intl and then further into small cap value on the US and EM for intl

The idea is to diversify across factors/regions of the market that have similar long term expected returns, or even a premium above market beta, but where they tend to not be as highly correlated over longer periods of time
I've not drunk the factor Kool-Aid myself, but sure it is a reasonable strategy for those who can stick with the underperformance over potentially *very* long periods waiting for the premia to appear. But it doesn't IMO relate to your point above that "Some people wish to put their fingers in their ears and pretend like valuations never matter and you can't use them to make tactical tilts".

One can have a fixed allocation that includes SCV, EM, bonds, etc. That doesn't imply tactical tilts in response to valuations. Again, you are not giving details about how you specifically use those "tactical tilts". And I'm still not clear on why that doesn't require something like a detailed IPS describing how those tilts are done in response to valuations or shooting from the hip based on feelings. So whatever I guess, you don't have to explain yourself. But if you are going to throw stones at those who are too obtuse to use valuations to make tactical tilts a better explanation would seem to me to be warranted.
My comment was directed at those that are 100% exposed to US only, not for a diversified portfolio.

Some who only invest in US equities are exposing themselves to a high level of risk that they are not aware of due to the recent returns that asset class has enjoyed

I’d rather only have a small part of my portfolio underperform than the chance 100% of it will over a long period of time.
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Re: Worried About PE Ratios?

Post by Da5id »

Nathan Drake wrote: Mon Jun 14, 2021 8:32 pm My comment was directed at those that are 100% exposed to US only, not for a diversified portfolio.

Some who only invest in US equities are exposing themselves to a high level of risk that they are not aware of due to the recent returns that asset class has enjoyed

I’d rather only have a small part of my portfolio underperform than the chance 100% of it will over a long period of time.
I guess I've not understood anything you've said to involve "tactical tilts". I believe that asset allocation is a long term strategy, whether it is tilted or not. I think it should have international personally. But when I think about a "tactical tilt" which takes valuations into consideration it would be something like "when US TSM hits a Shiller PE 10 above 30 change allocation in response to foo, when it hits 40 change to quux". Tactics change in response to market events, long term strategy need not be responsive. If US has higher multiples I'll generally shift money towards international, but only by virtue of needing to rebalance to fixed percentages when my bands are hit. I'm not a fond of tactical on the fly adjustments to allocation which I took you to be endorsing.
Nathan Drake
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Re: Worried About PE Ratios?

Post by Nathan Drake »

Da5id wrote: Mon Jun 14, 2021 8:44 pm
Nathan Drake wrote: Mon Jun 14, 2021 8:32 pm My comment was directed at those that are 100% exposed to US only, not for a diversified portfolio.

Some who only invest in US equities are exposing themselves to a high level of risk that they are not aware of due to the recent returns that asset class has enjoyed

I’d rather only have a small part of my portfolio underperform than the chance 100% of it will over a long period of time.
I guess I've not understood anything you've said to involve "tactical tilts". I believe that asset allocation is a long term strategy, whether it is tilted or not. I think it should have international personally. But when I think about a "tactical tilt" which takes valuations into consideration it would be something like "when US TSM hits a Shiller PE 10 above 30 change allocation in response to foo, when it hits 40 change to quux". Tactics change in response to market events, long term strategy need not be responsive. If US has higher multiples I'll generally shift money towards international, but only by virtue of needing to rebalance to fixed percentages when my bands are hit. I'm not a fond of tactical on the fly adjustments to allocation which I took you to be endorsing.
That’s true, rebalancing would be the more appropriate term, my true tilts are fairly small, as my strategy is basically 50:50 US vs exUS but I’ve let the rebalancing drift a bit higher which I’m OK with
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Re: Worried About PE Ratios?

Post by Lee_WSP »

Chapter 2 of common sense on mutual funds covers this. There actually is a bogle approach, but bogle heads has not embraced it.
MathWizard
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Re: Worried About PE Ratios?

Post by MathWizard »

PE1 ratios did indeed peak above 100 in the May/June 2009 time frame you refer to.

The PE10 however was in the 16 to 16.36 range in the same time frame, though I had already pushed all in(100% stock) in March 2009, when PE10 was in the 13's.

In a recession, even though stock prices drop, earnings drop faster than the stock prices (likely due to investors being unwilling to lock in a large loss). This means PE1 and PE10 will diverge.
The inflation adjusted earnings will not be as affected by a single years loss of earnings, and so will drop slower than stock prices, resulting in a lower PE10 even while PE1 is increasing.

So yes, it can be a good time to buy when PE1 is high, but I would be cautious if PE10 is also high .
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Re: Worried About PE Ratios?

Post by Thesaints »

HomerJ wrote: Mon Jun 14, 2021 2:32 pm Let's do a concrete example.

Say I'm currently 50/50 with $1.5 million, and I'm shooting to retire with $2 million.

I'm saving $30k a year, and I'm hoping to retire in 5-10 years.

Looks like my required return on my entire portfolio is:

5 years: saved $150k, need portfolio to grow 23% (4.3% a year)
6 years: saved $180k, need portfolio to grow 21% (3.3% a year)
7 years: saved $210k, need portfolio to grow 19% (2.5% a year)
8 years: saved $240k, need portfolio to grow 17% (2.0% a year)
9 years: saved $270k, need portfolio to grow 15% (1.6% a year)
10 years: saved $300k, need portfolio to grow 13% (1.2% a year)

Someone tells me stock expected returns are now 4% (-4% to 12% range) instead of 6% (-2% to 14% range), how should I change my asset allocation?
Assuming that you also want to stick to 50/50 allocation while in retirement:
- To reach 2 millions in 5 years you need an average annualized return of 4.1%
- To do the same in 10 years you need instead 2%.

If someone tells you that the expected return from stocks is 4%, you should be 100% in stocks in order to expect to retire in 5 year. Of course that means you are exposed also to bad outcomes in full. The worst of them being be left with 1.36 M at the end of the 5 years, although it would be quite improbable.
If you had a little time, it would not cost much effort to hypothesize a probability distribution for market returns and estimate a probability distribution for your capital after 5 years.
Depending on how much bonds yield, you could perhaps accept a reduced probability of hitting 2 M, but with less chances of losing substantial amounts.

In the 10-year scenario things are quite different. Even assuming zero return from bonds you could keep your 50/50 allocation and expect to reach your target. Here to you could swap chances of hitting the target with chances of not being left with less than a given amount.

But what if instead expected return were 6% ? Then 50/50 would be perhaps an allocation too adventurous. You could still expect to hit your target with a 33/77 (again, in the hypothesis of zero return from bonds). On the other hand, you might want to be too adventurous and accept higher chances of losing money in exchange of more certainty of reaching 2 M and also higher chances of making more than 2 M.

As you can see, being able to tell what the range of returns from the market is likely to be is a great advantage in selecting the optimal allocation, although I recognize that perhaps a majority of bogleheaders pick theirs based on hunches, quasi-religious considerations, and the likes.
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