Down goes the Dow

But the fool never considers the quality of earnings or the price.

The "experts" make their living telling you what to buy and sell and when.

In other words, timing the market.

But warn you to not time the market.

A form of cognitive dissonance.

Truey wrote:

But the fool never considers the quality of earnings or the price.

It's good that you recognize your shortcomings. Maybe someday you will learn.

Sure Yutre.

Yutre wrote:

Truey wrote:

But the fool never considers the quality of earnings or the price.

It's good that you recognize your shortcomings. Maybe someday you will learn.

Try to keep up wrote:

Rice Soup wrote:

Passive index investing is the latest fad.

It's been around for decades.

Exactly.

Investment Advisor wrote:

Try to keep up wrote:

It's been around for decades.

Exactly.

Passive investing has become a mania for late to the party retail investors.

Everyone knows timing the market is for suckers. You sound like a real ignoramous.

Retail investors think that passive investing is the answer.

Magic thinking.

There's nothing "magic" about it. Any rational investor will consider such things as performance and fees which make passive investing a winner most of the time for someone with a reasonable time frame.

Anyone pushing for market timing is either a fool, working for an investment company, or both.

In this cycle index funds feature overweight highly valued equities. Index funds are also the favorite vehicle for institutional trading. Retail investors increasingly provide liquidity for institutional trades.

Being invested in equities has made people a lot of money in this cycle.

Most, as in the past, will ride the next wave down.

Some will, some won't. Those who do can take solace that the market will rebound bigger and better than ever before. History teaches us that.

Most investors know little about market history, let alone heed it's warning signs.

Most investors know that the market goes up more than it goes down. Anyway, your arguments are an advertisement for passive investing.

"I’ve also been asked to comment on a recent paper analyzing the Shiller cyclically-adjusted P/E, which proposes an elaborate statistical method to form projections of expected market returns. Specifically, the approach fits an unrestricted 60-parameter vector autoregression, which further embeds a 12-parameter inflation model, ignores the impact of embedded profit margins, and after all that, underperforms the projections that one could obtain simply by using the ratio of nonfinancial market capitalization to corporate gross value added (MarketCap/GVA) with no regressions or fitted parameters whatsoever. I suspect that this description is sufficient to convey my reservations about this particular method. That’s no slight to the researchers. It’s just that we know that the Shiller CAPE, despite the 10-year averaging of earnings, is still sensitive to the embedded profit margin (the denominator of the Shiller P/E divided by S&P 500 revenues), and that accounting for that embedded margin clearly improves the correlation of the CAPE with actual subsequent market returns (See Margins, Multiples and the Iron Law of Valuation), without any need to fit scores of parameters.

On that note, it’s worth noting that the Shiller CAPE reached 30 last week, which places current valuations among the highest 3% of historical observations, on that particular measure. In reality, however, the situation is much more extreme. While some observers take solace in the fact that the CAPE reached a much higher level of 44 at the 2000 bubble peak, that historical comparison ignores the embedded margin. See, at the 2000 peak, the embedded margin of the CAPE was just 5.1%, compared with a historical norm of 5.4%. At present, because of depressed wages and high profit margins in recent years (which are now reversing given a 4.4% unemployment rate), the CAPE quietly embeds a profit margin of 7.2%. Put another way, investors are currently paying a very high multiple of a very high earnings number that quietly benefits from cyclically elevated profit margins. On the basis of normalized profit margins (an adjustment that improves historical reliability), the normalized CAPE would presently be 40. There is only a single week in history where the normalized CAPE was higher. That was the week of March 24, 2000, when the S&P 500 hit its final bubble peak, at a normalized CAPE of 41."

--John Hussman, Weekly Commentary 7/24/2017

Even Hussman admits the CAPE is flawed. Somewhere Igy's head must be exploding.

What is flawed is the beliefs of passive investors. What will explode is their portfolios.

So it's different this time?