Crooked Hillary wrote:Over 5 years warning of an impending 60% drop seems pretty anti-stock. But what do I know.
You're oversimplifying Igy's clearly expressed views. He is most emphatically not anti-stock, he is anti-all-your-eggs-in-one-(stock)-basket, and in favour of diversifying your assets to suit your individual risk profile. Which is exactly the same as nearly all of us on here think. The difference is in our varying appraisals of risk, and the chances of different outcomes in the market. Here I can distinguish between Igy's views and my own. I'll parrot what I think Igy has conveyed, and he can correct any errors to set the record straight.
Igy is first and foremost a pessimist about the markets, thinking they will surely crash (not correct, crash) in the immediate or near future. It seems to me he may have always held that view most of his adult life, but here I am speculating. For sure he's been warning of the next big one on here - still yet to materialize - for five years. Igy's belief seems to be rooted in (at least) two fundamental principles: first, crashes happen episodically, so it's not a question whether one will happen, only a question of when; second, he feels the markets are grossly overvalued based on P/E and other fundamentals. On the first point, I (and surely everyone with a brain) agrees with him. The markets will crash again someday (maybe this week...). The second point is where we diverge, and he badgers on this point, calling us (me anyway) delusional to believe otherwise. A final difference between Igy and some of us (me anyway) is his belief in technical signals.
My point of view overlaps with Igy's in key areas as noted above. The first place we diverge is on the question of technical signals. These are pure rubbish, useful only in hindsight, and only randomly. I view anyone who believes in (and makes investment decisions on) technical signals as just a little bit "off," if not delusional. Probably delusional isn't the right world. But tending to believe in astrology, alchemy and witchcraft. :-) I write this with a big smile, not intending to insult too harshly (but intending to insult just a little bit...). The second place we diverge is the importance of Shiller's CAPE, or P/E as a fixed measure having constant meaning to value investing over time. Clearly, the CAPE, and simple P/E (or other similar) metrics have had useful meaning over time, hence the consistent success of value investing as an approach. And yet, things change over time. Clearly the intrinsic value of an asset plays some part in defining its current value, but it's never been the only factor, and I'd suggest either its relative weight in setting prices has diminished somewhat, gradually, over time, or the pertinent ratios have gradually adjusted over time. There's no reason to believe that P/E ~ 20 (or whatever) is a universal law that remains fixed over all time. Many things have changed in recent decades, some of them at profound rates (population, productivity, innovation).
Maybe a last point where I think I diverge from Igy (and probably from most others on here) is the value of information in helping predict future prices. I think - quite confidently if perhaps entirely wrongheadedly - that no information other than insider information has any meaningful value in helping a retail investor do better than the market. We are all dart throwing monkeys, or noise traders.
As a last point, given current market levels - below the long term average trend - my opinion is that the markets are far more likely, as of today, to rise over the next several months than they are to drop. Also, Igy's much-warned crash to 1100 and below is - IMNSHO - far less likely today than it was in February.
That'll be $0.02 CAD. :-)