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Old 07-22-2014, 05:30 PM   #21
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Meh.

M... E... H...

Meh.

I've seen papers, good academic stuff, proclaiming the predictive value of Tobin's 'q' before. Ed Tower wrote a good one in 2011. One of his models, including momentum, tried for a near term forecast, predicting an 18% drop in real wealth over the four years from the end of 2010 from investing in the S&P 500 index.

This does not appear to have happened.

Tobin’s Q Versus CAPE Versus CAPER: Predicting Stock Market Returns Using Fundamentals and Momentum by Edward Tower :: SSRN

I'm pretty sure there isn't a single Magic Bullet which will forecast the future with any sort of accuracy. If the stock market were to suddenly become such a deterministic engine, there would be no sane reason for speculation or trading, and stocks would become the sedate, predictable asset for those weary of the thrills and volatility of the bond market.
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Old 07-22-2014, 05:36 PM   #22
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Quote:
Originally Posted by M Paquette View Post
I'm pretty sure there isn't a single Magic Bullet which will forecast the future with any sort of accuracy. If the stock market were to suddenly become such a deterministic engine, there would be no sane reason for speculation or trading, and stocks would become the sedate, predictable asset for those weary of the thrills and volatility of the bond market.
Yep -- if there were no risk in stocks, there would be no reward for assuming the risk in the form of higher expected long-term returns. That seems to be lost on some people who think there's some "free lunch" way to know when it's time to reliably get in and get out.
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