doushioukanaa
Recycles dryer sheets
- Joined
- May 9, 2006
- Messages
- 52
I know many of us put a lot of faith in a fixed allocation for a portfolio, but don't you think there is still a place for varying the allocation on the basis of P/E ratio or dividend yield or some other measure of whether stocks are overvalued? I mean, any Japanese investor who had 80% in stocks in 1989 lost their shirt and it still has not recovered.
http://finance.yahoo.com/q/bc?s=^N225&t=my
Is there something inherent to US equities that prevents us from anticipating and reacting to a possible bubble?
Isn't there a case that at some point an investment class can be just too expensive and therefore you should change your weighting in it? And if so, what is the magic number? I mean, the P/E ratio of the S&P 500 came close to 47 back in 2002 well above the mean of 24. Everybody said "this time it's different" because of new technologies, etc. But shouldn't the indicators have told us to become a bit more underweight in US stocks or at least retreat to value stocks?
Fortunately, the P/E ratio of US stocks is not too out of whack, so it's not like we need to contemplate reducing our exposure at this moment, but aren't there conditions where you would really consider it?
http://finance.yahoo.com/q/bc?s=^N225&t=my
Is there something inherent to US equities that prevents us from anticipating and reacting to a possible bubble?
Isn't there a case that at some point an investment class can be just too expensive and therefore you should change your weighting in it? And if so, what is the magic number? I mean, the P/E ratio of the S&P 500 came close to 47 back in 2002 well above the mean of 24. Everybody said "this time it's different" because of new technologies, etc. But shouldn't the indicators have told us to become a bit more underweight in US stocks or at least retreat to value stocks?
Fortunately, the P/E ratio of US stocks is not too out of whack, so it's not like we need to contemplate reducing our exposure at this moment, but aren't there conditions where you would really consider it?