Shiller a long-term semi bull ?

[(former)FormerSanDiegan]

[quote=cooprider]Assuming of course the economy doesn’t implode in the next 2 years.[/quote]

Actually, Shiller predicted the housing led-slowdown and economic implosion, but still says this.

[davelj]

[quote=FormerSanDiegan]Never thought I would see this day. Shiller claims stocks are roughly at fair value from a long-term earnings point of view. Now, he expects significant downside, but …

“If you buy now and wake up in 10 years, you’ll probably get a return around the historic average,” said Yale economist Robert Shiller.
[/quote]

Yep, this makes sense. It mirrors what Jeremy Grantham has been saying recently.

If you start with a 3% dividend yield, normalize earnings and get 5% annualized earnings growth with a normalized P/E of 14-15, you wake up with an 8% annualized return on stocks over the next decade. This compares to the 10-Year Treasury yield of 4%. 400 bps of equity risk premium is as good as we’ve seen in 20 years.

I agree that stocks will head lower at some point, but if you’re looking out long term, the risk-return trade-off for stocks versus bonds is pretty good right now. That’s just the math speaking.

[davelj]

[quote=FormerSanDiegan]Never thought I would see this day. Shiller claims stocks are roughly at fair value from a long-term earnings point of view. Now, he expects significant downside, but …

“If you buy now and wake up in 10 years, you’ll probably get a return around the historic average,” said Yale economist Robert Shiller.
[/quote]

Yep, this makes sense. It mirrors what Jeremy Grantham has been saying recently.

If you start with a 3% dividend yield, normalize earnings and get 5% annualized earnings growth with a normalized P/E of 14-15, you wake up with an 8% annualized return on stocks over the next decade. This compares to the 10-Year Treasury yield of 4%. 400 bps of equity risk premium is as good as we’ve seen in 20 years.

I agree that stocks will head lower at some point, but if you’re looking out long term, the risk-return trade-off for stocks versus bonds is pretty good right now. That’s just the math speaking.

[davelj]

[quote=FormerSanDiegan]Never thought I would see this day. Shiller claims stocks are roughly at fair value from a long-term earnings point of view. Now, he expects significant downside, but …

“If you buy now and wake up in 10 years, you’ll probably get a return around the historic average,” said Yale economist Robert Shiller.
[/quote]

Yep, this makes sense. It mirrors what Jeremy Grantham has been saying recently.

If you start with a 3% dividend yield, normalize earnings and get 5% annualized earnings growth with a normalized P/E of 14-15, you wake up with an 8% annualized return on stocks over the next decade. This compares to the 10-Year Treasury yield of 4%. 400 bps of equity risk premium is as good as we’ve seen in 20 years.

I agree that stocks will head lower at some point, but if you’re looking out long term, the risk-return trade-off for stocks versus bonds is pretty good right now. That’s just the math speaking.

[davelj]

[quote=FormerSanDiegan]Never thought I would see this day. Shiller claims stocks are roughly at fair value from a long-term earnings point of view. Now, he expects significant downside, but …

“If you buy now and wake up in 10 years, you’ll probably get a return around the historic average,” said Yale economist Robert Shiller.
[/quote]

Yep, this makes sense. It mirrors what Jeremy Grantham has been saying recently.

If you start with a 3% dividend yield, normalize earnings and get 5% annualized earnings growth with a normalized P/E of 14-15, you wake up with an 8% annualized return on stocks over the next decade. This compares to the 10-Year Treasury yield of 4%. 400 bps of equity risk premium is as good as we’ve seen in 20 years.

I agree that stocks will head lower at some point, but if you’re looking out long term, the risk-return trade-off for stocks versus bonds is pretty good right now. That’s just the math speaking.

[davelj]

[quote=FormerSanDiegan]Never thought I would see this day. Shiller claims stocks are roughly at fair value from a long-term earnings point of view. Now, he expects significant downside, but …

“If you buy now and wake up in 10 years, you’ll probably get a return around the historic average,” said Yale economist Robert Shiller.
[/quote]

Yep, this makes sense. It mirrors what Jeremy Grantham has been saying recently.

If you start with a 3% dividend yield, normalize earnings and get 5% annualized earnings growth with a normalized P/E of 14-15, you wake up with an 8% annualized return on stocks over the next decade. This compares to the 10-Year Treasury yield of 4%. 400 bps of equity risk premium is as good as we’ve seen in 20 years.

I agree that stocks will head lower at some point, but if you’re looking out long term, the risk-return trade-off for stocks versus bonds is pretty good right now. That’s just the math speaking.

[peterb]

10 years is a long time to have one of the biggest investments one ever makes just sit there or go down. Then throw in that it “will probably” have risen…
I think Someone got to Shiller and told him to “cool it with the reality stuff”.

[peterb]

10 years is a long time to have one of the biggest investments one ever makes just sit there or go down. Then throw in that it “will probably” have risen…
I think Someone got to Shiller and told him to “cool it with the reality stuff”.

[peterb]

10 years is a long time to have one of the biggest investments one ever makes just sit there or go down. Then throw in that it “will probably” have risen…
I think Someone got to Shiller and told him to “cool it with the reality stuff”.

[peterb]

10 years is a long time to have one of the biggest investments one ever makes just sit there or go down. Then throw in that it “will probably” have risen…
I think Someone got to Shiller and told him to “cool it with the reality stuff”.

[peterb]

10 years is a long time to have one of the biggest investments one ever makes just sit there or go down. Then throw in that it “will probably” have risen…
I think Someone got to Shiller and told him to “cool it with the reality stuff”.

[NotCranky]

I think Someone got to Shiller and told him to “cool it with the reality stuff”.

“Summing it up, the market as a whole is priced for good long-term returns, but it could end up priced for great returns down the road. Meanwhile, certain sectors within the market are priced for great returns already.”

Rich Toscano
http://www.pcasd.com/us_stock_market_now_priced_for_good_returns

I think Rich got the memo too, peterb.

[NotCranky]

I think Someone got to Shiller and told him to “cool it with the reality stuff”.

“Summing it up, the market as a whole is priced for good long-term returns, but it could end up priced for great returns down the road. Meanwhile, certain sectors within the market are priced for great returns already.”

Rich Toscano
http://www.pcasd.com/us_stock_market_now_priced_for_good_returns

I think Rich got the memo too, peterb.

[NotCranky]

I think Someone got to Shiller and told him to “cool it with the reality stuff”.

“Summing it up, the market as a whole is priced for good long-term returns, but it could end up priced for great returns down the road. Meanwhile, certain sectors within the market are priced for great returns already.”

Rich Toscano
http://www.pcasd.com/us_stock_market_now_priced_for_good_returns

I think Rich got the memo too, peterb.

[NotCranky]

I think Someone got to Shiller and told him to “cool it with the reality stuff”.

“Summing it up, the market as a whole is priced for good long-term returns, but it could end up priced for great returns down the road. Meanwhile, certain sectors within the market are priced for great returns already.”

Rich Toscano
http://www.pcasd.com/us_stock_market_now_priced_for_good_returns

I think Rich got the memo too, peterb.

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