Happy Holidays!

I wouldn’t be bearish in the short term either, but that’s the point of the article! Short term is a gamble though, as others have said on this thread.

Thanks for stopping by.

Agreed, broadly, Rob. People read a lot of patterns into noise, and that’s at the most extreme over short terms. Over longer term the pattern Vs fake pattern argument is more nuanced. I agree clearly it’s better to buy when prices are low than high, and the crucial point you make — that high prices suggest more of a chance of a price drop to come — is of course the one most forgotten by investors who pile in during bull markets.

As ever the argument boils down to what is high in terms of price. I think investing now is unlikely to produce poor returns on a long term view and possibly even a medium term view. I think P/Es look high, but I expect earnings to explode. Others feel we havent’ seen a cyclical low in P/E ratios, and that today’s P/Es are too high to expect much gain from here.

That’s what makes a market!

Whooo hooo!

I’ve spent years studying this questions.

The historical data shows that long-term predictions (properly caveated) always work. But it also shows that you are right to be skeptical of overly precise predictions. We can say today that the odds of a big price drop are far higher than the odds of a big price rise. But we cannot say when the big price drop will come.

And we cannot rule out a big price rise. Even at times of high prices, we can see big price rises. All that we can say is that it is a long odds bet.

I wouldn’t even say that a big price rise is a long odds bet in the short term. My view is that it is not possible to say anything about what is going to happen to stocks over the next year or two. There could be a big turn up or a big turn down or a little turn up or a little turn down.

My take.

Rob