Month: August 2024
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Long term historical equity allocation of investors
In the last two posts we looked at an incredibly accurate set of models for predicting future 10 year annualized returns in the market. These models utilize the equity allocation of investors to predict future long-term returns. When investors allocate a high amount to equity, future long term returns will be diminished, while if they…
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Equity allocation of investors plus anchored value expectations – an even better model of future market returns
Continuing from the last post on my favorite valuation indicator for long term market returns, the equity allocation of investors, I wanted to follow up on this with an even better model for long term market returns. This post will get somewhat technical in data analysis, so be warned. If you look at the post…
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Equity allocation of investors – the best long term market valuation indicator
I wanted to discuss my favorite long term market valuation indicator, which we will call equity allocation of investors. What does that mean? Well, in short, of all the wealth and assets to which people can allocate their capital, it represents the fraction that is allocated to equities. The idea is simple – when investors…
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Avoiding False Precision When Investing
In the last post we talked about the importance of understanding what explicit and implicit assumptions we were making as we attempt to make important investment decisions. I want to focus on one particular erroneous assumption that I see all the time in investing – false precision. Good scientists are always trained to understand precision…