My research had previously shown that switching (stock allocations) is superior when starting
from times of high valuations, but not when starting at times of normal and bargain level valuations.
Price drops that are deep enough and lasting enough to cause a problem only occur starting
from times of high valuations.
My research has shown that switching (stock allocations) is superior when starting
from times of high valuations, but not when starting at times of normal and bargain level valuations.
Not exact matches
If not switching allocations, we can still do better by being away
from stocks in
times of unreasonably
high valuations.
My view is that it is best to maintain a moderate position in stocks at
times of high valuation and that it is also best not to go too extreme on the
high side in one's stock allocation at
times of low
valuation (because in the short - term stocks may drop sharply even
from a starting point at which
valuations are low).
Stocks are extremely risky a
times of high valuations (like the
time - period
from January 1996 through September 2008) and not at all risky at
times of moderate or low
valuations.
In a whipsaw period like that which we have had
from 1998 to the present, it makes a lot
of difference, because many investments during the bubble era put fresh capital into the market at a
time of high valuations, with buybacks predominating as
valuations troughed.
He fails to distinguish the risk that comes
from retiring at a
time of high valuations and the risk that comes
from experiencing a poor returns sequence.
It is superstitious and wishful thinking to assume that the market will perform strongly simply because
of two Discount Rate cuts, despite elevated
valuations,
high levels
of bullishness, absence
of a recession, and an S&P 500 index that is only about 2 %
from its all -
time high.
A
Valuation - Informed Indexer would say that Buy - and - Hold performed well
from 1982 through 1996 because stock prices were shockingly low at the start
of that
time - period and did not become dangerously
high until the end
of it.
From the
high costs
of business
valuation to lost work
time, divorce proceedings can dramatically affect the viability
of a small business.
With stock
valuations relatively
high now, this suggests starting retirement with a low allocation to stocks — as low as 30 percent — and taking withdrawals
from the fixed - income part
of the portfolio so that, in effect, you'll take on a
higher equity allocation over
time, he says.