Meb Faber Research – Stock Market and Investing Blog

One of the things that makes me really queasy as a portfolio manager is when people make "adjustments" to historical price data.  The classic example is excluding 1987 from the analysis as an outlier.  Why would you exclude something that actually happened? My friend John Bollinger often says (paraphrase), "all of the interesting information is in the tails".  A friend...

It has only taken a few weeks but I am very happy to announce that enough people have subscribed to The Idea Farm that I am ready to return the blog to free.  More people subscribed , and at a faster rate,  than I expected. In retrospect I should have just turned on the Idea Farm first before the...

Interesting news tonite that Third Point is launching a Greek Hedge Fund to capitalize on opportunities in the beaten down stock market there.  Other big firms such as Baupost have been building stakes in stocks there, and you know I think they're cheap! Longer post from Josh on Third Point and their recent investment letter. 

I'm on the plane to NYC to sit in on the Barron's ETF Roundtable, and should have a little free time in both cities.  Bummed the Mets and Phillies are out of town but may catch a Yanks game (somehow never been to any of the three stadiums). Drop me a line if you want to meetup!

Asset Price Trend Theory Abstract:      Traditional portfolio optimization models implicitly or explicitly specify placement of capital as rather irrevocably and fully at risk through investment horizon(s) or continuously. Under this constraint, asset class allocation typically serves as primary mode of diversification, pursuing risk moderation by seeking to reduce portfolio variance. But investors adopting this construct find Risk Management inevitably failing to...

A few Idea Farms ago we looked at a WisdomTree research piece by Schwartz that sorted emerging markets into high and low dividend years.  This is of course backwards looking, but instructive nonetheless.   They found that:   + The average performance of the MSCI Emerging Markets Index during years following high dividend yield values was 33.03%, more than 31 full percentage...

Below I updated the sector CAPE valuations....there is a pretty wide range - one sector is at 10 and another at a near all time high bubblishious 27... Here I am below also yapping about some of our tilts....and so far the Aussie pronunciation of my name may perhaps be my favorite so far... http://plus.cnbc.com/rssvideosearch/action/player/id/3000157958/code/cnbcplayershare   And here are the sector CAPEs:  

The difficulty I have with a lot of indicators is just that, they are difficult.  If I can't understand what the chart is saying within a few seconds it is usually too confusing and often makes me think you're trying to smash a square peg in a round hole. I'm not sure why I didn't think of this before, but...

Below are updates to the CAPE values from our paper Global Value: Building Trading Models with the 10 Year CAPE.    

Longish piece from Damodaran... and nice graphic of buybacks and dividends...