
Stock-market legend who predicted 3 financial bubbles says this is Real McCoy - danboarder
https://www.marketwatch.com/story/guid/A157512A-B0D0-11EA-B693-BE36DDFAF8A6
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magicnubs
> The great bubbles can go on a long time

What he said may be true, but that doesn't mean it's useful. By this logic,
you can just say that stocks are overvalued any time after they've recovered
from a prior bubble pop or they go over a certain P/E ration, and you'll
eventually be right given a long enough timeframe for a correction, but you
might miss out on decades of growth in between.

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lmilcin
No, that's not what he said.

What he said is that people can be blind for a long time. That it is not
correct to assume that if there is a big bubble people will notice it
immediately.

It is useful when it prevents you from assuming there are no huge bubbles
around because if there was one somebody would notice it already.

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svaha1728
I think a big problem is everyone is in, “Central banks are on the case and
will save us” mode. It’s still an unprecedented route to take. There’s a lofty
exuberance to the Hertz rally, in particular, that seems completely detached
from the current reality.

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kwhitefoot
What's the false positive rate, false negative rate? Does he also correctly
predict when there will not be a bubble?

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rmrfstar
His research team publishes global equity index forecasts, monthly I believe.

They also have a collection of mutual funds, whose track records you can check
very easily. I recommend bench-marking against Ken French's factors [1].

[1]
[https://mba.tuck.dartmouth.edu/pages/faculty/ken.french/data...](https://mba.tuck.dartmouth.edu/pages/faculty/ken.french/data_library.html)

~~~
moneywoes
How do those compare to just the spy500, I thought sector allocation didn't
perform better long term.

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rmrfstar
Start with the 3 factors (market, size, value).

Almost all the variance is in the market factor, which is just a cap-weighted
average return for all US-listed stocks.

The size factor should capture a lot of the difference between SPX (which
excludes small companies) and the broad market.

Also: SPX = S&P 500 index SPY = ETF tracking S&P 500 index

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rmrfstar
His fund family actually publishes equity index forecasts in its research
library [1].

That means you can evaluate the efficacy of his research team's forecasts over
time.

I happen to think he is correct, but process matters. How has the process held
up over time?

[1] [https://www.gmo.com/](https://www.gmo.com/)

