Thursday, April 17, 2014
A Spectrum of Possibilities (Probabilities)
Most investors like to think in binary terms. Stocks are either cheap and a buy, or expensive and a sell (or crash!!!). I’m convinced they think this way along the same lines they like to cheer for sports teams (it’s more fun). I tell investors using valuation is a spectrum of future possibilities. While buying expensive markets generally will produce lower future returns, you will have positive outliers. The same for cheap markets, it’s usually a good idea but they can always get cheaper.
Posted by Bud Fox at 5:36 AM