I would note that we see similar disparities in valuations all over the place. For example, while US broad market indices are trading near the top percentile of historical valuations international and EM are trading near their low percentiles. And same for value and growth. While valuations have virtually no predictive value in short term (like one year, which is one reason market timing using them doesn't work), but they do provide valuable information over the long term. Sadly too many investors are subject to recency bias and that leads them to abandoning even well thought out plans to diversify
Great article as always Larry. I'm looking forward to reading your texts here on Substack. Thank you very much for your work!
Glad you found it helpful
I would note that we see similar disparities in valuations all over the place. For example, while US broad market indices are trading near the top percentile of historical valuations international and EM are trading near their low percentiles. And same for value and growth. While valuations have virtually no predictive value in short term (like one year, which is one reason market timing using them doesn't work), but they do provide valuable information over the long term. Sadly too many investors are subject to recency bias and that leads them to abandoning even well thought out plans to diversify