Should You Start Buying Stocks?

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Not yet says Robert Shiller, the author of Irrational Exuberance and creator of a variation of the P/E ratio (price/earnings) called CAPE (cyclically adjusted price/earnings).

Here he goes into how CAPE is determined and how it’s shows that there’s still room to go down.

Are you buying right now?

  • Adam

    I’ve got a reminder in my calendar to invest 10% of my cash across a basket of stocks at the start of every second month.
    I certaintly see scope for further share price falls, but I think widespread fear is factored into the market and no-one ever rings the bell to signal the bottom

  • kranky kritter

    One of the crappiest of reasons to invest money is because you think it’s the right time. Market timing is for people foolish enough to think that they are smarter than the rest of us.

    One ought to invest in the market if
    a. one has spare cash not needed for current anticipated use


    b. one can identify companies that one thinks are a solid investment with fundamentally strong long-term prospects.

    Then by all means, take that money and dollar cost average it into the market.

    I feel sorry for folks investing because they think the bottom is now, as well as for folks investing in companies like say GM or some bank, just because they are receiving gov’t cash and help.

  • J. Harden

    That is very Grahamish advice there Kranky. But I’m encouraging all to invest in my highly-leveraged hedge fund — 70% of our portfolio is composed of African micro-loans and 30% in an massage oil company in Newark, NJ. Of course I take the obligatory 2/20. Now is the time to invest — don’t hold back.

  • kranky kritter

    JH, who is Graham?

    Most of what little I know about investing I culled from a book by John Bogle, a few other sources, and semi-regular digestion of Marginal Revolution plus whatever articles of economic interest I have run across.

  • Adam

    Ben Graham – author of “Security Analysis”. Warren Buffet’s mentor

  • Snarkless J. Harden

    Ben Graham was a economist and investor — advocated “value investing” and authored the famous book Security Analysis. One of his disciples was/is Warren Buffet.

    Forgetting about my Hedge Fund, I’ve never been a big proponent of technical analysis (50/200 day weighted moving average, cup and handle, et al.). Still, I think there are some buys out there (and definitely some shorts).

  • Rich Horton

    I’m putting everything I own into Sirius/XM.

    What? That’s not a good idea?

    Hmmm…. maybe GM then….

    Seriously, the only reason to be in the market now is to speculate, and there is always room for a little bit of that.

  • Bob Aman

    Yeah, what Rich said. There’s some really, really good bets out there right now, but almost every one of them also has the caveat: “This company may file for chapter 11 if the economy doesn’t turn around soon.”

  • potla

    Good work, keep it up.