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When Great Minds in Investing/ Finance Cannot Agree


Saw this article from Wall Street Journal titled “Is the Market Overvalued?” which presents it from two different perspectives.

One says that based on the indicators he has, the market is expensive.

The other, says that based on his alternative methods using different indicator, that the market is cheap.

It’s typical of the kind of struggles that every ordinary investor like you and me go through each time we think to buy or sell.

At the end of the article, the academic, Prof Shiller, who says markets are expensive concludes aptly that “I think I should just keep it simple.”

We, or at least I, tend to over-complicate things sometimes.

We need to know that:

1. No one knows for sure where the market is going, we can guess, but anyone that says they know with a 100% probability based on his or her ‘system’ or ‘indicators.’ Run far, far away from them.

2. Even so called ‘experts’ disagree, so how do you know who is correct?

My conclusion is to ignore them. And think for myself. At least if I got it wrong, there is no one to blame but myself.

I tend to agree on the fact to keep things simple. So I buy with both eyes open, don’t monitor my stocks prices on a daily basis and try to do the more important things. Like to be on top of things in my job and focus on my part time education doing my Masters.

Right now, my guess is that the Singapore stock market could be in for a surprise soon as elections are approaching and there is always a chance of a seismic change like what happened in Taiwan, Malaysia and Japan. So keep your powder keg dry and accumulate some moolah. And if you believe every word I say, you haven’t been reading it carefully.

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