In the world of finance, there are a few different ways you can analyze markets and stocks. You have your basic fundamental analysis, which relies on financial reports, ratios, earnings, etc. Technical analysis is interested in the charts and the trends that lie within the charts. You have the more advanced quantitative analysis, which uses complex algorithms to determine price actions. What is value investing? Value investing is the process of investing in companies...
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by Rob Bennett Not one study supports the claim that the market is efficient. Not one. Millions of people believe that there are studies supporting this claim. I don’t dispute that for a second. But people believing that there are studies and there actually being studies are two very different things. It’s important that those trying to understand how stock investing works keep the distinction in mind. 'Get ValueWalk's Daily Edition By Email and...
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by Rob Bennett If the market were efficient, it would always be priced properly and both overvaluation and undervaluation would be meaningless concepts. We know that is not so. Yale Professor Robert Shiller long ago published research showing that valuations affect long-term returns. So valuations are meaningful and the market is not efficient. This reality raises troubling questions. The Efficient Market Theory explains why stock prices change. Investors are reacting rationally to economic developments....
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by Rob Bennett It seems strange to us that there was a time when most people thought the world was flat or that there was a time when most people thought that the sun revolved around the earth. The full reality is that our way of thinking about these matters no doubt seemed strange to those who held the earlier views when they were first exposed to it. We become so accustomed to one...
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by Rob Bennett We have been living in a twilight zone for the past 30 years. University of Chicago Professor Eugene Fama’s Efficient Market Theory became the dominant academic explanation of how stock investing works in the 1960s. It was incorporated into the Buy-and-Hold Model, which became extremely popular during the huge bull market. But while the bull was raging forward Yale Professor Robert Shiller published research showing that valuations affect long-term returns. That...
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By Rob Bennett The most important factor affecting an investor’s results is his stock allocation. So argues the conventional investing wisdom of today, a wisdom popularized during the Buy-and-Hold Era from a wide array of financial publications. I don’t subscribe to the Buy-and-Hold Model for understanding how stock investing works. I believe that this model, developed during a time when belief in the Efficient Market Theory was strong, is hopelessly flawed, and favor a...
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