How can you cyclically adjust when there is no cycle? The Shiller P/E and the US market

Markets Value Investing

The Shiller price-to-earnings ratio (or ‘cyclically adjusted price-to-earnings ratio’) has become the poster child for bubble-hunters everywhere. Ever since Robert Shiller himself became associated with the dot.com boom and bust, investors have looked to the metric as an indicator of irrational exuberance in the markets.

So why is Shiller himself… Read the article

Are asset markets “pausing for breath”? (with a note on the relevance of “hard data” versus “soft data”)

Behavioural Finance Economics

Are asset markets “pausing for breath”? Since the relatively dramatic moves in many markets in the second half of last year, a lot of commentary suggests that things feel less eventful so far in 2017.

There are a number of biases evident in this view. Such commentary is hugely myopic… Read the article

Nickel and Diming about a quarter per cent: Why is the Fed talking in terms of number of rate increases and not levels, and should we care?

Behavioural Finance Economics

Wednesday’s triggering of Article 50 was a non-event in financial markets; an event more symbolic than anything else. Meanwhile in the US, two Fed officials were discussing their views on what could happen to US interest rates.

The Boston Reserve President said that four rate “hikes”… Read the article