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Persistent equities market over-valuation due to the wider-adoption of indexing?

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This makes sense, and there is nothing wrong with that.

Equities comes with 2 risks: market risk and single-company risk.

Indexing totally removes the second risk, leaving only market risk.

So of course valuations should move up, because risk is reduced, but returns are the same.

In a decade or two, when all dumb money has moved into dumb-beta index-funds, the stock market will become a “long-term-bond” with low volatility and low returns.

This does not apply yo emerging markets such as China, where there are virtually no index funds, and investors are forced onto the roller coaster of single stocks. No wonder so many Chinese are desperate to get their money out of the country !!!

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Posted by Furion Lfg
Posted on 04/25/2017 7:46 PM
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And Cullen you have been calling for a market top since last year. To quote Trump: “Wrong”.

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Posted by Furion Lfg
Answered on 04/25/2017 7:56 PM
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    I AM MAKING THE CALL RIGHT HERE RIGHT NOW:

    Markets will keep going up 2017 to 2019, just as Hairy Ass Dent predicted in his latest book:

    https://www.amazon.com/Sale-Lifetime-Great-Bubble-2017-2019/dp/0735217742

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    Posted by Furion Lfg
    Answered on 04/25/2017 7:58 PM
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      What? I’ve always said Trump was good for the stock market and if you held a gun to my head I’d bet his Presidency leads to a stock bubble.

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      Cullen Roche Posted by Cullen Roche
      Answered on 04/25/2017 8:17 PM
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        https://www.pragcap.com/what-does-president-trump-mean-for-the-economy-market/

        “So, assuming a President Trump can keep his finger off the button I think it’s safe to assume that this business friendly President will be more market friendly than not.”

        Don’t confuse me with Paul Krugman who said stocks would tank after Trump won. I said exactly the opposite…. That's because, unlike the Liberal talking heads, I am able to separate market analysis from politics.

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        Cullen Roche Posted by Cullen Roche
        Answered on 04/25/2017 8:20 PM
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          You are never wrong, Cullen. Last year you were saying that we are in the “late stages” of a bull market, and that you were adjusting your clients’ funds so as to be underweight equities and overweight fixed income.

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          Posted by Furion Lfg
          Answered on 04/27/2017 8:40 AM
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            We are in a late stage of a bull market.

            But I find it fascinating that deflationary doom porner Harry Dent is now bullish and released a new book. That is a sure sign we are near the end.

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            Posted by MachineGhost
            Answered on 04/29/2017 9:12 PM
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