Chris Cole, of Artemis Capital, recently asked, “What investments do you justify by common knowledge today that will look foolish 40 years from now?”
Here are a few I think might qualify:
First has to be embracing a passive approach to equity investing just as the median stock becomes more highly valued than ever before in history…
Median price-revenue ratio of S&P 500 components. The 2000 peak focused on a subset of hypervalued large-caps. This is an everything bubble. pic.twitter.com/DViNcziG5h
— John P. Hussman (@hussmanjp) January 29, 2017
…and the smartest guys in the room loudly proclaim, “sold to you!”
— Todd Harrison (@todd_harrison) January 28, 2017
Next I would submit short-selling volatility…
New record this week in speculative net short positions against the VIX: pic.twitter.com/P7IwhW4YIx
— Jesse Felder (@jessefelder) January 28, 2017
…when economic policy uncertainty is soaring to record highs is probably not very wise, either.
— Gavekal Capital (@GaveKalCapital) January 27, 2017
Finally, maxing out the duration of your fixed income exposure…
— Jesse Felder (@jessefelder) January 10, 2017
…when both nominal and real interest rates test their all-time lows doesn’t strike me as a great recipe for investing success.
— Jesse Felder (@jessefelder) August 16, 2016
Time will tell.