Monday, March 14, 2005

Clue, Meet Less

My very interesting, oddball (oh, there's a big surprise) job consists of analzying large amounts of investment data to find patterns that are tradeable. I'm basically a retarded version of Columbo.

As part of my job, I read all kinds of things written by "authorities." This is, itself, a very dubious term when applied to people who write about investments for a living. It's an old boxing axiom that "styles make fights," and it's never more true than when talking about "authorities" in the investment world. Almost no one (Warren Buffet might be the only present exception) is an expert in all types of markets. Today's genius is tomorrow's clown when market conditions change.

Today, I read an article by Jeremy Siegel, the tremendous popular author of Stocks for the Long Run and widely considered an investment expert. He's so popular that his nickname is "The Wizard of Wharton."


Now Siegel has said some very intelligent things and made some very compelling cases for certain investment scenarios in the past. Here's what he said today (in response to the question quoted below) in an article on
Last Thursday was the anniversary of the peak of the Nasdaq. What are some of your takeaways from the bubble's collapse?

I think the big takeaway is that large-cap stocks should never carry P/E ratios over 100.

Wow again. Wizard? Of what? Saying that is about as bright as the guy who has a wreck going 120 mph on the freeway, and when the judge asks him if he's learned anything, he says "I sure have. Never go over 115."

Mr. Siegel, Wharton's calling. They want their wand back.

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