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Predicting the Markets of Tomorrow : A Contrarian Investment Strategy for the Next Twenty Years Hardcover – Bargain Price, March 2, 2006
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From Publishers Weekly
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved. --This text refers to an out of print or unavailable edition of this title.
From the Back Cover
"What investment strategies have worked over the past forty years? Ask this man."
"You ignore his message at the risk of your own future wealth. His trailblazing research suggests new ways to invest."
Kiplingers Personal Finance Magazine --This text refers to an out of print or unavailable edition of this title.
Top Customer Reviews
1. When calculating returns from any investment strategy, it is essential to focus on the real return, after accounting for inflation.
2. Approximately two hundred years of stock market data (1809-2004) show that real returns have been highly erratic, especially when analyzed over periods of a few years or less.
3. However, when one calculates returns using overlapping periods of 20 years, they become much smoother. Stocks have rarely lost value over a 20 year period.
4. There are probably some underlying factors that cause returns to be smoother over 20 years. O'Shaughnessy suggests two. First, many investors don't really get started saving and investing until their mid 40s, giving than about 20 years to accumulate assets before retiring. Second, retirement at 65 together with a life expectancy of 85 suggests retirements (and asset depletion cycles) that last about 20 years.
5. If one decomposes the 20 year average returns of the S&P into the returns of the growth and the value stocks that comprise the S&P, these two groups have tended to move out of cycle with each other. Growth stocks occasionally have produced the higher return, as they did in the 1980s and 1990s. More often, value stocks have outperformed value stocks.
6. The returns of these three groups (S&P, Growth, and Value) all seem to revert to their mean rates of return.Read more ›
I didn't find much to challenge my view. The author's argument seems to be based entirely on reversion to mean, without any consideration of current valuations (P/E, Price/Book, Price/Sales) of the different market segments.
Two aspects raise the specter of data mining. First, the reversion analysis is based entirely on 20-year rolling data, but the grounds for picking 20 are thin. He says it's a typical holding period, but so are 10 and 25; I see no curiosity displayed whether the results would hold if different periods were used. Second, the stock picking rules laid out in Chapter 8, singled out for praise by another reviewer, give the appearance of having been selected from thousands of possible rules. I can't tell if these were previously published and have worked since then, but the backtesting is ALWAYS spectacular, and if enough rules were tried then the success of these was just random chance.
The author's portfolio recommendations are all domestic equity, and compared to a strawman historically bad allocation. Bonds are ultimately dismissed, although the chapter devoted to them contains some good information. REIT's, international investing, and commodities are skipped over in favor of advice to hire an advisor (which the author happens to be).Read more ›
Most Recent Customer Reviews
Thorough research done by O'Shaughnessy and his team, yet the predictions that came out of this research is average at best.Published 14 months ago by ara g chilingerian
In 1970 someone wrote a book how to invest all your money in 1 day - buy a spider S&P 500. This book adds, sell 30% of SPY and but a russell small-cap index etc. Read morePublished on October 3, 2013 by Melvin Rappaport
Most of the book's recommendations don't fit it's claim to "contrarianism". O'Shaughnessy prefers small cap to large. For large caps he recommends value over growth. Read morePublished on November 10, 2012 by Gderf
1. According to the OECD by 2030 the number of people over sixty five across the developed world will increase by 89 million, while the working adults will decrease by 34... Read morePublished on December 6, 2008 by Golden Lion
I love having numbers to back things up. I do. O'Shaugnessy delivers in spades. His opinions include some guesswork, but also thousands and thousands of checked... Read morePublished on July 30, 2008 by Noah Gibbs
James P. O'Shaughnessy is a recognized authority on quantitative investing and something of a financial media star. Read morePublished on April 13, 2007 by Rolf Dobelli
I wish I could have paged through this book before I got it. Based on the title, I was hoping that the book would discuss economic developments, new markets, new theories, or new... Read morePublished on October 19, 2006 by Befragt