Regarding "always reasonably priced", note the comments upthread referencing Fama ("no one has a clear definition of how to perfectly define or precisely measure ...") and Malkiel ("this does not mean that prices are correct"). Even Greenspan warned about "irrational exuberance". I'm not saying those inputs are necessarily actionable (I'm agnostic on that), but on the separate question of whether securities are "always reasonably priced" (your wording), those guys clearly came down on the "we don't know whether or when prices are reasonable, and therefore we don't claim they're always reasonable, and it may be that they're unreasonable some of the time" side. Were they wrong?Let’s break this down:Yes, that’s correct. If efficient market means that people are using common sense and understand reality and invest accordingly I do not believe that the market is efficient. The example I give everyone is that everyone knows that China is dictatorship. Everyone knows that if one person or one sector displeases the dictator, that person will be jailed or killed And the sector will simply disappear. They steal intellectual property. The markets are opaque. Everyone lies. And yet highly educated American fortune, 500 leadership has been falling all over itself to invest as much as they can in this market. An enormous part of their economy has been built on sand. Unfathomably Large cities, composed of unbelievably large skyscrapers are built at the whim of a dictator, not because of any market demand. Much of the economy was built on sand. And yet everyone seemed to ignore it. Obviously it was going to fall apart at some point. And no one seemed to factor any of this in. So I do not think that the markets are efficient if efficient means that people acknowledge reality.I am not saying your beliefs about international markets are wrong but what I am saying is because of those reasons you expect underperformance, and you would seemingly believe that the global markets have not efficiently priced these real factors into the price.
1. You don’t believe markets are generally efficient, and current securities prices are not always reasonably priced. That view is typically the view of active investors who believe they can outperform markets, in spite of all of the evidence to the contrary.
"Foolish" is subjective, for example, a concerned mother can consider it foolish for her teenage son to play football due to risk of injury. So reasonable people can disagree over what's foolish and what's not, but even those who accept the risks ought to consider them before deciding, yes? And if "yes", and assuming you have equity exposure in China, it would be interesting to know your opinions about each of KBR's specific points about China, and whether or not US-based investors should consider them, or even be aware of them at all, before deciding. I do mean point-by-point, as I'm interested to know which ones you think are worth considering (or even being aware of) and which aren't.2. You obviously don’t want to invest in countries with specific geopolitical characteristics. You also indicate that US companies have been foolishly investing resources in China.
I'm not saying anything about whether you should invest in China or not (just like I'm not saying anything about whether a given teenager should play football or not). I just want to know your opinions about the questions I've posed.
Statistics: Posted by HanSolo — Sun Apr 14, 2024 4:49 am — Replies 5514 — Views 1050420