Tag: investment
-
The CAPE ratio, the Merton Share and Your Asset Allocation | Part 3
In the previous two articles, we teased the Merton Share as a rational framework for portfolio asset allocation. Now, let’s dive into how you can use both the CAPE ratio and the Merton Share to align your portfolio with your investing horizon, risk appetite, and current market valuations, without constant tinkering.
-
The CAPE ratio, the Merton Share and Your Asset Allocation | Part 2
Last week we discussed how the CAPE ratio of the S&P 500 is historically high at over 37, making the expected return on equities relatively low. And when we compare the earnings yield to the real return on 10-year TIPS, we see that the “equity risk premium” is quite small today. However, predicting the future is tough,…
Fictitious Capitalist 