It is always interesting to see the two square off: Robert Shiller and Jeremy Siegel are both good friends, but have intense debates about market valuations.
In this video, Yale University economist Robert Shiller and Wharton's Jeremy Siegel square off in a debate hosted by Wall Street Journal's E.S. Browning on the best method for calculating market value and what their conflicting assessments mean for investors.
As usual, Shiller is more of a bear and Siegel is more bullish. Contrary to what some think, Shiller is no perma-bear. In late January 2009, Shiller stated that the S&P 500 was undervalued. Since then we have witnessed one of the greatest bull markets ever.
Warren Buffett and others seem to be bullish on the market, which would put him on the side of Siegel. Seth Klarman, Jeremy Grantham, John Hussman, (myself-_http://www.valuewalk.com/stock-market-valuations/stock-market-valuation-april-3rd-2011/) and others think the market is over-valued.
Even while searching for value bargains IMHO it is important to pay attention to overall market valuations. Although value investors did well overall during the tech bubble crash, most got crushed in the financial crisis of 2007-2010. I do not think this is a macro-argument, but rather I keep in mind how much cash I want to hold based partially on overall market valuations. Additionally, when market valuations are high, bargains are harder to find, so it really goes hand in hand.
Disclosure: None
In this video, Yale University economist Robert Shiller and Wharton's Jeremy Siegel square off in a debate hosted by Wall Street Journal's E.S. Browning on the best method for calculating market value and what their conflicting assessments mean for investors.
As usual, Shiller is more of a bear and Siegel is more bullish. Contrary to what some think, Shiller is no perma-bear. In late January 2009, Shiller stated that the S&P 500 was undervalued. Since then we have witnessed one of the greatest bull markets ever.
Warren Buffett and others seem to be bullish on the market, which would put him on the side of Siegel. Seth Klarman, Jeremy Grantham, John Hussman, (myself-_http://www.valuewalk.com/stock-market-valuations/stock-market-valuation-april-3rd-2011/) and others think the market is over-valued.
Even while searching for value bargains IMHO it is important to pay attention to overall market valuations. Although value investors did well overall during the tech bubble crash, most got crushed in the financial crisis of 2007-2010. I do not think this is a macro-argument, but rather I keep in mind how much cash I want to hold based partially on overall market valuations. Additionally, when market valuations are high, bargains are harder to find, so it really goes hand in hand.
Disclosure: None
