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BULL MARKETS AND LONG-TERM TRENDS

5/9/2020

2 Comments

 
This chart can tell you a lot about bull and bear markets in the long run:
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The source of the chart is an article by Jurrien Timmer of Fidelity Management & Research. Do read the whole thing, it's interesting throughout.

The above chart provides a perspective that is rather similar to our own, as computed by our flagship application, Robot Investment Calculator:

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Note that we use CPI-unadjusted returns, unlike Jurrien Timmer. Still, the overall picture of relative valuation is not very different. (RIC does not go that deep into history, but we could see a similar pattern if it did.)

Unlike Jurrien Timmer, we do not use a long-term exponential regression curve. Instead, we work with MZM, which is a money supply aggregate that includes instantly liquid money.

In the short run, our MZM-based valuation indicator can hint to overvaluation or undervaluation of the market. The COVID19-related monetary expansion made the market significantly undervalued until June 2020. Through August, however, the market grew more than 10 per cent into the 'overvalued' territory. This may signal an increased risk of a correction. (No more ground-shaking events on the horizon, though.)
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2 Comments

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    Pavel Kohout (1967), investor, writer, photographer and application developer (Android, Windows, macOS). Based in London and Prague.

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The Robot Investment Calculator software and its underlying algorithms and know-how is owned and published by Westbourne Technologies Ltd, 25 Westbourne Terrace, London W2 3UN (the Publisher), Company Number 11115458. All rights reserved. 

DISCLAIMER: Contents are provided for general information purposes only and do not constitute an offer to sell or a solicitation of an offer to buy any Security in any jurisdiction. The Publisher does not intend to solicit and is not soliciting, any action with respect to any Security.

The contents of this section have not been approved or disapproved by any securities commission or regulatory authority in any jurisdiction. The contents are neither sufficient for, nor intended by the Publisher to be used in connection with, any decision relating to the purchase or sale of any existing or future Securities. The Publisher does not intend to provide financial, investment, tax, legal, or accounting advice. Investors considering the purchase or sale of any Securities should consult with their own independent professional advisors. Past performance is no guarantee of future returns.

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  • HOME
    • INTRODUCTION
    • THE DASHBOARD
    • RELEASE 2
    • EULA
  • ABOUT
  • BLOG
  • CONTACT
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    • ÚVOD
    • PŘÍSTROJOVÁ DESKA
    • RELEASE 2
    • ČTENÍ
    • CZ BLOG
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