Mon, Sep 20, 2021
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

Do you have FOBAS? The key to investing now is your time horizon

Wednesday, December 28, 2016

Matthias Knab, Opalesque:

Frank Byrd of Fielder Capital Group LLC writes on Harvest Exchange:

Confused? Stocks are up post the Trump surprise. It's totally natural to have "FOMO" - the fear of missing out. You're likely tempted to jump on board and invest more in stocks. But you are likely frozen by "FOBAS" - the fear of being a sucker. You'd hate to invest more at today's higher prices and lose money if investors wake up pricing stocks more pessimistically in a few months.

FOMO and FOBAS are both dangerous to our long-term wealth. The good news is that if you're a truly long-term investor, you can free yourself from the anxiety of either affliction.

There's no question: Stocks are expensive by historic standards (the cyclically adjusted price-earnings multiple, or CAPE, is over 27x today, compared to a historic average of around 16x). This matters. What you pay for something today determines what return you will earn on the investment. The following shows this has indeed been the case with stocks:

So price matters. But so does your time horizon. The longer your holding period, the less important price paid becomes. In other words, the longer your time horizon, the lower your odds of a big mistake (as well as being tortured by FOMO or FOBAS).

Consider the following hypothetical stock: If its Price/Earnings multiple declines from ......................

To view our full article Click here

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. SPACs: The fall of the SPAC market has digital media companies in disagreement about best path forward, Cannae Holdings: SPAC bloodbath provides a good entry point, British car startup Cazoo raises $1bn from SPAC merger, Europe's incoming SPAC boom will create a demand for talent[more]

    The fall of the SPAC market has digital media companies in disagreement about best path forward From CNBC: The digital media industry has reached a strategic crossroads. Earlier this year, special purpose acquisition vehicles (SPACs) appeared to be the long-awaited savior of digital me

  2. Property: Real estate's new moneymaker is not design-driven, it's alternative, Two Sigma building quant tools to hunt real estate bargains[more]

    Real estate's new moneymaker is not design-driven, it's alternative From Forbes: There has been a recent shift of attention in the real estate market as to the types of investments which make the strongest returns. In the past, it's always been a combination of good design, prim

  3. PE/VC: Private equity GPs, LPs alike working on diversity and inclusion, Chinese regulator vows to crack down on private equity, venture capital funds, The VC playbook for portfolio companies: learning from the Covid-19 crisis[more]

    Private equity GPs, LPs alike working on diversity and inclusion From Private equity general partners and limited partners are doing more to increase diversity in private markets, according to a report released Tuesday by the Institutional Limited Partners Association.

  4. PE/VC: Private equity continues to lead fund closings, Venture capital firms are fighting to throw money at cleantech[more]

    Private equity continues to lead fund closings From Among private fund closings, private equity funds have led the pack starting in 2011, based on data collected by Pensions & Investments. During those years, private equity's share has ranged from 56% to 72% of the total

  5. PE/VC: Climate tech is hot, but VCs can't forget about water, Five top trusts to tap into the private equity boom[more]

    Climate tech is hot, but VCs can't forget about water From Crunch Base: "It is unequivocal that human influence has warmed the atmosphere, oceans, and land." These fiery words come from the latest landmark U.N. report detailing intensifying, universal climate change impacts. They cover