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The Efficient Valuation Hypothesis: The Long View

  • Niall J. Gannon
Chapter

Abstract

Tailored Wealth Management is a fitting title for this book because wealthy investors experience markedly different outcomes in managing their wealth, which makes a “one size fits all” approach ineffective. Cause and effect is a theme that runs throughout this book, and I am more than ever convinced that it is time to challenge two theories: (1) that stock prices are random and (2) that prices revert to their mean, two widely held theories used by wealth management firms, academics, and robo-advisors. Most investors have an understanding that inception yield is predictive of the future returns of a fixed income (bond) portfolio. We aim to illustrate that starting earnings yields are similarly predictive of the future returns in an equity portfolio, over 20-year investment periods.

References

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  3. The National Bureau of Economic Research. “U.S. Business Cycle Expansions and Contractions.” 2017, http://www.nber.org/cycles/cyclesmain.html.
  4. Siegel, Jeremy. Stocks for the Long Run: The Definitive Guide to Financial Market Returns and Long-Term Investment Strategies (4th Edition). New York: McGraw-Hill, 2007. Print.Google Scholar
  5. Silverblatt, H. “S&P Dow Jones Indices.” 2017, http://us.spindices.com/indices/equity/sp-500.

Copyright information

© The Author(s) 2019

Authors and Affiliations

  • Niall J. Gannon
    • 1
  1. 1.The Gannon GroupSt. LouisUSA

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