tag:blogger.com,1999:blog-4979477022008569617.post7410952914805240148..comments2023-05-02T06:38:35.510-07:00Comments on Roger Farmer's Economic Window: Asset Prices in a Lifecycle EconomyRoger Farmerhttp://www.blogger.com/profile/05213844698773859392noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-4979477022008569617.post-78096671309559577012014-04-12T13:46:39.664-07:002014-04-12T13:46:39.664-07:00Link to David Glasner should be http://t.co/J3uvOg...Link to David Glasner should be http://t.co/J3uvOg6cv8Edward Huffhttps://www.blogger.com/profile/06579781953584264707noreply@blogger.comtag:blogger.com,1999:blog-4979477022008569617.post-26203096545206170602014-03-14T18:36:57.454-07:002014-03-14T18:36:57.454-07:00Efth I agree with David Glasner on this pointEfth I agree with <a href="http//t.co/J3uvOg6cv8" rel="nofollow"> David Glasner </a> on this pointRoger Farmerhttps://www.blogger.com/profile/05213844698773859392noreply@blogger.comtag:blogger.com,1999:blog-4979477022008569617.post-37829386906115705322014-03-14T18:28:08.791-07:002014-03-14T18:28:08.791-07:00Richard
Yes, stocks for the long run is clearly a ...Richard<br />Yes, stocks for the long run is clearly a winning investment strategy for the youngRoger Farmerhttps://www.blogger.com/profile/05213844698773859392noreply@blogger.comtag:blogger.com,1999:blog-4979477022008569617.post-43285472961854976002014-03-14T18:27:03.928-07:002014-03-14T18:27:03.928-07:00I agree. But simple models don't always captur...I agree. But simple models don't always capture every element of reality.Roger Farmerhttps://www.blogger.com/profile/05213844698773859392noreply@blogger.comtag:blogger.com,1999:blog-4979477022008569617.post-63622252062620706442014-03-14T15:20:21.409-07:002014-03-14T15:20:21.409-07:00Stock prices fluctuate because market makers and i...Stock prices fluctuate because market makers and insiders play games to sell high and then buy low again and there is nothing else into it. You can try to fit to a model as many auxiliary hypotheses as you like but the truth of the matter is that facts are over hypotheses and the stock market is a game of wealth redistribution from speculators to equity issuers and insiders. Trying to look at stock prices from an economic perspective is, in my humble opinion of course, fallacious thinking. Many will get prizes while the facts are constantly denied. Therefore, since you handle the math extremely well, why not building a model in which there are four agents: the equity issuer, the well-informed insider, the uninformed speculator and the trader/gambler. You will find out that your simulation will also fit reality.<br /><br />Why the market has been going up the last year? Because companies bought back their stock primarily. At some point, those insiders and issuers with dump the pumped stock on the face of the speculators and create another huge swing, like the past two, in 2000 and 2007.<br /><br />Microfounded Economics or Macrotheory? http://t.co/J3uvOg6cv8Anonymoushttps://www.blogger.com/profile/06787200197343589571noreply@blogger.comtag:blogger.com,1999:blog-4979477022008569617.post-56662292145127474582014-03-12T22:43:09.047-07:002014-03-12T22:43:09.047-07:00"But for those of us with finite horizons, li..."But for those of us with finite horizons, life is too short to make those trades. As Keynes quipped; Markets can remain irrational for longer than you or I can remain solvent."<br /><br />So, are you agreeing, basically, with Siegel's premise of stocks for the long run, that if you can take a long-run view you can get better risk-adjusted returns (or much better)? This would imply that the young should hold a relatively higher percentage of stocks (which some like Bodie seem to disagree with). And the same would hold true for money the old want to leave as a bequest (as well as for other long-lived funds, like university endowments).Richard H. Serlinhttps://www.blogger.com/profile/09824966626830758801noreply@blogger.comtag:blogger.com,1999:blog-4979477022008569617.post-22309853609118341182014-03-12T22:29:09.503-07:002014-03-12T22:29:09.503-07:00Eventually, I'll try to read your paper. But i...Eventually, I'll try to read your paper. But initially my thought is it's not just that different cohorts have different risk-aversions at their current life stages. Even within a cohort, it doesn't look hard to show irrational, or at least extremely uninformend and/or unexpert, behavior. Even within, say, the young or middle-aged cohort, I don't think it would be hard empirically to find a large percentage of investors not jumping all over, with the liquid money they did have, the realtively low P-E ratios in early 2009 – and instead doing the exact opposite, fleeing.Richard H. Serlinhttps://www.blogger.com/profile/09824966626830758801noreply@blogger.com