Timing, Randomness, PE
I believe strongly in not timing the market. No one can predict the market in the short run; in the long run it has historically increased about 10% a year. Hopping in and out of the market is a great way to miss big up moves and be left on the sideline. Louis Rukeyser always tells a story about two brothers who invested in the market. One started early but was the worst timer their was, the other started late and was the best timer there was. In the end they both had the exact same sized portfolio. The moral of the story is to invest continuously and invest early, for the long haul. No one can time perfectly, but we can start investing now. You might enjoy Louis Rukeyser's newsletter.
I don't buy into random market theory. I guess I assume what the mathematicians are saying is that "if the market is random, no one can profit from it." This is simply not true. I also find it hard to believe the market is random when it historically trends up in the long run. I could probably agree in the short term it can be random.
“The markets are not random, because they are based on human behavior, and human behavior, especially mass behavior, is not random. It never has been, and it probably never will be.” —Jack D. Schwager, author of Market Wizards
I don't care about P/E. This is more about how I trade than if PE has value. Traders like Warren Buffet an Martin Zweig would use PE since they are value shoppers. Traders like William O'Neil "canslim" would not. The stocks I hold vary greatly from one PE to the next. I have renamed PE to the "Popularity Evidence" ratio. I simply see PE is popularity guage. Some stocks are simply more popular with Johnny Q Trader.
“A stock’s P/E ratio is not normally an important cause of the most successful stock moves.”
—William J. O’Neil, author of How to make Money in Stocks
