Wisdom of Wiggins


 When Valuation Matters

This is not an argument that valuations do not matter, but rather there is no reason to believe that they will matter on any given day, nor is there a constant search by the market to discover fair value. It is best to think of valuations as having a weak gravitational pull over asset prices. Prices will fluctuate through time as cycles evolve and investors extrapolate. They will happen to pass through fair value at various unpredictable points. – Joe Wiggins

https://behaviouralinvestment.com/2021/04/20/why-should-equities-be-fairly-valued/

The Lion Sleeps Tonight, or Behavioral Wiring

The problems that stem from … behavioural wiring are twofold. First, we are likely to neglect information that is genuinely important in favour of what we are currently experiencing. Second, we are almost certain to trade too much as we get stuck in the cycle of continually reacting to the next set of salient and available information, or what we might instead call the prevailing market narrative.

That most investors are caught in this behaviourally satisfying but return-eroding loop is reflected in the lack of introspection or reflection around past decisions and opinions. Nobody looks back at all the predictions that were made in our market outlooks for 2019 because it would be embarrassing to acknowledge how wrong we were and how attentively we focused on matters that were either irrelevant or unpredictable. It is better for everyone if we all just keep looking forward.

https://behaviouralinvestment.com/2023/11/21/what-happened-in-financial-markets-in-the-second-quarter-of-2019/

The Rising Stream of Real Cash Flows

The truth is most people owning equities should be doing so to capture long-run returns by investing in a collection of companies generating a rising stream of real cash flows through time. Attempts to predict how the market might be pricing those cash flows over any given year is entirely fruitless and counterproductive.  – Joe Wiggins

https://behaviouralinvestment.com/2023/12/12/how-will-equity-markets-perform-in-2024/

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