The Flinchum File
Thoughtful Economic Analysis and Existential Opinions

In Praise of Math

03/26/2020

Dr. Jeremy Siegel is a celebrated professor at Wharton and author of “Stocks for the Long Run.”  He is also my longtime favorite investment thinker.  I’ve read his books and listen to him whenever possible.  Yesterday, I listened to him again and realized that there is a disconnection that has been bothering me.  He argued that stocks remain the best investment and that the default asset allocation should change from 60/40 to 70/30.  He  discussed traditional metrics for stocks, like PE ratios, dividend yields, relative strength, book values, etc.  I agreed with everything he said, but any discussion of the coronavirus pandemic was ancillary.

I’m suspicious that the rules of traditional investing may have been temporarily suspended by the suddenness and severity of this pandemic, which is outright heresy to my fellow advisors.

Maybe, rules of math are not so strongly affected?  Take a look at this:  https://www.youtube.com/watch?v=fgBla7RepXU&feature=youtu.be

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