Shorter DeLong: Investors should value financial stocks higher

Read the grim argument here.

Since Dec. 2007:

  • XLF down about 50%
  • SP500 down about 9%
  • NASDAQ 100 up 25%
  • NGDP up 8%

Sounds about right.

 

 

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Shorter DeLong: Investors should value financial stocks higher

2 thoughts on “Shorter DeLong: Investors should value financial stocks higher

    1. Yeah, I saw it. I’ve been too busy to write anything particularly smart on the topic. The main point, I guess, is that the relationship between re-investment and cap. gains is complex. The in-place capital stock can get real valued, and over short time horizons, re-valuations of the inplace capital stock are going to dominate. Investors rationally tend to ignore the re-invested earnings, and tend to focus on the revaluations of the in-place stock during times of uncertainty when the profitabilty of past investments is called into question.

      But making the above rational requires more thought.

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