Sorry, I was thinking 1-5% of real returns rather than nominal, though I agree for these purposes nominal might be more relevant.
There’s a lot of room for different figures depending on how mean reverting you think valuations are. I think we should expect them to be somewhat mean reverting, so my best guess is more like 3% real.
I was also partly thinking that valuations are much higher again since I wrote that post, so I think that article is a bit optimistic today.
http://www.multpl.com/shiller-pe/
With costs, I’m more thinking about the set-up cost. I wouldn’t be surprised if this took several person-months, which could be used to add features that would add much larger proportional gains.
I also guess the on-going costs would be quite a bit more than one week per year, due to the reasons Rob lists.
And then there are also the costs of explaining this feature to users, which seem pretty significant—e.g. even if you write up a clear explanation of why you’re doing this and speak to a bunch of people about it in-person, you’ll still end up with lots of misunderstandings.
Sorry, I was thinking 1-5% of real returns rather than nominal, though I agree for these purposes nominal might be more relevant.
There’s a lot of room for different figures depending on how mean reverting you think valuations are. I think we should expect them to be somewhat mean reverting, so my best guess is more like 3% real.
I was also partly thinking that valuations are much higher again since I wrote that post, so I think that article is a bit optimistic today. http://www.multpl.com/shiller-pe/
With costs, I’m more thinking about the set-up cost. I wouldn’t be surprised if this took several person-months, which could be used to add features that would add much larger proportional gains.
I also guess the on-going costs would be quite a bit more than one week per year, due to the reasons Rob lists.
And then there are also the costs of explaining this feature to users, which seem pretty significant—e.g. even if you write up a clear explanation of why you’re doing this and speak to a bunch of people about it in-person, you’ll still end up with lots of misunderstandings.