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Arnott on Bubbles and Valuation Gaps

What Goes Up

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Is It Hard to Take the Other Side of That Trades?

Wyatt: With so many investors just going passively into an sn p 500 fund, does it just make it such an uphill task to go against that flow? You know what i mean? Ans yoer, speaking of self fulfilling prophecies. Stocks that are added to the s and p are companies that have just recently soared. The stocks that are deleted from the index on average, beat the market by two thousand basis points,. 20 per centage points, in the first year after they are deleted. That kind of utterly naive approach gives you s and p returns plus 18 basis points a year over the last 30 years. We're now sending it live. Can't take another crazy

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