Meta-moves may look off-topic from the object level
Halfway through a double-crux about efficient markets, my interlocutor asks how I’m feeling.
I’m deciding where to go for lunch and my friend asks me if I’m ready for the presentation in the afternoon.
I’m planning my road-trip route on Waze and my partner asks what time we plan on leaving.
Imagine if every time someone mentions something you consider irrelevant or off-topic, instead of dismissing it—you view it as a meta-move and considered their meta-frame on your thinking.
I think it’s more about what the world looks like at the end of a long economic boom: the price/earnings of the overall market is really high, since valuations have grown faster than the underlying economic earnings. I think of P/E as a measure of market enthusiasm—high P/E means people have strong expectations of future growth. Historically, it seems that markets are magically corrected to mirror the actual growth of the economy over the long run. Currently the Schiller P/E is well above it’s average—meaning the market may be ‘over-valued’. We just don’t know what the actual ceiling on this figure is—which is why it’s hard to time the market.
Re: gamblers fallacy, I think the greater the over-valuation, the greater the probability of a ‘market correction’ - these changing probabilities mean it’s not really a gambler’s fallacy situation—chance of correction is not independent or truly random.
Ray Dalio’s explanation seems pretty plausible to me, though I definitely don’t have the gears to fully evaluate it: https://www.youtube.com/watch?v=PHe0bXAIuk0