They're back: crazy stock prices. Not as crazy as they were 14 years ago, but clearly irrational. A comparison of stocks with earnings tells you that the market is overvalued by 40% to 50%. What to do? Go to 100% cash? You probably shouldn't go that far. But you should lighten up your stock allocation, says James Montier, an asset allocation theorist at the Boston money manager Grantham, Mayo, Van Otterloo, a.k.a. GMO. You should definitely lower your expectations. If you were counting on equities to get you to a comfortable retirement, rethink your finances.
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