“We Need to Stop Worrying about Who Is an Expert and [Try] Figuring Out What Makes Sense”

I recently posted a comment to the Get Rich Slowly blog that argues that our current understanding of how stock investing works is too primitive for anyone properly to be thought of as an “expert.” My post is  Comment #51.

Juicy Excerpt: We all need to get back to the basics if we want to figure out how stock investing really works. We need to stop worrying about who is an expert and who isn’t and direct more effort to figuring out what truly makes sense. Expertise that means something will follow.

Comments

  1. says

    It is hard to imagine that people will just accept the beating that they have taken with Passive Investing since the October 2008 meltdown.

    Yet, here we see people advocating MORE OF THE SAME.

    Weird.

    Have fun.

    John Walter Russell

  2. says

    Regarding Today’s Passion:

    P/E10 was 37 in January 2001. I put this value into the Stock Return Predictor. The most likely Year 20 result was 1.48% (real, annualized, total return) for the S&P500 index.

    It looks like a close call between cash and the S&P500 index from 2001.

    Looking at today’s market, a Year 10 most likely return is 8%. This is the poster’s magic number.

    The story sounds consistent whether we follow the poster or use the Return Predictor.

    Have fun.

    John Walter Russell

  3. Rob says

    Thanks very much, John.

    Here is an important lesson that I believe we have learned — it does not work to wait until prices are out of control to warn people that prices are out of control.

    It takes years for humans to learn how stock investing works. We absorb insights only over long periods of time. To invest effectively five years from today, you need to begin learning how stock investing works today.

    There are going to be some who are going to say that there is no need to learn about the effect of valuations because today valuations are fine. I don’t buy it. If you fool yourself about the effect of valuations when valuations are fine, you will continue to fool yourself about the effect of valuations when valuations are not fine.

    We don’t learn facts. We learn attitudes. The Passive Investing attitude is investor suicide.

    Rob

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