The Out of Your Rut site has posted Entry #2 in my weekly Beyond Buy-and-Hold column. It’s called Valuation-Informed Indexing Is the Future of Stock Investing.
Juicy Excerpt: What’s not to like is that someone who cannot swim and is six feet tall is not going to do well in a pool that on average has a depth of five feet if he happens to be placed in the section that has a depth of twelve feet. Because Buy-and-Holders choose their stock allocations based on how stocks perform on average, the strategy works well so long as stocks are selling at average prices and the average return or better is likely to turn up within 10 or 20 years. That was the situation we saw from 1974 through 1995, the years when Buy-and-Hold became popular. The trouble comes when prices rise to insanely high levels, as they did in 1996.