I’ve posted Entry #8 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It’s called The How-To of Valuation-Informed Indexing.
Juicy Excerpt: It is the Reversion to the Means phenomenon that makes Valuation-Informed Indexing so effective. Most strategies relying on market timing involve so much guesswork that the odds of them coming through are not great. Because Valuation-Informed Indexing relies on an “Iron Law” of stock investing, it almost always produce better returns for those investors patient enough to wait for the phenomenon to kick in. Then it’s just a question of letting enough time to pass for the compounding returns phenomenon to transform a small edge gained by taking an almost certain bet into something substantial.