Simon:

This is a super question. You are getting right to the heart of the matter. You have put your finger on the source of all our troubles and you have put your finger on the source of what is going to save us.

The root question is: Is the market efficient? That is, do investors price stocks properly?

Fama says yes. He has never put forward any data showing this. But many smart and good people believe it. Why? Because it makes so much sense! Why WOULDN”T investors pursue their own best interests? If investors pursue their own best interests, the market will see to it that the price is roughly right. That’s what markets do, they provide a means for the different perspectives of all the participants to be reduced to a single number that reflects in some rough way the interests of all of them.

The problem we have in the stock market is — Not all of the interests are being heard!

There’s a ban on discussions of Valuation-Informed Indexing at Motley Fool today. And at Bogleheads. And at Morningstar. And at the Get Rich Slowly Forum. And at lots of other places.

All the people who go to those places to learn about stock investing are hearing only one side of the story. The market (us!) WANTS to be efficient. But it cannot yet pull it off. Why? It doesn’t have the information it needs to do so. For the market to function, investors must be informed. We cannot become informed for so long as there is a Social Taboo against honest posting on the most important questions.

You are right that in theory the internet would make a difference. If the various boards and blogs honored their promises, it would. At every one of the sites that have banned honest posting, there are published rules that protect those posting honestly from abusive posters. At not one of them have those rules been enforced. We have the IMPRESSION of free speech on the internet. But on the topic of investing, it is only pro-Buy-and-Hold views that may be voiced.

How often have you heard Buy-and-Hold described as a Get Rich Quick scheme? Why do you think that is? It was the primary cause of an economic crisis that has caused great pain for millions. And yet how often is this discussed on political blogs much less investing blogs?

Here’s an article at which I quote 101 of our fellow community members who have expressed a desire that honest posting on investing topics be permitted:

http://www.passionsaving.com/investing-discussion-boards.html

Rob