I’ve posted Entry #76 to my weekly Investing: The New Rules column at the Death by 1,000 Papercuts site. It’s called We Are Stock Drunk.
Juicy Excerpt: He knows that he has a problem. That’s why he lashes out. If he didn’t have a problem, he could laugh off your question. But since he really does have a problem, the question hurts. He knows that he has a problem.
But he doesn’t want to give up the drinking. So he is not about to acknowledge the problem. He denies it vehemently. He knows he can give up the drink anytime. Your friend knows two opposite things.
So it is with stock investors. We know that stocks are priced to crash when they are selling at the prices that have applied from 1996 forward. We’re not dummies. We get that loud and clear.
That’s why we insist that Buy-and-Hold can work and there is no need to lower our stock allocations. We know that our fears are legitimate and thus we do everything we can to banish them from our minds. We know two opposite things — that prices matter big time and that there is no need to lower our allocations when prices rise to insanely high levels.