I’ve posted Entry #96 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s titled We Need a New Kind of Investment Research.
Juicy Excerpt: Research appeals to the brain. The will has primacy over the brain. So long as our emotions direct our wills, all the research in the world will not produce good results.
An investor who has an emotional attachment to Buy-and-Hold strategies can rationalize following them despite mountains of research showing they can never work. It’s the interpretation of research that matters, not the research findings themselves. And interpretation is under the control of the will, not the intellect.
Hundreds of “researchers” continue to produce new research showing that Buy-and-Hold can work. How do they pull off this magic trick? By leaving out valuation adjustments. Why do they leaves out valuation adjustments? Because research that includes them always shows that Buy-and-Hold doesn’t work!