I’ve posted Entry #118 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called It’s a Thin Line Between Love and Hate (of Stocks).
Juicy Excerpt: Stock price changes that are brought on by the logical analysis of economic developments are orderly.Things go up a little bit, things go down a little but. Things generally stay more or less the same. Wild price swings don’t evidence themselves in an efficient market.
‘They evidence themselves in the real-world market. That’s because the real-world market ain’t efficient. The real-world market, like the humans who buy and sell in it, is more than a little bit nutso.
Anything can happen in an emotions-driven market. Things can get out of hand. You don’t have to like it. If you want to understand the market, you have to come to terms with the reality. The only thing worse than how a market controlled by emotions behaves is how a market controlled by emotions that are denied behaves.