I’ve posted Entry #135 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s titled My Response to the Seeking Alpha Article Saying P/E10 Doesn’t Work.
Juicy Excerpt: I don’t agree with most of the points made in the article. But the appearance of the article is encouraging. I believe that we need to convert the entire world to Valuation-Informed Indexing. That won’t happen as a result of me posting articles praising the concept. It can only happen as the result of a national debate in which people who support the concept argue to the best of their ability in support of it and in which people who see flaws in the concept argue to the best of their ability to opposition to it. Canavale is advancing the debate by trying to shoot the concept down. For that we all owe him our gratitude.
A second reason why we should all be happy to see this article is that it shows that the Buy-and-Holders are getting nervous. I was around in the day when the Buy-and-Holders were so sure of themselves that they wouldn’t go to the bother of shooting down Shiller’s ideas. They just ignored them. The appearance of this article is evidence that at least some Buy-and-Holders are opening up their minds a wee bit. Arguing against Valuation-Informed Indexing is the first step in a long journey that ends with people like Chuck Carnevale becoming big-time advocates. He (and lots of others) has to got to work through his objections before he will permit his mind to be won over by the new ideas. By airing his reservations he is giving those of us who support the concept an opening to try to win him over.