“Emotion-Informed Investing Is the Future. Emotion-Ignorant Investing (Buy-and-Hold) Is the Past. Bogle Should Be Interviewed in Psychology Today. He Couldn’t Handle It Today. But Once He Brings Himself Up to Speed on the Peer-Reviewed Academic Research of the Past 32 Years, He Will be Just Fine.”

Set forth below is the text of a comment that I recently put to the discussion of a blog entry posted at this site:

When is your interview with Psychology Today?

I understand that you are being sarcastic, Sparky.

But an interview with Psychology Today would be 100 percent appropriate and 100 percent wonderful. I look forward to the opportunity to participate in such an interview.

The Buy-and-Holders achieved an amazing advance in rooting their strategies in the academic research. I am 100 percent with them re that one. I am also 100 percent in accord with the Buy-and-Holders in their belief that the key to long-term success is becoming an Unemotional Investor.

The dispute is over how best to achieve that goal.

All overvaluation and undervaluation is the product of investor emotion. What P/E10 tells us is how emotional investors are being at any given moment in time.

The Buy-and-Holders aim to keep the emotion out of stock investing by IGNORING emotion. Just don’t include the metric that identifies the extent of emotionalism in the stock price and you’ll be fine, according to the Buy-and-Holders.

No!

Re that one, I am in TOTAL disagreement with the Buy-and-Holders.

The key to avoiding investor emotion is to become knowledgable about investor emotion. You don’t want to ignore investor emotion, you want to immerse yourself in it. You want to include the emotion factor in ALL your research and in ALL your allocation decisions. It is absolutely critical.

That’s Valuation-Informed Indexing. That’s the advance that we achieve over Buy-and-Hold.

You could call it Emotion-Informed Indexing. That would be perfectly appropriate.

Emotion-Informed Investing is the future. Emotion-Ignorant Investing (Buy-and-Hold) is the past. Emotion-Ignorant Investing ALWAYS fails in the long run.

ALL the experts in this field should be doing interviews in Psychology Today. The fact that you put forward the idea in a sarcastic way reveals how far off the right track the Buy-and-Holders have wandered in recent years.

Bogle should be interviewed in Psychology Today. He couldn’t handle it today. But, once he brings himself up to speed on the peer-reviewed academic research of the past 32 years, he will be just fine. We all should be working together to help our good friend Jack Bogle sufficiently up to speed on the investing research so that he will become able to handle an interview with Psychology Today with ease.

My best wishes to you and yours.

Rob

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