I have posted Entry # 163 to my weekly Valuation-Informed Indexing column at the Value Walk site. It is called All of Today’s Investment Advisors Need to Warn Their Clients That Their Advice May Be Wildly Off Base.
Juicy Excerpt: So the right way to handle things is to say: “I believe that the best allocation for someone in your circumstances is 80 percent but I have to add that there are good and smart people out there who believe just as strongly and with research every bit as serious backing up their belief that 20 percent is the better choice.” The Valuation-Informed Indexers need to say it the other way around, of course.
It’s not a super message from a marketing standpoint. Investors don’t want to hear a wishy washy message. They pay experts to tell them what to do. They view an expert who fails to take a stand as an expert who is not doing his or her job.
So all investing professionals need to take a stand. We all need to be saying “I believe that 80 percent is best and that the research supports me on that point” or “I believe that 20 percent is best and that the research supports me on that point.”
The idea here is that we ALSO need to note that there is another strongly held viewpoint out there that is every bit as legitimate (at least in the eyes of some). It’s wrong to fail to mention that. Investors need to know that the research is not settled, that a respected economics professor has raised a challenge to the premises of the now-dominant model and that that challenge has not been effectively countered in over three decades.