I’ve posted Entry #164 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called If Widely Held Views About Smoking Can Change, Widely Held Views About Investing Can Change Too.
Juicy Excerpt: I don’t think anyone truly believed that smoking is good for your health. So, in a literal sense, no, no one believed the stupid advertisements.
But it is important to remember that it is not the purpose of an advertisement to persuade through logic. One of the characters on Mad Men did a good job of explaining the purpose of advertising when she said that the idea is to persuade people to do what they want rather than what is expected of them. Advertising attacks the Super-Ego with the aim of making the consumerist Id more powerful.
The advertisements promoting the health benefits were aimed at people who already smoked. Research showed that these people were starting to develop concerns that smoking could kill them. So they were thinking of quitting or cutting back. The aim of these advertisements was to offer reassurance to people who wanted to smoke that it would be okay to continue doing so. The aim was achieved by putting forward absurdly deceptive claims that possessed emotional resonance because they gave people a reason to do something they very much wanted to do but which was beginning to cause pangs of conscience.
It’s the same story with the absurdly deceptive claim of the Buy-and-Holders that there is no need for investors to lower their stock allocations when prices rise to insanely dangerous levels.