I’ve posted Entry #185 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Falling in Love With Your Inner Goon.
Juicy Excerpt: The Inner Goon is skeptical of new ideas. Shiller’s “revolutionary” (his word) findings were published 32 years ago and big names still promote Buy-and-Hold strategies to this day. That’s bad. Our skepticism is holding us back big time.
But skepticism itself is not a bad thing. The reality is that the Buy-and-Holders advanced many powerful insights. We want to be skeptical about challenges to those ideas. And once we come to accept the need to consider valuations when setting our stock allocations, we will want to be skeptical of challenges to the new orthodoxy as well.
If our minds become too flexible, we will find ourselves jumping from investing fad to investing fad. The idea that long-term timing is not required was a mistake. But it was a mistake that persuaded many good and smart people. We shouldn’t dismiss it too easily. I certainly wish that more people would question it more forcefully. But, trying to be objective about things, I can see that jumping from one core belief to its opposite should be done only with a great deal of caution.