I’ve posted Entry #189 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Stock Gains Are a Bad Thing.
Juicy Excerpt: Say that you’re 35 years old and that you expect to retire at age 65. You’ll be buying stocks for another 30 years. If stock prices increase this year, you’ll see an increase in your portfolio value. But you’ll also be forced to pay a higher price for the stocks you buy with each paycheck. Do the math and you’ll see that you would be better off if the price gain were delayed until closer to your retirement date.
Stocks are like anything else you buy. They offer a better value proposition when you pay less for them. And stock gains always push prices up. Since you are going to remain a net buyer of stocks for many years to come, stock gains are bad for you.