I’ve posted Entry #193 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called What Tolstoy, Machiavelli and Joan of Arc Can Tell Us About Stock Investing.
Juicy Excerpt: “There is nothing more doubtful of success than a new system. The initiator has the enmity of all who profit by preservation of the old institution and merely lukewarm defenders in those who gain by the new one.’
That’s Machiavelli. The guy nailed it! How did he know precisely why it was going to be so hard to make the transition from Buy-and-Hold to Valuation-Informed Indexing centuries before either model was conceived? That’s smart stuff!
If Valuation-Informed Indexing represented a small improvement on Buy-and-Hold, all of the ideas that move under this banner would have been adopted a long time ago. The trouble is that the advance is a huge one. Reduce the risk of stock investing by 10 percent and the world beats a path to your door. Reduce the risk of stock investing by 70 percent and you make lots of people who have built careers promoting the inferior model feel defensive and embarrassed and resentful and hostile.