I’ve posted Entry #207 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Rational and Irrational Investing Ideas Co-Exist.
Juicy Excerpt: People don’t respond with excitement when they learn that it is possible to reduce stock investing risk by 70 percent. They respond with worry. What if it doesn’t work? It’s been working for 140 years. What if you got something wrong? The paper passed peer-review and is subject to challenge to anyone who has access to the internet. What if it stops working? Anything can happen in this crazy, mixed-up world of ours but most of us elect to get out of bed every morning and brush our teeth and get on with the business of the scary new day all the same.
There’s something about stock investing that makes people think it should be rational. There’s money involved. I think that’s the thing. Bankers don’t wear loud ties because folks who appreciate formality in every other life endeavor sleep better knowing that their retirement money is being handled by people of great prudence. We don’t want the people handling our money to be wild and crazy guys and gals. So we like to think that there is some magical force rendering the stock market a rational place.
It’s not so.
The market is every bit as rational and every bit as nutso as the humans who participate in it. That’s us! The market is no more serious or silly than all of us who have money in it.