Set forth below is the text of a comment that I recently put to another blog entry at this site:
I actually don’t know one person who buys into stocks without concern for price.
Yes and no.
Buy-and-Holders kinda sorta acknowledge that valuations matter.
But they don’t QUANTIFY the effect of valuations.
They quantify everything else. But not that. The Old School SWR studies contain NO adjustment for the valuations level that applies on the day the retirement begins.
That’s always been the source of the friction between me and the Buy-and-Holders.
I learned from them to quantify stuff and to pay attention to the peer-reviewed research and to focus on the long-term. So, when I learned from Shiller that valuations ALWAYS affect returns in the long-term, I naturally got about the business of QUANTIFYING the effect.
And the Buy-and-Holders went positively apeshit.
It’s THEIR idea!
But they hate it. They hate that one application of their idea with an awesome hate.
You figure it out, you know?
I think they hate it so much because they know on one level of consciousness that what I am saying makes perfect sense given everything else they believe.
If you come up with some different explanation of their behavior, please fill me in. Until someone comes up with something else, I am going with the cognitive dissonance thing.
It’s their idea to quantify things. I picked that one up from my Buy-and-Hold friends. But they hate, hate, hate the idea of quantifying the effect of valuations on long-term returns.
Other than that, Jack Bogle and I (and Mel Linduaer and I and John Greaney and I) are soul mates.