I’ve posted Entry #208 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Why I Write Only About Valuation-Informed Indexing.
Juicy Excerpt: In other fields, we learn new things and we move ahead. In the investing field, we learn new things and — we ignore the new things we have learned.
I believe that the reason why we do this is not that investing doesn’t matter but that it matters too much. We cannot bear to acknowledge having made big mistakes in our investing strategies because we know that making big mistakes in this area delays our retirements. So we are in denial about what we learned from Shiller. We aren’t going to acknowledge this mistake until it wrecks us.
When that happens, we are going to realize that we have missed out on 33 years of learning experiences. We will enter a new world, one in which there is no legitimate argument over whether we need to adjust our stock allocations in response to big valuation shifts but only over what tools we should use to determine how big an allocation adjustment is needed in different circumstances.