I’ve posted Entry #210 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Shiller Is Weak re the How-To Aspects of Stock Investing.
Juicy Excerpt: The primary reason why people buy investing books is to learn what to do with their money. Irrational Exuberance is amazing on theory. But Shiller devoted only two paragraphs of his masterwork to the how-to questions.
Here is what he says: “So what should investors do now? The natural first step may be, depending on current holdings and specific circumstances, to reduce holdings of U.S. stocks…. But there is a fundamental difficulty with advising individuals and institutions to get out of the stock market. If such advice were taken by large numbers, it would cause an immediate drop in the level of the market. In fact, we cannot all get out of the market. We can only sell our shares to someone else. Somebody must be left holding the outstanding shares. As a group, those unfortunate people who bought in at a market high have already made their mistake, and we cannot correct it for them after the fact.”