I’ve posted Entry #218 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Shiller’s Record at Short-Term-Timing Predictions Is Poor.
Juicy Excerpt: Most interviews with Shiller focus on his short-term-timing predictions rather than on the important implications of his research re how investors should be changing their stock allocations in response to big price swings as a means of keeping their risk profiles roughly constant. The reality is that Shiller possesses about the same ability to predict where the market is headed in the short term as everyone else — his track record is poor. We all should make an effort to give up our preoccupation with what doesn’t work (short-term timing) and move on to the truly exciting finding of Shiller’s 1981 research — his finding that long-term timing (changing your stock allocation because of a big shift in valuations with an understanding that you may not see benefits for doing so for as long as 10 years) always works.