I’ve posted Entry #277 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called If We Can Change Smoking Behavior, We Can Change Investing Behavior.
Juicy Excerpt: There is nothing that anyone could have said in earlier days to persuade me that tight restrictions on smoking were a good idea. But over time I have come around, at least to some extent. Changes that cannot be achieved overnight in many cases can be achieved gradually.
Most people today view the idea that investors should change their stock allocations in response to big valuation shifts as an “out there” idea. And it probably is not realistic to think that most people will change their thinking on the subject overnight.
But I believe that we will see big changes take place if those of us who believe in Shiller’s research make the case in a clear and firm and non-apologetic way. We won’t win the battle in a day. We will take small steps forward followed by more small steps forward. But one day we will look up and see that we have walked a long ways.
It all starts happening when we work up the courage to speak up. So long as we view the end goal as unattainable, we remain stuck in a world where stock investing is a far more risky activity than it should be. We need to be like my friend at the restaurant and express our concerns. Some will look funny at us (I know how it goes). But we will win them over in time if we continue to fight the good fight.