I’ve posted Entry #285 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called The “Why” Behind Michael Kitces’ Strange Finding That High Valuations Point to Low Returns Only for a Time and Then to Higher-Than-Normal Returns.
Juicy Excerpt: It’s investor emotion that is the primary cause of stock price changes, not economic realities. That’s the Shiller breakthrough. That changes everything. The strange pattern described in the Kitces article makes sense once you accept that it is investor emotion that is the primary cause of stock price changes.