I’ve posted Entry #291 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Bull Markets Increase the Odds of Two Outcomes — Very High Return Years and Very Low Return Years.
Juicy Excerpt: There were a small number of investing analysts who advised their clients or readers to lower their stock allocations in early 1996. Imagine what their clients thought of them when a return of 19 percent was delivered for 1996. And then a return of 31 percent was delivered for 1997. And then a return of 27 percent was delivered for 1998. And then a return of 18 percent was delivered for 1999.
Investing experts need to eat too. Investing experts prefer to have their clients like them rather than hate them. Valuation-Informed Indexing works. Buy-and-Hold sells.
We all want to obtain higher returns at lower risk. Valuation-Informed Indexing always delivers higher returns at lower risk. It should be more popular than Buy-and-Hold.
But the human mind focuses on what happens in the short-term rather than what happens in the long-term. The stock market delivers feedback in a way that messes with our minds.