I’ve posted Entry #299 to my weekly Valuation-Informed Indexing column at the Value Walk site, It’s called Shiller Showed That Valuations Matter, the Return Predictor Shows How Much They Matter.
Juicy Excerpt: After two months. Larry called me and we talked for several hours about the good that this new investing model (rooted in Robert Shiller’s research) could do for the world. The following day he sent me an e-mail containing the words quoted above. Larry put Valuation-Informed Indexing concept to the test and a skeptic became a believer. It happened the same way with me (I was once an enthusiastic Buy-and-Holder). And with John Walter Russell. And with Wade Pfau. And with scores of others.
I would like to see it happen with millions of others. But that hasn’t happened yet by a long shot. So I often ask myself what it is that people need to hear to bring them around. I believe that the answer is — they need to work the numbers. The research-backed finding that exercising price discipline when buying stocks can reduce risk by 70 percent is a highly counter-intuitive reality. People find it impossible to believe until they see the numbers for themselves.