I’ve posted Entry #310 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Once There Is a Bubble, It’s Too Late to Do Anything About It.
Juicy Excerpt: But the problem of a lack of price discipline can be addressed through education. The reality is that all overvaluation is a bad thing; small amounts of overvaluation lessen the value proposition in the same way as the large amounts of overvaluation that are referred to as “bubbles,” just to a lesser degree. Investors taught to object to all overpricing (as the participants in all markets other than the stock market have been taught to object to all overpricing) will tap the brakes each time a little bubble-generating irrational exuberance is applied to the engine.
Bubble cannot be prevented in markets lacking price discipline and cannot develop in markets possessing price discipline. Talk about bubbles wastes our time. Our focus should be on educating investors on the need to always exercise price discipline so that bubbles become a thing of the past.
Anonymous says
Your Value Walk column is locked behind a pay wall. This annoys your legions of readers who want to see more than the Juicy Excerpt. But on the bright side, it must mean you are being fairly compensated for your work.
Rob says
I wasn’t aware that it was behind a pay wall. I’d prefer that it be available to everyone who wants to read it. But that of course is not my call. Jacob has bills to pay like everybody else. If he is able to make money from it, I think that’s great. He has provided space to me for six years now when very few others were willing to do so. I am grateful to him for the opportunities to spread the word that he has provided me.
When the concept catches on (I believe this will happen following the next price crash), he will have exclusive rights to over 300 columns exploring VII from every possible angle. I could see how he could indeed make some money from that. He will have earned every penny of it by virtue of his six years of loyalty. It would make me happy if he were to receive a payoff of that sort.
Jacob doesn’t compensate me for the column and I have never asked him to. My aim is to get the word out. I have a funny feeling that I will be receiving plenty of financial compensation for my development of the VII concept in the days following the next price crash.
I am confident that you Goons will take up a collection to finance Sammy Soda’s entrance fee. Where would we all be without his fine comments each week?
Take care, man.
Rob