Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
“If I am wrong about investing, I want to find that out as soon as possible.”
How about now? That report presented simple, objective, provable facts. But you say it’s wrong anyway. Why? Because you feel it must be wrong. Common sense, and all.
So getting back to your quote, it’s impossible to convince you that you are wrong. Your gut feelings will always beat someone else’s arithmetic.
I wrote a column about that article that will appear at the Value Walk site in a few weeks, Anonymous. Perhaps reading the column will help you to understand where I am coming from. Perhaps not, you know? But all that we can do is to continue to try.
You are right in your suggestion that common sense matters a lot to me. Common sense is my default. There are cases in which the belief that follows from common sense turns out to be the wrong one. We need to keep out minds open to the possibility that counter-intuitive findings are pointing us to something important.
But it is my strong belief that, in the investing realm, the research findings of the last 36 years support the common-sense belief that price discipline is key when buying stocks. So I go with that. I believe that the reason for the friction we have seen is that it was not until 1981 that the research was in line with common sense. The pre-1981 research, the research that was once thought to support Buy-and-Hold and that is still thought to support Buy-and-Hold by millions of good and smart people, was not discredited until Shiller published his “revolutionary” (his word) findings in 1981.
You are right that it would take a lot at this point to convince me that I am wrong. I have studied this stuff for a long time and in great depth and so my views are to a large extent fixed. I like to believe that I remain at least a tiny bit open-minded.
But you know what? We humans are always influenced by our biases. And I think it would be fair to say that I have a strong bias in favor of Valuation-Informed Indexing at this point in the proceedings. So I certainly would not advise anyone to change his or her opinion re how stock investing works based solely on what I say. People need to take my bias into consideration when thinking about what I say and check out what I say by checking into the research on their own and by asking questions and by looking for holes in my arguments and by talking things over with others and all that sort of thing. I am not God. I believe what I believe. But I am every bit as flawed as all of my Buy-and-Hold friends.
That’s my sincere take re these terribly important matters, in any event.
I naturally wish you all the best that this life has to offer a person, my good friend.