Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
Hmm if that were true, why don’t the Wall Street institutions, the ones who have far more intelligence, experience, and resources than you ever will, set stock prices at half their current value?
There is no one person or one institution that sets stock prices, Anonymous. Stock prices are set by ALL investors.
The people who work in Wall Street institutions are in many respects like all the rest of us. Some of them are Buy-and-Holders. That group doesn’t see a need to divide by two. Some have doubts about Buy-and-Hold. They might be open to dividing by two but not push it because they don’t hear other people talking about it and don’t want to get on the bad side of the Buy-and-Holders. Lots of people have probably never thought about it.
We didn’t always know that we need to divide by two when prices are at two times fair value. We learned that in 1981, when Shiller published his “revolutionary” (his word) research. That’s the revolutionary part. Shiller’s research was revolutionary because it changed our understanding of how stock investing works in a fundamental way. Prior to 1981, we thought that the market was efficient, which means that there is no such thing as over-valuation. Now we know that over-valuation is a real phenomenon and that it needs to be taken into consideration in every calculation that is performed.
Now we just need to get the word out. When everyone understands the realities, we all move forward in a big way. That’s why I want to be able to post honestly. It’s why I want every other community member to be free to post honestly as well. When we are all posting honestly, we all learn from each other. Which is how it should be.
Are you able to say why the idea of permitting people to post honestly re the last 36 years of peer-reviewed research upsets you so? What do you see as the downside? If there are some who are not convinced that Valuation-Informed Indexing has merit, they can always stick with Buy-and-Hold, right? So what is the problem?
We have had thousands of community members express a desire to be able to post honestly and to learn from others doing so. Why do you think you have a right to deny them this? Are you willing to cover any losses they suffer as a result of your abusive behavior?