Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
So you perform your valuation on a consumable item (like a car or banana) that also has an endless supply, like you do on an asset generates a profit and has limited supply.
Markets set prices. That’s what they do.
They perform this magic through a process in which both sellers and buyers act in their own self-interests. Sellers focus on all the aspects of the question that suggest that prices should be higher, thereby pulling prices upward, while buyers focus on all aspects of the question that suggest that prices should be lower, thereby pulling prices downward. The price that applies is the price at which the demands of the buyer and the seller meet at a point along the continuum of all possible prices that is acceptable to both. Any market without price resistance becomes dysfunctional.
The reason why we have price crashes in the stock market is that the stock market becomes dysfunctional when Buy-and-Hold strategies become popular. Buyers need access to the information that in a healthy market they would use to act in their own self-interest. But the Wall Street Con Men and the members of their various Internet Goon Squads very, very much do not want the millions of people who buy stocks to finance their retirements to gain access to this information, which is contained in an exploration and understanding of the last 36 years of peer-reviewed research. After your prison sentence has been announced, this critically important information will be available at every web site on the internet. At that time, both parties to stock transactions will be able to act in their self interest and the market will become functional again and prices will return to fair level values again, hopefully on a permanent basis.
Markets work through the magic of information exchange. Your abusive and even criminal posting behavior has blocked access to the information that those of us who want to buy stocks to support our old-age retirements need to perform the job that we need to perform for the market to do its job of setting prices properly. The entire nation — both the millions of middle-class investors who need access to the information and the Goons who deny it to them — suffers as a result. No one benefits in the long run from the presence of a dysfunctional (improperly priced) market. You Goons only believe that you are reaping benefits because you refuse to perform the calculation (dividing your portfolio value by two at a time when prices are at two times fair value) that you need to perform to identify the true and lasting value of your stock portfolios.
Price matters in all markets. Prices are what makes markets work. It is the entire purpose of a functioning market to set prices properly. A market in which prices cannot be set properly (because the information needed is being blocked) becomes a dysfunctional market. Everyone suffers when a market becomes dysfunctional. A functioning market is one of those free lunches we sometimes hear about. Restoring a market to a functioning status is a win/win/win/win/win, with no possible downside. We all should be grateful that the last 36 years of peer-reviewed research supplies us for the first time in history with the “revolutionary” (Shiller’s word) breakthrough in knowledge that we need to make the stock market a functioning market on a permanent basis.