I’ve posted Entry #362 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called The Stock Market Is Only As Smart As the Investors Who Comprise It.
Juicy Excerpt: The problem with Buy and Hold, in my view, is that it assumes that the market as a whole is smart enough to get things right. The way to make smart decisions is to assume as little as possible but to instead always remain on guard against mistakes of all types. When a large percentage of investors comes to believe that the market cannot get it wrong, that’s when the market lets down its guard and gets it horribly wrong. For so long as most investors worry about valuations, the valuation level for the market as a whole remains reasonable. When most investors become Buy and Hold types, there is no longer any intelligence working to keep prices in check and prices rise to insanely dangerous levels.