“We Need Everyone Participating. No One Person or Small Group of People Has All the Answers. We Need to Hear From Thousands of Smart People, All Offering Their Unique Perspectives on the Matter. That’s How We All Come to a Better Understanding Over Time.”

Set forth below is the text of a comment that I recently posted to the discussion thread for one of my columns at the Value Walk site:

As usual, it looks like you did another repeat. Any plans to post something new in the near future?

Everything I post is going to be some variation of the theme “Valuations Matter.” Sammy. I believe that the fact that valuations matter and the extent to which they do is the most important issue facing our nation today. I believe that we could bring the economic crisis to an end if we had a national debate on how valuations matter. In fact, I believe that we never would have experienced an economic crisis if we had launched a national debate on the valuations question many years ago.

It’s a fundamental question. Both Buy-and-Hold and Valuation-Informed Indexing are numbers-based models for understanding how stock investing works. The Buy-and-Holders believe that stock market changes are caused by economic developments, which would mean that valuations don’t matter. The Valuation-Informed Indexers believe that stock price changes are caused by shifts in investor emotion, which would mean that valuations are critical. Which is it? Eugene Fama, who supports Buy-and-Hold, and Robert Shiller, who supports Valuation-Informed Indexing, were both awarded Nobel prizes for their research. But both cannot be right given that they are saying opposite things. So, as a nation, we need to figure out which one of them is right. Yes?

It seems so to me. We need everyone participating. No one person or small group of people has all the answers. We need to hear from thousands of smart people, all offering their unique perspectives on the matter. That’s how we all come to a better understanding over time. We are all in this together. We all benefit from learning more about how stock investing works. So we all need to contribute what we can to advance the debate a bit.

That’s my sincere take. That’s where I am coming from. I hope that helps a small bit.

I naturally wish you all the best that this life has to offer a person, my dear Buy-and-Hold friend (from whom I have learned a good bit over the years).

Learning-Focused Rob