I’ve posted Entry #398 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Putting More Focus on Valuations Would Make Indexing More Popular.
Juicy Excerpt: What happens when stock prices rise so high as to bring on a crash? People lose money, of course But it’s not just that. When people lose large portions of their life savings in a crash, they lose confidence in the stock asset class itself. Most people don’t understand that it is only when stocks are high-priced that they become dangerous. People who suffer through a crash swear off the asset class and become reluctant to invest in stocks even when they are selling at perfectly reasonable prices. These investors lose at both ends. They see large portions of their life savings disappear because they buy into the hoopla about stocks when they are dangerous and then they miss out on the benefits of stocks when the dangers are close to nonexistent.
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