I’ve posted Entry #419 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called What Makes Stock Investing Hard Is the Poor Feedback Mechanism on Allocation Choices.
Juicy Excerpt: But prolonged bear markets do not take place often. We have good records of stock prices going back to 1870. That’s 148 years. Stock valuations have always played out in a hill-and-valley pattern, with perhaps 20 years of gradually rising valuation levels followed by perhaps 15 years of gradually falling valuation levels. So an investor sees the completion of one full pattern only after he has been investing for 35 years. Someone who started investing in stocks in 1982 would not have personally witnessed the bottom of a secular bear market to this day, 36 years later (this bull/bear cycle has taken longer than any earlier one to play out). That’s a slow, slow, slow feedback mechanism, the kind that the human mind has a hard time processing and learning from.
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