Valuation-Informed Indexing #456: The Black Swan Concept Confuses Our Understanding of How Stock Investing Works More Than It Illumines It

I’ve posted Entry #456 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called The Black Swan Concept Confuses Our Understanding of How Stock Investing Works More Than It Illumines It.

Juicy Excerpt: The 2008 crisis was not a Black Swan. Buy-and-Hold encourages price indifference when it advises investors not to practice market timing. Widespread price indifference causes bull markets to get out of hand. Then, when the market performs its core function of getting prices right by crashing them (it’s not possible to get prices right in any other way in a nation of Buy-and-Holders), trillions of dollars of spending power are removed from the economy and we all suffer the consequences.

The economic crisis was a predictable event. In fact, it was predicted by the leading voice challenging the Buy-and-Hold Model. We all should be taking the warning that it delivered to us to heart before we repeat the mistakes that brought it on.