Valuation-Informed Indexing #466: The Paragraph in Shiller’s Book Warning of the 2008 Economic Crisis Has Been Removed

I’ve posted Entry #466 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called The Paragraph in Shiller’s Book warning of the 2008 Economic Crisis Has Been Removed.

Juicy Excerpt: I do not know of another passage from Shiller’s work or from the work of others who believe that valuations matter that conveys the essential message so clearly. When Shiller says that “the real losses could be comparable to the total destruction of all the schools in the country, or all the farms in the country, or possibly even all the homes in the country,” it sends a chill down my spine. He is coming close in those words to describing a Second Great Depression.

And, indeed, there were articles in respectable newspapers like the Wall Street Journal in the days following the 2008 crash speculating that we might be headed into a second Great Depression. So that scary possibility was a live possibility for a few months. It was the relentless promotion of the Buy-and-Hold investment strategy, which posits that it is not necessary for investors to lower their stock allocations no matter how high prices rise, that made the crazy price levels that brought on that crash inevitable.