Valuation-Informed Indexing #479: Investors Hurt Themselves in the Long Run By Bringing on Excessive Price Gains in the Short Run

I’ve posted Entry #479 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Investors Hurt Themselves in the Long Run By Bringing on Excessive Price Gains in the Short Run.

Juicy Excerpt: Can I afford two weeks of vacation this year or only one? Should I buy a new car or get by a bit longer with the one I already own? Should I encourage my child to attend a state university or tell her to feel free to attend a more expensive out-of-state one? Investors ask themselves questions of this sort on an almost weekly basis. To analyze these questions properly, they of course need to know how much they have in savings. It is of course impossible to know for so long as we live in a world in which stocks are often priced at two times fair value or more, as they have been for much of the past 23 years.