“Will an Investor With a True Portfolio Value of $400,000 Who for a Time Was Led By the Buy-and-Holders to Believe That His Portfolio Had a Value of $800,000 and Who Is a Short Time Later Told That His Portfolio Value Is Only $200,000 Become More Open to Hearing What the Last 39 Years of Peer-Reviewed Research Teaches Us All About This Important Subject?”

Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:

“I certainly believe that the Coronavirus matter is causing genuine economic disruptions. There are economic causes for the drop in stock prices that we have seen”

And that is why you won’t see a dime of the $500 million. There is always something to blame for the drops.

We’ll see.

I agree that there is always something to blame. That’s true of everything. There is always something to blame for anything.

The question is whether a drop in the CAPE value from 32 (two times fair value) to 8 (one-half of fair value) changes investor psychology. If Shiller is right that shifts in investor emotion play a big role in causing stock price changes (I believe that he is), then a change in the CAPE value from 32 to 8 is going to signal a huge change in investor psychology. Will an investor with a true portfolio value of $400,000 who for a time was led by the Buy-and-Holders to believe that his portfolio had a value of $800,000 and who is a short time later told that his portfolio value is only $200,000 become more open to hearing what the last 39 years of peer-reviewed research teaches us all about this important subject?

I believe that he will become more open. And I believe that that will make all the difference in the world. But we are just going to have to wait to see how it all plays out to find out for sure.

I naturally wish you all the best of luck with it, in any event.

Confident (At Least Reasonably So!) Rob