Vakuation-Informed Indexing #519: Stock Investing Seems Safer If We Presume Rational Investors

I’ve posted Entry #519 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Stock Investing Seems Safer If We Presume Rational Investors.

Juicy Excerpt: Shiller’s research showed that the market is NOT rational, that prices were set by those highly emotional humans, who sometimes greatly overpriced it and on other occasions greatly underpriced it. I see great potential in Shiller’s research to enhance all of our lives because, once there is widespread acceptance that the market is not rational and that the numbers on our portfolio statement often do not reflect the economic realities at all well, we can all get about the business of making the market more rational than it is today. If we all faithfully practiced market timing, prices could never reach the levels where they reside today. Market prices become self-regulating in a world in which most investors understand the how-to implications of the last 39 years of peer-reviewed research in this field.