I’ve posted Entry #525 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Rooting for a Stock Price Crash Is Like Rooting for a Hurricane.
Juicy Excerpt: Something that I do feel comfortable wishing for is that as a nation we learn the lesson that we need to learn to avoid the next financial heart attack. The reason why it is wrong to wish for a price crash now is that the distance between fair-value prices and the price today is so large that the experience of closing the gap is going to be very painful. If in the future we made it a practice to close that gap once prices got only a little out of hand, it would never again be true that a price crash would hit like a hurricane. Little price crashes are good price crashes. They are adjustments, “corrections” as some like to put it. Little price crashes are wonderful. They allow stocks to continue going up in price (a gain each year of 6.5 percent real is justified by the economic realities) without putting us all at risk of enduring a financial hurricane.
This is why I am such a harsh critic of the Buy-and-Hold strategy.
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