I’ve posted Entry #550 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Assurances That Stock Prices Will Go Back Up Again Don’t Count for Much After a Crash.
Juicy Excerpt: We are going to need to reassure investors at that time. I don’t think that we should try to persuade them to buy enough stocks to push the CAPE back to today’s level. We are all better off when stocks are priced at fair-value levels. So a CAPE of something in the neighborhood of 16 would be good. An argument could be made that something a bit higher than that might be better. We have to make the trip down to fair-value prices at some point. But that is such a long trip that it might be better to achieve it in stages. A drop to something a bit closer to 16, followed by some time for stock investors to catch their breath before a further drop to 16, might be ideal.
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