Valuation-Informed Indexing #596: Stock Prices Drift Upward Unless Most Investors Practice Market Timing

I’ve posted Entry #596 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Stock Prices Drift Upward Unless Most Investors Practice Market Timing.

Juicy Excerpt: What we see in the historical record is what I would refer to as a roller coaster pattern. Stock prices rise gradually over time for many years (with brief price pullbacks mixed in) until they reach shockingly high levels and then they fall sharply and remain low for a number of years before beginning a gradual trip back to crazy high levels.

So investors clearly give in to their emotional desire to create pretend money for themselves. But they do not give in to those Get Rich Quick urges entirely. They seem to feel a need to maintain enough rationality to not cause themselves to lose confidence in the pretend prices that they want to believe are real. Prices go up over time. But it takes a long stretch of years for them to travel the path from crazy lows to crazy highs.