I’ve posted Entry #703 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called The Arc of History in Stock Investing Bends Toward Rationality.
Juicy Excerpt: Martin Luther King once argued that the ark of history bends toward justice. It’s not hard to imagine that there were times when he had to reassure himself that that was so just to continue on with the battles he was fighting. I believe that in the personal finance realm the way to think about it is that the arc of history bends toward rationality.
Human nature bends towards the irrational. For example, see your own behavior over the past 22 years.
I think that investors are capable of engaging in irrationality and also capable of engaging in rationality. I see it as the job of investment advisers to help investors become as rational as they are capable of being.
Rob
If I had a plan to fund my retirement and it was failing, would you consider it to be irrational if I did not make any changes in order to fix my failures?
If I got an important number wrong in a retirement study posted at my web site, would you consider it irrational if I failed to correct it for 22 years?
Rob
If the retirement study didn’t need a correction, wouldn’t it be irrational for this person to keep repeating the lie for 22 years?
Um….
Rob