I’ve posted Entry #679 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called If Valuations Can’t Be Used for Market Timing, Shiller’s Research Serves No Purpose.

Juicy Excerpt: If overvaluation exists, the market is not efficient. If the market is not efficient, market timing must work. It’s that simple.

I’ve posted Entry #678 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called How Has the Mood of Investors Changed Over the Past 27 Years?

Juicy Excerpt: I took money out of stocks as a result of what I learned from reading Bogle’s book. I was planning to leave my corporate employment and make a living building a business on the internet in the not-too-distant future. I imagined that the new business would not produce much in the way of earnings in the early years. So I wanted my savings to be secure. What Bogle’s book told me about the risks of owning stocks at times of high valuations told me that stocks were not the right place for most of my money at the sorts of valuation levels that applied at the time.

I’ve posted Entry #677 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Stock Losses Are a Real Setback Even Though One Day Prices Will Recover.

Juicy Excerpt: Stock prices will recover. They will return to where they were before they crashed and eventually rise to new highs. This is the story that Buy-and-Holders tell investors who are worried about suffering losses. No! It’s your money on the line. Do not fall for the trickery!

I’ve posted Entry #676 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Shiller Quantified What Was Previously Thought To Be Non-Quantifiable.

Juicy Excerpt: Every investor with sense has always known that stock prices were affected both by rational factors (economic developments) and by emotional factors (investors getting overly optimistic or overly pessimistic and sending prices to places not justified by the economic realities. In pre-Shiller days, the trouble was that there was no way to determine how much of the current price was real and how much was emotional mumbo jumbo. The Buy-and-Hold concept was essentially an admission of defeat. The idea was — we cannot know how much emotion is affecting the price so we will just stay at a high stock allocation at all times and hope for the best.

Now we know what we need to know!

I’ve posted Entry #675 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Only Those Who Engage in Market Timing Are Truly Following a “Strategy.”

Juicy Excerpt: Do you know how a Buy-and-Holder would solve this sort of problem? He would reason that: “Even cars that get stuck in massive traffic jams on Route A always make it to their destination eventually. So Route A is the only route that should be considered. It would be mistake even to look at the pros and cons of Routes B or C. It must always, always, always be Route A, regardless of how bad the traffic is or how much money you have or how much you are in need of extra sleep. There’s nothing to think about – it’s Route A!”

Buy-and-Hold is the absence of strategy. It is the strategy for investors who don’t want to follow a strategy.

I’ve posted Entry #674 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called The Stock Market Craves Information It Has Been Denied.

Juicy Excerpt: Prices should slowly go up or slowly go down with none of the sudden, bold leaps and drops that we all think of as being characteristic of the stock market as it now exists. It’s because investors are human that we have this strange inclination toward violent and erratic movements in stock prices.

I’ve posted Entry #673 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called The Stock Market Is an Information Processing Machine.

Juicy Excerpt: What if the information is in error.? Bad information is a thing, is it not? Given that the market has this magic ability to spin information into gold, what’s to stop it from misinterpreting information bits into gold when they don’t merit the gold treatment?

I’ve posted Entry #672 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Buy-and-Hold Is a Price-Indifferent Strategy — That’s Not Good!

Juicy Excerpt: Shiller’s book is titled “Irrational Exuberance.” The first word of the term gives the game away. Irrational exuberance is not a good thing. As bad as it is, we all should be united in trying to put an end to it whenever it appears. You put an end to irrational exuberance by noticing when prices get too high and by uniting as a nation of people to pull them back down to reasonable levels. Um – hello, advocates of price-indifferent strategies!

 

I’ve posted Entry #671 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called The Thing That Permits Markets to Get Prices Right Is the Natural Tension Between Buyers (Who Seek Low Prices) and Sellers (Who Seek High Prices).

Juicy Excerpt: 

Why doesn’t the stock market already work like every other market? What’s the problem?

I’ve posted Entry #670 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Valuations Affect Long-Term Returns — But Why?

Juicy Excerpt: Think of each act of market timing as a tiny price crash. When you sell some stocks because prices have risen too high, you are crashing the market in a small way, are you not? Is it better to have tiny crashes all the time or to listen to the Buy-and-Holders and to avoid crashes until the CAPE value has risen so high that we all experience a gigantic crash?