I am often asked how Valuation-Informed Indexers should go about changing their stock portfolio allocation in response to changes in valuations. Set forth below are descriptions of five strategies that are supported by the academic research. 1. The Cliff Approach If simplicity is your most i… Continue Reading

Buy-and-Hold works after the passage of 30 years. I’ve said that before and I stand by the comment because there is a sense in which it is so. However, there is also a sense in which it is NOT so. The purpose of this article is to present both sides of the story. Buy-and-hold's Finest Hour … Continue Reading

Brett Arends included a throwaway line in an article he wrote for the Wall Street Journal in 2010 that I thought was so important that I included the article in the “Links That Matter” section of my site. He said: “Valuation is by far the most important issue for investors.” Those of us t… Continue Reading

Michael Alexander reports on the results of a test of market efficiency in his book Stock Cycles. He categorized each month in stock return history from January 1802 through December 1999 as offering an above-average return or a below-average return. Then he checked how many of the sequential 50-mon… Continue Reading

Say that you have a six-sided dice and that you are going to throw it 30 times. The first 10 throws produce five cases in which the number “1” or “2” or “3” turn up (low rolls) and five cases in which the number “4” or “5” or “6” turn up (high rolls). That’s about what you … Continue Reading

I believe that investors of the future will indeed be taking Life Cycle Investing into consideration as a positive but incomplete step forward. Continue Reading

How bad will the next stock crash be and when will it arrive? Based on the P/E10 level a decline of around 65% seems very likely. We have to hope it won't start the Second Great Depression. Continue Reading

Beyond Buy-and-Hold #107 Last week’s column showed that there are circumstances in which a $100,000 portfolio offers the promise of delivering more lasting wealth than a $300,000 portfolio. It seems crazy. The trick is that this really is so if the $300,000 exists at a time of high valuatio… Continue Reading

You have a choice. You can have a portfolio worth $300,000. Or you can have a portfolio worth $200,000. Or you can have a portfolio worth $100,000. Which is better? Humor me for a bit... Continue Reading

Forget the S&P500 level – it’s the P/E10 value that REALLY counts. The evidence showing it to be so is at this point a mountain. Don’t take my word for it--check it out yourself. Continue Reading