Day: April 15, 2026

[…] For individuals, succeeding conventionally would be to invest in the passive S&P 500 Index because it is conventional and stocks only go up and to the right. For the institutional investors, being passive expects that others won’t do well in stock picking. Passive investing keeps your fees low and, all else equal, is the way to add value. These facts are all conventional. The inherent risk is that the passive S&P 500 Index causes most investors to fail together. Watching the conventional crowd believe that the market can’t ever go down longer-term because of factors like 401k flows, loss of active decisions, etc., is just as adorable as believing in 2005-2007 that house prices could never go down. […]

Now that the bloom has started coming off the growth/momentum rose, we would like our shareholders to consider the arguments of those who believe the S&P 500 Index is “just in a correction.” Their argument is that today’s S&P 500 Index has the ability to provide a permanently higher price-to-earnings (P/E) ratio to protect forward returns. […]