Best, but Not Perfect

3) The third tenet of Valuation-Informed Indexing is that the historical stock-return data provides the best numbers-based guidance available on how stocks will perform in the future.

There is a tremendous amount of useful information in the historical record. There are always limits. The key is to extract as much reliable information as we can.

History is our best source of guidance. It does not answer all questions. It is not perfect. But often, history can tell us much more than we imagine.

Here is an example of learning more from the historical data than expected, but without compromising reliability. It is in our Letters to the Editor. It starts: Just Because I Didn't Answer His Question..

How Long Do You Have to Wait for 7%?

Have fun.

John Walter Russell
November 8, 2005