Valuation

For an activity that is supposedly best done using pure logic, investing can be incredibly emotional. There will inevitably be times that test one’s intestinal fortitude and to expect otherwise is envisioning a path that has never existed in financial markets. But to some extent, investors do get to choose which type of volatility they are willing to accept. Since the price we pay is the primary determinant of future returns (over longer periods of time), if we invest in something that is expensive relative to its historical norm, there’s a very good chance we’ll take losses eventually – in…