Markets Change. So Should You.

If you don’t know that markets have evolved and some strategies are no longer valid, you’ll end up making terrible decisions.

So many investors today put tremendous faith in investing metrics showing, say, that this stock is overvalued, or that the overall market is undervalued. They back it up with a century worth of historic data, showing how well the metric has worked in the past.

I often wonder: Have things changed? Have so many people caught onto a popular metric that they’re less effective than they were in the past? Should we, like Graham, be constantly tinkering with our metrics, discarding what’s unlikely to work anymore?

There’s a mocking statement that “it’s different this time” are the four most costly words in investing. And sure, investors fall for some of the same traps again and again. But for many things, it’s always different this time. Things change. So should you.