Did Joe need the IQ of a genius to do this? Nope. He was just an average student in college. In fact, just by implementing this no-brainer strategy, Joe beat out the majority of money managers at mutual funds who DO have graduate degrees in finance from Harvard, Wharton, etc., and who spend their careers studying reports from Wall Street analysts who ALSO have MBAs from the top Ivy Leagues.

Though he didn't have to be a genius, what he did have is one of the greatest rallies in all time as a tail wind. Depending on your favourite metric, generally it's fair to say that the broad cap-weighted US market valuation levels are higher now than at any time since the 1929 peak. On some metrics it's only close to the tech bubble peak--much more comforting!

I'm not saying current valuation levels are "wrong", they are what they are. But it's fair to say that they could not have been foreseen. Joe's result was a whole lot more luck than smarts.

The ending date is a big determinant of what looks smart with hindsight. Lots of people who retired in 1999 (as I did) and switched their equities to an all-bond portfolio (as I didn't) would also look extremely smart. So, the general rule is: be highly concentrated in whatever is going to be most richly valued at your retirement date.

Jim

Average S&P 500 price-to-sales ratio 2000-2014 inclusive: 1.39
Current level: about 3.0
Is a dollar of sales for the average company really worth over twice what used to be normal even in the post-20th-century era of high valuations? The market seems to think so, for the moment.