Wade Pfau, Associate Professor of Economics at the National Graduate Institute for Policy Studies in Tokyo, Japan, advanced several posts to the Bogleheads Forum this morning showing that, when risk is held stable, Valuation-Informed Indexing beats Buy-and-Hold by a huge margin, and , when the long-term return is held stable, Valuation-Informed Indexing provides the same long-term [...]
Wade Pfau: “Any Data Mining I Am Doing Favors Buy-&-Hold…The Findings for ‘Market Timing’ Are So Robust That It Hardly Matters How We Do It”
Published in March 1st, 2011
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- "Your Website Is So Enjoyable That It Is Keeping Me From My Research As I Am So Excited That I Have Found Such a Valuable Resource." -- Stuart, A Site Visitor
- "What We're Talking About Here Really...Is Empowerment." -- Wanderer, a Poster at the Motley Fool's Retire Early Board.
- "The Stock Market Valuation Tool on the PassionSaving.com Site...Is Based upon the Principle that Over the Long Term, Stock Market Prices Will Reflect the Ten-Years Earnings Growth of the Underlying Companies. While There May be Blips Here and There, Ultimately Prices Will Return Back to a Common Growth Pattern." -- The Links.com Review of The Stock-Return Predictor
- "Rob’s Arguments in Favor of Value Investing Actually Make a Lot of Sense In a Way That Should Make Any Rational Buy-and-Holder Uncomfortable." -- Pop Economics Blog
- "What I Don't Understand Is How Rob Can Correspond in Such a Sweet and Polite Way -- Yet He Irritates Me to No End!" -- A Poster at the Financial WebRing Forum
- "You Go About It in a Manner that is Catastrophically Unproductive by Adding Missionary Zeal that Inflates Your Importance and Demeans Others. The Whole Idea That There is a New School of Safe Withdrawal Rates Reeks of Personal Aggrandizement." -- Dallas Morning News Columnist Scott Burns
- "Inflammatory" -- The Morningtar.com Site Administrator
- “What Warren Buffett Did Was Essentially Quite Close to What Rob Bennett Has Written.... Though We Often Hear Only His ‘Buy-and-Hold Forever’ Mantra, Warren Buffett Has in Fact Been Cleverly Employing the Equivalent of the Rational Investing Model, Incorporating Long-Term Market Timing Based on Valuation of the Market in His Allocation of Money to Stocks.” -- Investing Notes Blog
- "This Report Offers A Fresh Perspective That Is Rarely Found In Other Financial Literature." -- Secrets of Retiring Early Reader
- "Rob Bennett Makes the Claim That Market Timing Based on Aggregate P/E Ratios Can Be a Far More Effective Strategy Than Passive Investing Over Long Horizons (Ten Years or More.) I Am Not in a Position to Evaluate This Claim Empirically But It Is Consistent With Shiller's Analysis and I Can See How It Could Be True." -- Rajiv Sethi, Professor of Economics, Barnard College, Columbia University
- "Retiring Early Was A Concept I Did Not Entertain. I Was Going to Retire at 65 After Putting in 40 Years. Now I Am Glad To Say That All That Has Changed." -- Secrets of Retiring Early Reader
- "In a Couple of Days, I Had Devoured the Entire Book." -- A Passion Saving Reader
- "FIRECalc May Not Be the Last Word on Safe Withdrawal Rates" -- Former Wall Street Journal Columnist Jonathan Clements
- "A Safe Withdrawal Rate Is Very Dependent on the Valuation of the Stockmarket at the Retirement Date" -- The Economist Magazine
- "It Seems to Me That Some on This Board Feel Threatened by the Arrival of Rob and His Ideas. They Feel a Threat to Their Perceived Elite Status." -- Motley Fool Poster
- "You've Got to Say One Thing for Rob. He Has NEVER Lowered Himself to Ad Hominen Attacks -- Subliminal or Otherwise -- on Any Other Person on This Board. Not Once. Ever. At Least Give Him Credit for That." -- Motley Fool Poster
- "I Have Never Seen Rob Show Incivility. No Matter What. Truly Amazing. Either He Is Really the Output of an Artificial Intelligence Program, or the Man's on the Way to Becoming a Saint!" -- Early Retirement Forum Poster
- "You're the Politest Guy on the Internet. Such a Soft Touch!" -- Jonathan Lewis
- "Props to Keeping Your Cool in the Married with Debt Article. Best of Luck Combating Buy-and-Hold." -- Money Mamba Blogger
- "I Caught Up [at the Financial Bloggers Conference] With a Fairly Controversial Financial Blogger Named Rob Bennett, Who Struck Me As the Nicest Guy Around. There -- I Said It!" Digerati Life Blogger
- "Mr. Bennett, You Are Spot on About Integrating Some Type of Valuation Filter to One's Stock Allocation. Astute Investors Have Incorporated Some Type of "Valuation Timing" Into Their Investment Decisions Since the Beginning of Time." -- Poster at the Psy-Fi Blog
- "I Have Read Everything I Can About Valuation-Informed Indexing, and I Agree With You That Buy-and-Hold Passive Investing Is Extremely Problematic... I Value and Respect the Passion, Hard Work and Research That You Have Put Into This Very Important Issue... I Think What You Are Doing Has Huge Value." -- Carl Richards, Owner of Clearwater Asset Management and Author of the Behavior Gap Blog
- "The World of Personal Finance Blogging Needs More Rob Bennetts. He’s Passionate. He’s Intelligent. He’s Writing Things That Go Against the Grain." -- Financial Uproar Blog
- "His Insights Into What Is Really Going On In The Stock Market Are Quite Compelling." -- Future Storm Blog
- "It Was an Epiphany...Valuation-Informed Indexing Beats Buy-and-Hold Over Most Long-Term Holding Periods at Much Lower Volatility." -- Sam, a Site Visitor
- "I Am Intrigued by Your Ideas" -- Adam Butler, Director and Wealth Management & Portfolio Manager at Butler, Philbrick & Associates.
- "I Read the Book and I Loved It. The Philosophy Resonated with Me. I Am a Believer in Your Concept." -- Dr. Peter Weiss, author of More Health, Less Care
- "If Your Investment Ideas Can Do for Investing What Weston Price’s Ideas Did for Food, You’ve Got Our Attention" -- Owners of the End Times Hoax Blog
- "I Have Looked at His Website and Reviewed His Research and Find It Both Compelling and Completely Logical and Common-Sense-Based" -- Apex, a Poster at the Free Money Finance Blog
- " I Do Agree That If Investors Paid More Attention to Valuation, We Would Have Fewer Boom-and-Bust Cycles.... The Investing Institutions Are Definitely Going to Avoid It Because It Will Affect Their Income. -- Bret, Hope to Prosper Blogger
- "Must Read As Per My Viewpoint For All Value Seekers..." -- Ajit Vakil, Value Investing Congress Member
- "His Approach Is Both Mathematically Rigorous and Easy to Understand." -- Online Investing AI Blog
- "There Is Nothing More Difficult to Plan, More Doubtful of Success, Nor More Dangerous to Manage Than a New System. For the Initiator Has the Enmity of All Who Would Profit By the Preservation of the Old Institution and Merely Lukewarm Defenders in Those Who Gain By the New Ones." -- Machiavelli
- "I Am Not Afraid. I Was Born to Do This." -- Joan of Arc
- "First They Ignore You, Then They Ridicule You, Then They Fight You, Then You Win." -- Ghandi
- "I Am Also Extremely Grateful to Rob Bennett for Motivating This Topic and Contributing His Experience and Encouragement" -- Wade Pfau, Associate Professor of Economics at the National Graduate Institute for Policy Studies, in His Recent Study Showing That "[Long-Term] Market-Timing Strategies Provide Comparable Returns As a 100 Percent Stocks Buy-and-Hold Strategy but with Substantially Less Risk. Meanwhile, [Long-Term] Market Timing Provides Comparable Risks and the Same Average Asset Allocation as a 50/50 Fixed Allocation Strategy, but With Much Higher Returns.”
- "Rob Bennett Was an Early Pioneer in 3rd Generation Modeling by Advocating (Through Various Online Forums) that Withdrawal Rates Must Be Adjusted for Market Valuations Consistent with Research by Campbell and Shiller" -- Todd Tresidder, Financial Mentor Blogger
- "I Am Fascinated by the Growing Body of Research that Revolves Around the P/E10 Ratio...Published at Advisior Perspectives as Well as Independently and in Professional Journals by Numerous Researchers: Robert Shiller, Doug Short, Wade Pfau, Michael Kitces, John Hussman, Crestmont Research, Jim Otar, the team of Mike Philbrick and Adam Butler, Rob Bennett and others." -- Kay Conheady in Advisor Perspectives
- " The Calculators on Your Site Are Great Resources for All of Us. It Still Amazes Me As Well How So Many People Can Say 'Valuations Matter' Yet in the Next Breath, They'll Say That We Should Ignore Valuations" -- John Marlowe, Logistics Analyst at Hess Corporation
- "Rob Is an Enigma in the Personal Finance World. He Has Very Interesting Theories on Safe Withdrawal Rates and Buy-and-Hold Investing Based on Market Valuations. But He Weaves a Tale Which Makes the Stories of Alexander Litvinenko and Gareth Williams Seem Somehow Tame by Comparison." -- Don't Quit Your Day Job Blogger
- "Beyond Awesome" -- Larry, a Site Visitor
Blogroll
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