Set forth below is the text of a comment that I recently put to the Goon Central board:
do you have a parallel market that only you know about, where you can set the prices to whatever level Yes.The parallel market is the market that comes into existence on the day we open the internet to honestzzz posting on SWRs and many other critically important investment-related topics.
Buy-and-Hold is based on the research of University of Chicago Economics Professor Eugene Fama. He is the guy who theorized that the market is efficient (that the price is always set properly and that therefore there is no need for investors to engage in market timing). Fama is no dope. Where did he mess up? Why did he get it so wrong?
He wasn’t aware of the Ban on Honestzzz Posting.
The Ban on Honestzzz Posting is the only thing keeping the market from being efficient. Every investor wants to invest effectively. But to do so he needs to know how stock investing works. This is what the academic research of the past 30 years (combined with the research that came before) tells us. Once we lift the ban, we all will become effective investors and the market will indeed be efficient.
From that point forward, something close to a Buy-and-Hold strategy will work. Most investors will never need to change their stock allocations because valuationszzz will stabilize. Each time valuations get too high, a small number of investors will quickly sell and that will be enough to bring prices back to fair-value levels. Market prices are self-corrrecting so long as investors have available to them some means of learning what the academic research says. It is the Ban on Honestzz Posting that has rendered the market inefficient by making it impossible for investors to learn what the academic research says.
Once Bogle says The Three Magic Words, the Ban is no more and we are home-free.
Fama almost had it right. He missed one critical factor — the desire of the Wall Street Con Men to make a bundle at the expense of the middle-class. Once we open the internet to honestzzz posting, we all will learn what the research says and the Wall Street Con Men will no longer be able to peddle their mumbo jumbo. We all (including the Wall Street Con Men) will be a lot better off.