Barry Ritholtz Links to My Article on “Why Buy-and-Hold Investing Can Never Work,” Provides the A Rich Life Blog with the Biggest Traffic Day in its History

Barry Rithlotz (owner of The Big Picture site) late yesterday afternoon linked to my article on Why Buy-and-Hold Investing Can Never Work at the Tuesday PM Reads section of his blog. The traffic brought in by that link made yesterday the highest traffic day in the history of the A Rich Life blog. Thanks, Barry!

The traffic number is important for reasons beyond the obvious reality that it makes me happy to have lots of readers for my work. I have been writing about the Valuation-Informed Indexing concept on the internet for over 10 years now. Thousands of middle-class investors and a large number of experts in the field have told me that they have found huge value in my work and that they believe that in years to come the Valuation-Informed Indexing Model will supplant Buy-and-Hold as the dominant model for understanding how stock investing works. Academic Researcher Wade Pfau spent 16 months exploring the concept in great depth and found that the entire historical return record shows that Valuation-Informed Indexing is far less risky than Buy-and-Hold and yields greatly increased long-term returns. The response of the Buy-and-Hold Goons has been to try to destroy my site by intimidating the owners of other sites that link to my site. They also threatened to send defamatory e-mails to Wade’s employer in an effort to get him fired from his job. I have written to many big-name Buy-and-Hold advocates asking them to take action re the Goons but to no avail thus far.

We all should be concerned about the Goon problem. Shiller’s finding that valuations affect long-term returns is the most important advance in the history of investing analysis. This advance has been to a large extent (but not entirely) covered up for 30 years now. People know about Shiller’s research. His book was a widely reviewed bestseller. But there is not one other site on the internet that explores the implications of Shiller’s finding in the in-depth way that I have explored it with the articles and podcasts and calculators available at this site. That is a shocking reality. We all need to learn how to invest effectively and we of course all want to learn how to invest effectively. I know as the result of my ten years of work trying to spread the word about Valuation-Informed Indexing why Shiller’s work has thus far had only a tiny fraction of the impact it needs to have if we are to recover from this economic crisis and enter the period of sustained economic growth that in ordinary circumstances it would have brought about by now. People are afraid to speak out. Millions of investors are addicted to Buy-and-Hold strategies (which are Get Rich Quick strategies in disguise — the people who developed the Buy-and-Hold concept did not intend to create a Get Rich Quick strategy but that is what they inadvertently did because Shiller’s research was not available to them at the time). We need to assure everyone working in this field that it is safe for them to advocate Valuation-Informed Indexing. This is the most important economic (and even political) imperative of our time.

Barry’s link helps in a big way. The Goon tactics are beyond the pale. I have had confirmed and passionate Buy-and-Holders tell me that they are ashamed of the tactics that they have seen the Lindaurheads and the Greaney Goons employ in “defense” of the investing strategy they favor. Sunlight is a disinfectant. The way to flush out the Goons is to shine the light of open discussion on their tactics. The more people know how they have behaved and the more people who speak out in strong opposition to how they have behaved, the less bad behavior we will see. As the bad behavior subsides, we will all become engaged in the greatest learning experience of our lifetimes. The Buy-and-Holders and the Valuation-Informed Indexers obviously are on the same side and want the same thing. The Buy-and-Holders have lots of doubts about the Valuation-Informed Indexing concept. They need to have their questions answered in an environment where they know that death threats and countless acts of defamation and unjustified board bannings and threats against academic researchers will not be tolerated. Barry’s link tells others interested in these ideas that they are safe from attacks because too many people are watching for the attacks to achieve their intended aim.

I officially hereby designate Barry as a Hero of the First Order to the Middle-Class Investor. I will be writing him to ask whether I can write at his blog on some sort of ongoing basis to share with his readers what I have learned about the Valuation-Informed Indexing concept as a result of my work of the past 10 years. Please pray for a positive outcome!

That’s my explanation of why the numbers I will report below are important. Enough preface! On to the numbers!

I get roughly 200 views at my blog on a typical day. I had a link at the high-traffic Jesse’s Cafe Americain blog last week. That day I had 696 views. The article reporting on my work that appeared at The Big Picture site last Monday produced a day with 813 readers. Barry’s 4:00 PM link yielded a daily views count of 1965 for yesterday. That’s a record for the blog, which has been around since 2005. I have over 1,000 views for today as of 9:00 AM.

These are sad, pathetic numbers. Please understand that I am NOT bragging. So long as a day with 1965 views breaks records, these ideas are not going anywhere. We need to see that sort of view count on a daily basis to get this snowball rolling in any significant way. We are talking about baby steps for baby feet.

Still. we all know that successful long journeys begin with small first steps. Barry’s link is potentially a small first step to something that down the road a piece will become something very grand indeed. As Bruce Springsteen reported in an important academic journal a number of years back, From Small Things, Mama, Big Things One Day Come (this one has become a sort-of theme song for our effort beginning on the morning of May 13, 2002, to get the errors in the Old School safe withdrawal rate studies corrected — it is that effort that led to all of the amazing insights that have been developed at this site and at numerous discussion boards and blogs over the past 10 years).

So I am feeling blessed today. I will have zero trouble thinking up reasons to be thankful when I sit down to dinner at my younger brother Steve’s house tomorrow afternoon.

Onward! Courage!

Comments

  1. Rob says

    I have four e-mails in my in-box this morning from people who discovered the site by virtue of Barry’s link, found great value in the ideas explored here and then wrote to me asking questions about how to apply the Valuation-Informed Indexing concept in their own lives. That’s what it is all about, my man.

    When we get to the point where we are getting links like this on a daily basis, we will have hundreds of comments every day. After Bogle makes his “I Was Wrong” speech and it is written up on the front page of the New York Times, we will have to set up a discussion board to handle all the discussion and we will be seeing thousands of posts advanced there on a daily basis.

    Please take a look at the traffic at the Bogleheads Forum. It’s a plenty active site, no?

    Well, Valuation-Informed Indexing is Buy-and-Hold with the Get Rich Quick element removed. Buy-and-Hold impoverishes those who stick with it for the long term. VII enriches those who follow it for the long term. Which strategy do you think will end up becoming more popular in the long term?

    The only think holding us back is the Goons. People are not going to make the shift to VII if they have never heard of it or if they have only heard of it once or twice and have never seen any follow-up.

    We need all of the big names in the field helping us to spread the word. We need Bogle helping out. We need Bernstein helping out. We need Swedroe helping out. We need Burns helping out. And on and on and on. When we have all those people helping out, we will have zero problem generating comments here, Evidence. I am sure.

    It’s all just a question of getting Bogle on board. I know from my conversations with a lot of big names in the field that lots and lots of people want to make the switch. Just about everyone understands that Valuation-Informed Indexing is the future (I think this would be fair to say even re you Goons — otherwise, why the behavior evidencing so little confidence in your strategy?). We just need to help people to feel safe. We need to APPLY the published rules that were adopted to govern behavior at every one of our boards and blogs.

    We’re not standing on the finish line, Evidence. But I think it would be fair to say that it is all but impossible for any reasonable person to imagine a scenario in which we don’t get there in not all that much more time.

    Given that we are going to end up there sooner or later in any event, why not take the steps that we all know we need to take and that on a deep level we all very much WANT to take and thereby put the ugly stuff behind us and turn our attention to all the wonderful, enriching stuff that lies in our future? Are you able to imagine any possible downside?

    Do you see some merit in insuring yourself a LONGER prison sentence? I do not, my old friend. I very much would like to keep your prison sentence as limited as possible. I sure could use your help in making that little dream of mine a reality. Please give this exciting opportunity a bit of thought. If we turn the key today, I think it would be fair to say that we will all enjoy our holiday meal a whole big bunch more than would otherwise be the case.

    I naturally wish you all the best that this life has to offer, in any event. Hang in there, my good man.

    Rob

  2. Evidence Based Investing says

    The only think holding us back is the Goons. People are not going to make the shift to VII if they have never heard of it or if they have only heard of it once or twice and have never seen any follow-up.

    You contributed at Motley Fool, Morningstar Diehards and other boards for years. Thousands (perhaps tens of thousands) have read your message.

    No-one (0 comments) has felt the urge to comment regularly at this blog on VII.

    The fault dear hocus, is not with the goons, but in yourself that you are an underling.

  3. Rob says

    I’m afraid that this may be one of those ones re which we are going to need to agree to disagree, Evidence.

    I believe that the published rules that apply at every one of our boards and blogs were adopted for a reason. Smart and good people who came before us believed that such rules are needed to protect the poor, flawed humans from doing great damage to themselves in circumstances in which engaging in better behavior could open up huge opportunities for making all of their lives better and fuller and richer.

    Universally accepted social norms don’t become universally accepted social norms by accident.

    My take.

    Rob

  4. Evidence Based Investing says

    And as is quite common, your “take” had absolutely nothing to do with the point I made.

    Thousands of people have heard of VII and read your countless follow-ups on numerous boards and yet “0 comments” is the response.

  5. Rob says

    Thousands of people have heard of VII and read your countless follow-ups on numerous boards and yet “0 comments” is the response.

    You are stating this fact accurately, Evidence.

    I think it would be fair to say that the reason why we are working at cross purposes is that I very much want to see this fact change and you very much want this fact to remain an accurate statement of the ongoing reality.

    No?

    Rob

  6. Evidence Based Investing says

    Not even remotely true.

    I would love to see many more people contributing here. However while your site remains a jumbled disaster and you continue to go about things in a way that is catastrophically unproductive the “0 comments” will be the response.

  7. Rob says

    I would love to see many more people contributing here.

    It’s encouraging to hear this, Evidence.

    At least we are on the same page re this one.

    I wish you all the best that life has to offer.

    Rob

  8. david icke says

    what a strange, sad person you are.this blog is your whole life. that, and trying to make yourself important by imagining that you are the target of some campaign to suppress your “truth”.

    courage! you’ll need it to face your utterly wasted life.

  9. what says

    it would be interesting to have a poll to see what percentage of the new visitors think bobby boy is off his rocker.

  10. Rob says

    Greaney used to take polls all the time in the Motley Fool days, What. I can give you a rough idea of what they revealed. I had 25 endorsements of my post calling for Greaney’s removal from the board. He had 200 endorsements of a post threatening me. I lost every poll ever taken at that board.

    Buy-and-Hold is not promoted as a poll-driven thing. It is promoted as a research-driven thing. Honest researchers do not put out whatever findings are most popular. They report accurately what the data shows. It’s not true research anymore once you decide to let polls decide what the findings are.

    The Wall Street Con Men have always pushed Get Rich Quick. That’s where the money is for them. The reason why this economic crisis is worse than any of the earlier ones brought on by the promotion of Get Rich Quick investing strategies is that they are now saying that there is “research” that backs up the Get Rich Quick approach. This is obvious nonsense. They obviously cannot produce a URL for a study. But millions of middle-class people have been taken in. Millions believe there really is research supporting Buy-and-Hold. I know. I have spoken to thousands myself.

    So we have created a mess for ourselves. We need to tell people the truth. But the truth is just the opposite of what the Buy-and-Holders have been saying for years now. It’s not so that Get Rich Quick is the answer. The reality is quite to the contrary. Get Rich Quick is the problem.

    It hurts people to hear that. People have staked their retirements on a belief in this Get Rich Quick garbage. Wouldn’t it hurt you to hear that?

    I believe that the answer is to combine love and honesty in the proper proportions. We need to be as loving as we can possibly be without crossing the line and becoming dishonest. And we need to be as honest as we possibly can be without crossing the line and becoming unloving. I think that’s the path to the better place that we all deep in our hearts want to move to.

    I also like to focus on the positive. We are the luckiest group of investors who ever walked Planet Earth. Once we gain the freedom to post honestly re what the last 30 years of research says, we will all be able to earn far higher returns while taking on only dramatically reduced risk. We will all be able to retire many years sooner. We will see this economic crisis brought to an end. I can live with that!

    I’d like to see the results of the poll taken AFTER we make the shift from Buy-and-Hold to Valuation-Informed Indexing. I have a funny feeling that the results of that one might be 200 to 25 in the other direction.

    Take care, my Goon friend.

    Rob

  11. what says

    Really, what I was talking about has nothing to do with investing. I am just interested that out of say, 100 people that read your stuff, how many of them think you are a whack job.

  12. Rob says

    It is only those who are emotionally addicted to Get Rich Quick investing strategies that respond to reports of what the academic research says in that way, What.

    We hurt people when we fill their heads with these fairy tales. I don’t approve of this sort of thing. There’s a time and a place for making a buck and there’s a time and a place for shooting straight with people.

    I wish you all good things, in any event.

    Rob

  13. what says

    Are you sure its only those? I would be pretty surprised. I didn’t get rich quick or try any get rich quick strategies. However, I am rich and I think you are nuttier than a can of Planter’s.

  14. Rob says

    I think you are hurting, What.

    I think that people who feel a true and deep confidence in their strategies don’t speak in the manner you do.

    I don’t think we should be promoting strategies that cause the people following them to experience such pain.

    I naturally wish you all the best that life has to offer.

    Rob

  15. what says

    Really, you and your site hold zero interest for me in terms of ‘investing’. The only interest it holds for me is your bizarre behavior and mannerisms. So, if you try to interpret my posts in the context of investing you are way off.

    Of course, part of your psychosis is reducing everything to some kind of buy and hold vs valuation investing argument with an even more bizarre conspiracy theory backing it; so this is all part of the fun!

  16. Rob says

    Successful long-term stock investing is all about reining in your emotions, What.

    You have obviously failed in that quest.

    There’s no self-interested motive served by you failing. You didn’t wake up one morning and say to yourself: “I’l like to fail at investing!”

    So the question that all in this field should be asking is — How have we let down investors like “What”?

    We let them down because we didn’t know it all back in 1974, when the wonderful (but gravely flawed) book “A Random Walk Down Walk Street” was published.

    In 1981, Yale Economic Professor Robert Shiller revealed to us the piece of the puzzle we had been missing until then.

    In 2012, we need to figure out how to make the transition. How do we acknowledge the mistake that we made in thinking that long-term timing is not required for long-term success and move on to the model that helps every living soul live a better and richer and fuller life?

    We all need to be working together to pull that off. We need all the Democrats and all the Republicans. We need all the old people and all the young people. We need all the women and all the men. We need all the rich and all the poor. We need all the Buy-and-Holders and all the Valuation-Informed Indexers.

    That’s our story.

    We don’t want to see people hurting like you are hurting, What. We want to help them find their way to a better place.

    How do we work up the courage to take the steps we need to take? How do we acquire the grace it requires to acknowledge having caused (however inadvertently) all this human misery?

    My job is to work up that courage myself (that’s an ongoing process that I have been struggling with since the morning of May 13, 2002) and how to show by example others how to do the same.

    I naturally wish you all good things, my old friend.

    Rob

  17. Sparky says

    Rob,

    I have visited your site from time to time, but have never posted. Like others, I believe that you are showing some signs of a mental disorder. Perhaps you view your blog as being therapeutic???

    As for Wade P, if you really consider him a friend, I would suggest leaving him alone (from a public perspective) and stop posting information from private emails.

    I wish you well and hope you can get help.

  18. Sparky says

    Rob,

    I have read plenty about your comments about Wade and have read some of his.

    Please get some help. Seriously.

  19. Rob says

    I am 100 percent up for offers of help, Sparky.

    How many daily e-mails can I put you down for?

    Just 10 would make a difference.

    Many hands make for quick work, my new friend.

    Rob

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