“When You Attack Buy-and-Hold, You’re Attacking People’s Religion. You’re Attacking Prosperity. You’re Attacking America and All That’s Good and Right About It. That’s Why They Won’t Tolerate It.”

Yesterday’s blog entry reported on an e-mail sent to my by a blogger friend in which he argued that we will not be able to overcome the Buy-and-Hold Crisis until the world regains its ability to approach issues with an ability to reason, something that for reasons that cannot be clearly identified has been lost in recent years (in the assessment of my blogger friend) and my response to that e-mail. Set forth below are the words of the follow-up e-mail sent to me by my blogger friend:

It’s not so much that I see the Apocalypse in the headlights.  While I think that’s one (very good) possibility, there are lesser events in history that came close.  Think about the fall of the Roman Empire and the 1000 year Dark Ages that followed.  Or think about the 1930s and 1940s.  That was shorter, but at least as dramatic.

I think we’re on the edge of something like that.  When it hits, it will change history and shake out the excesses.  Until it does, we’ll continue to play let’s-pretend. That’s the envelope buy-and-hold sits in.  We can’t argue against buy-and-hold  because it’s the order of the day, and it’s not an accident.

Post 1987, the government decided that the stock markets were a venue worthy of national security consideration.  A high stock market portrays peace, prosperity and optimism.  The stock markets are no longer free markets.  I’ve detected in some of your comments that even you don’t believe that, but consider the following:

– the Fed keeps interest rates artificially low, which lifts the stock market (money that would flow into intest bearing securities instead flows into stocks chasing higher returns) and this has been going on for decades now

– favorable long-term capital gains rates favor stocks and other appreciating assets, but mostly long term stocks

– the wealthiest 1% of the population get most of their income from capital gains

– triggers are in place to keep stocks from falling more than X amount (no free market on the downside)

– govt intervenes when stocks get soft, through various means poplularly known as the plunge protection team

From this configuration, we have stock markets rising when the economy is falling (detachment from reality), a population who generally view the Fed Reserve as omnipotent (“the Fed will NEVER let problem X happen–OVERCONFIDENCE), and a general belief in the stock markets as an all-weather investment.

That’s very fertile soil for buy-and-hold.  It’s become a religion and the Fed chairman is it’s god. When you attack buy-and-hold you’re attacking people’s religion.  You’re attacking prosperity.  You’re attacking America and all that’s “good and right” about it.  That’s why they won’t tolerate it.

Charles Smith recently wrote that the stock market is a fraud, and I have to agree.  It’s pure manipulation, where price levels are contrived and not allowed to drop by but so much.  5%, 10% max.  The evidence of this are the periodic crashes. Prices are pushed to insane levels and when it’s beyond the ability of the Fed to stop it, there’s another crash.  Alas, the Fed is not omnipotent. I’m with you that another crash is coming, and I think it will be worse than any we’ve seen so far.

How do you write about all of this?  The implications are horrific and no one wants to deal with that.  They just want to live peaceful lives and nothing will wake them from their assumptions.

As far as writing about pf–it’s more important now than ever. I approach all of the above by addressing micro strategies. But guess what?  Apparently more people want to read about credit card rewards and higher CD rates than the strategies I advance.  You’re in the same boat with VII.

I think we’re past the point of thinking we can change people’s minds about the big picture.  Best we can do is prepare them for the fall, without necessarily mentioning how it will come about.  I think we’re both doing that in our own ways, but until disaster strikes, we’ll have a limited audience.

Does that clarify anything?

Blogger Friend

Comments

  1. Not a Buy and Holder says

    Mr. Bennett:

    The language and precision found within the bulletted items above are so foreign to your well-known and much-overused documented lexicon that it is plain you have ‘lifted’, ‘appropriated’, ‘borrowed’, ‘paraphrased’ or otherwise garnered those points as well as much of the actual language and phraseology itself, from other(s), yet you provide no attribution as to source.

    Since I am a nice person, I am going to give you a grace period of 48 hours to remove the material, or to properly attribute that information prior to contacting your alma mater with evidence of your plagiarism, for their consideration of possibly renouncing your degree or other sanction.

    I’m sure you will view this message as a ‘threat’ or otherwise gleefully use it as grist for your twisted mill; but in truth, it is simply driven by a desire for ALL works to be properly attributed to their correct source.

  2. Rob says

    Oh, great!

    Someone left the Goons out of their cages again!

    You take care, Not a Buy-and-Holder. I will say a prayer for you and I encourage others reading these words to do the same.

    Anything that causes you this much pain is not worth holding onto, my old friend. I am sure!

    Rob

  3. Not a Buy and Holder says

    So no love for Ian Welch, Ron Paul, or Teresa Ghilarducci, eh, Rob?

    So be it.

    We will see what your schools think of your intransigent theft of intellectual works.

  4. Rob says

    I know who Ron Paul is. I am not familiar with the other two.

    Please, please, please don’t have them renounce my degree, Not a Buy-and-Holder.

    I have always strived to keep my degree unrenounced. It’s a big deal to me.

    Rob

  5. Rob says

    One question.

    If a degree is renounced, can it be unrenounced at a later date?

    Or is this like one of those board bannings that is always a lifetime thing?

    Rob

  6. Not a Buy and Holder says

    I think your over-use of sarcasm here is illustrating what you often misattribute to anyone who finds fault with your writing: fear.

  7. Rob says

    Wouldn’t you be a-scared if you knew that someone was on the verge of taking steps to have your degree renounced, Not a Buy-and-Holder?

    Be honest.

    Rob

  8. Not a Buy and Holder says

    If you are going to delete the latest posts, why are you not deleting all of them? I see no logic to your methods. Of course, that may be merely a reflection of your mental illness.

    Oh, well.

  9. Rob says

    The thing that is not logical is your hate, NBH.

    I leave most of your posts up because the purpose of a comments section is to let other people have their say and you are one of the other people and I think you should have a chance to vent here.

    But I am not going to let you put up 50 posts in a row that are just insanity piled on top of insanity. That hurts you. That suggests that I don’t care how much you degrade yourself. I do care. If you push it and push it and push it, eventually you force me to remove a post or two.

    There are no lifetime bans at this site. I still like you. I still want to hear you vent (or, better yet, make a sincere effort to tell us what you really believe about investing).

    I of course wish you well, my long-time abusive posting and Buy-and-Hold defending friend.

    Rob

  10. Rob says

    Oh, well.

    Hold that thought!

    The attitude signified in that phrase is a healthy one, NBH. The suggestion conveyed by those words is that it’s not the end of the world that there is someone out in the world who does not agree with your every thought.

    That’s it! That’s what you are missing when your thought processes turn to the investing realm.

    You and I do not agree about how stock investing works. So the heck what? Maybe I’m crazy. Maybe you’re crazy. Maybe we are both a bit crazy. Who knows which it is? Who cares enough to let the issue cause him to give in to feelings of anger and hate? LIfe is too short, man. That ain’t the way.

    I’ll do battle with you over the investing stuff from now until doomsday. As you well know. I will fight and fight and fight and fight and fight.

    Because I care. When you care, you fight for the thing you care about.

    But I hope that I never come to hate you because you have different beliefs about investing than I do. If I ever do that, I have taken the fight too far.

    You disagree with me about investing. You are still my friend. In part that’s so BECAUSE you disagree with me. The people who pat me on the back all the time never set me straight. You call me out on my b.s. all the time. I can count on you for that, eh?

    Friend! Comrade!

    There’s a lot of wisdom packed into that “oh, well” phrase of yours. I only hope that, the next time you say it, you really mean it.

    Rob

  11. what says

    “But I am not going to let you put up 50 posts in a row that are just insanity piled on top of insanity.”

    How funny! Don’t you do this on a regular basis yourself? You must have had a smile (deranged albeit) when writing that one Bobby Boy!

  12. Rob says

    Do you think it was “insane” of me to point out the errors in the Old School safe withdrawal rate studies in my May 13, 2002, post, What?

    Please recall that that post came 10 years before the dozens of articles in mainstream publications that have shown up in recent months making the same point.

    It’s not that I am insane. It’s that Bogle was right both when he said that we should use the academic research as a guide for making our investing decisions and when he said that the most important thing for any long-term stock investor is to Stay the Course.

    I wish you well, old friend.

    Rob

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