I have been sending e-mails to numerous people letting them know about my article on The Silencing of Academic Researcher Wade Pfau by the Buy-and-Hold Mafia. Set forth below are the words of the response I received from University of Siena Economics Professor Roberto Reno, followed by my reply to him:
Thanks for your article. I will have a closer look at Pfau’s paper and pass it to students.
However, I have to disagree on a couple of things.
1) The fact that you mention (long-term stock prediction) is also contained in the enclosed paper by Cochrane (admittedly, the more mainstream scholar around) [My guess is that Reno wrote these words quickly and had intended to suggest that Cochrane is NOT the most mainstream scholar around — Rob] and was published in the Journal of Finance (top in the field).
2) It is not strictly true that there is no research on this. Let me enclose a small example from myself. Here we show that, when properly computing standard deviations, presumed long-term strategy with extra returns are actually as effective as random picks. There are, obviously, many other examples. I just supervised an undergraduate thesis on value investment.
Your article was thoughtful, though, even if I don’t like too much the conspiracy idea. For what it may count, I am not pressured by anyone in my research.
Best.
Roberto
canyon wanderer says
if everyone sells when prices are high, who are they selling to?
Rob says
They sell to whoever will buy, Canyon.
If everyone is seeking to sell, no one can find a buyer.
So the price drops.
That’s how it works.
Rob
Canyon wanderer says
If the price drops, then it wouldn’t make sense to sell anymore.
Rob says
No, it wouldn’t.
But the Wall Street Con Men won’t be telling us then how Buy-and-Hold is such a great idea. When the price is much lower, they tell us “Oh, it now appears that no middle-class person should ever have any investment in stocks — just look at how prices have dropped!”
So millions of middle-class people sell anyway and lock in their losses.
Then the game starts over.
If we want to restore confidence in our political system, we are going to need to find a way to get accurate and honest information about what the last 30 years of peer-reviewed academic research says about stock investing out to millions of middle-class people.
That’s my sincere take re the matter, in any event.
Rob