Set forth below is the text of a comment that I recently put to a discussion thread of this blog:
So B&H’ers are sloggers, not timers.
You insult the Buy-and-Holders with these words, Banned. You are acknowledging here that the Buy-and-Holders do not practice long-term timing.
LONG-TERM TIMING IS PRICE DISCIPLINE.
Investors who do not engage in long-term timing are not exercising price discipline. No market can function if a large number of participants are not exercising price discipline. Price discipline is the magic that makes markets work.
It is the failure of stock investors to exercise price discipline that caused our economic crisis. You are here acknowledging that the Buy-and-Holders caused the economic crisis.
That’s not a good thing, Banned. It is a very bad thing. We want to bring the economic crisis to an end. We need to be encouraging all investors to be ABSOLUTELY CERTAIN TO EXERCISE PRICE DISCIPLINE FROM HERE ON OUT.
Another way of saying it is to say that we need to be encouraging all investors never, ever, ever again to follow a Buy-and-Hold strategy.
At least not the first-draft version. If the Buy-and-Holders want to call the new model Buy-and-Hold 2.0 or something like that, I have zero problem with that. That was my original intent. All Valuation-Informed Indexing is is Buy-and-Hold with the error corrected, Buy-and-Hold with the Get Rich Quick element (the idea that there is no need to practice price discipline) removed.
We MUST practice price discipline.
For reasons that I wish were obvious to all. For reasons that WOULD be obvious to all if the Buy-and-Holders had not been telling people for 30 years that timing doesn’t work or isn’t absolutely required or some such thing.
Price discipline (long-term timing) is ABSOLUTELY required. That’s the mistake. If you don’t practice price discipline, you are not following a research-based strategy. Pre-1981, you were. But not today.