Set forth below is the text of a comment that I recently posted to the Goon Central board, as well as two brief follow-ups:
http://www.bogleheads.org/forum/viewtopic.php?f=10&t=112149&start=50Meh, these threads are always depressing. By the time I get to the end of them, I feel like I’ll be lucky to get 0% real return over the next 30 years.
This is why secular bear markets can only come to an end when the Buy-and-Holders sell.
Investors who follow true research-based strategies are not affected emotionally by words that appear in discussion-board threads. Following a true research-based strategy gives you confidence.
Buy-and-Holders know on some level of consciousness that any strategy rooted in the idea that price doesn’t matter is b.s. So they are always looking over their shoulders. They always live in fear. And, when the fear gets to them, they don’t just sell to the level that is proper. They oversell. They go as far to the negative emotional extreme as they earlier went to the positive emotional extreme.
This guy gets down when he reads scary discussions because there is a part of him that knows that he is living in a fantasy world. He’s not dumb. I’ve never met a dumb Buy-and-Holder.
This is why it is not strictly correct to say that Valuation-Informed Indexers “predict the future.” We say what will happen in the future. But we base those statements on an understanding of the implications of events that have already taken place. We are not saying that investors are going to become excessively emotional and that is going to cause a 65 percent price drop. Investors already are excessively emotional. This comes through in every discussion that has ever been held at BHeads on SWRs. All that Valuation-Informed Indexers say is that that emotion has to be resolved at some point in the not-too-distant future. That’s not so much a “prediction” as it is just an observation rooted in simple logic. When an airplane takes off, it’s safe to “predict” that it is going to land someone in the not-too-distant future, is it not? It cannot just keep flying around in circles forever without access to a source of fuel.
This fellow is scared. I am not predicting that he is going to become scared. I am stating that he is scared today.
He is not going to sell today. But he is going to sell in the not-too-distant future. That’s what scared investors do when things get shaky (and there are always shaky times in the not-too-distant future).
This fellow is not the only scared Buy-and-Holder. ALL Buy-and-Holders are scared. Hence, this board. Hence, the unwillingness to correct the studies.
You can deny your fears from now until Doomsday and you will not convince me. Actions speak louder than words. People who put forward the sorts of posts we see at this board are scared people. All human history tells us that.
The fellow who wrote that post will probably sell before the people who post to this board. That just means that he will get a better price than you will. You will sell too. At a lower price.
Then we will all pull together and get to work fixing our broken economy. It will be better on the other side. We will all be friends on the other side.
Heaven help us all!