Robert Savickas, GWU Associate Finance Professor: “I Thought That Buy-and-Hold Had Been Challenged a Long Time Ago and Many Academics Don’t Believe It”

I have been sending e-mails to numerous people, letting them know about my article reporting on The Silencing of Academic Researcher Wade Pfau by The Buy-and-Hold Mafia.

Set forth below is the text of the response I received from Robert Savickas, an Associate Professor of Finance at the George Washington University School of Business:

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Hi Rob,

>

I looked at the article.  I thought that buy and hold had been challenged a long time ago and many academics don’t believe it.  I have actively traded myself (and daytraded) with relative success and so have some of my other “academic” colleagues.  The efficient market hypothesis (EMH) has also been challenged a bunch of times.  I have problems with both buy-and-hold and EMH myself, but for reasons other than what you mention.
>
Also, the phrase ““For years, the investment industry has tried to scare clients into staying fully invested in the stock market at all times, no matter how high stocks go,” I  think is not quite accurate.  I think we often emphasize that it is important to buy low and sell high.  I always tell my students that even if you are a long-term investor and have decided your portfolio, nobody forces you to enter all the positions at once: you have to time the market and buy the stocks at their lows (technical analysis helps identify temporary lows and highs).  Same with exiting your positions; sell at the temporary highs.   I thought it was well known in academic and non-academic circles that you can’t buy without any regard for price…
>
Robert
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I wrote back:

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Robert:

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Thanks much for your response.
>
I certainly agree that Buy-and-Hold has been challenged and that many academics don’t believe in it. The question (in my mind) is whether they give sufficient voice to their doubts to protect the millions of middle-class people who have been led to believe that there is academic research supporting this strategy (there is not, but I have spoken to thousands of middle-class people who believe that there is).
>
My personal concern is less with the bad investing results that follow from promotion of Buy-and-Hold and more with the economic crisis that came about as a result of the huge losses suffered by millions of investors and the loss of buying power we saw in our economic system as a result. We see articles on the internet about the economic crisis all the time and it has even led to political unrest in the form of the Tea Party and Occupy Wall Street movements. Wouldn’t this problem be solved if we just permitted (And even encouraged) honest posting about the 30 years of academic research (Shiller published his paper showing that valuations affect long-term returns in 1981) showing that a Buy-and-Hold strategy can never work in the long run? If investors knew that stocks offer a poor long-term value proposition once prices reach insanely dangerous levels, we would never see another bull market. Price would self-regulate because investors would sell at high prices and continue selling until prices returned to fair-market levels. If we never saw another bull market, we would never see another bear market or another one of the economic crises that inevitably follow in their wake. That works for me!
>
Anyway, those are my thoughts. It helps me to hear what other smart and good people think about these matters. I am grateful for your willingness to send a few words my way.
>
Please take good care.
>
Rob

Comments

  1. Evidence Based Investing says

    A new email correspondence.

    Does this mean the your communication with Joachim has come to an end or are there more exchanges that you will be reporting on.

  2. Rob says

    I have reported on all of my e-mail exchanges with Joachim, Evidence.

    My best wishes to you.

    Rob the E-Mail Machine

  3. The Pink Unicorn says

    “Rob The E-Mail Machine”

    Don’t you mean:

    Rob The Deletion Machine

    I think you are deleting more posts each day than you are sending out emails.

  4. Rob says

    I’m working on it! I’m working on it!

    Rob the Cowboy with the Quick Trigger Finger

  5. Rob says

    There are two things being said in the article, Pink: (1) that short-term timing doesn’t work; and (2) that long-term timing (the exercise of price discipline) isn’t necessary.

    The first message is gold. There are decades of peer-reviewed academic research supporting that message. The finding of the Buy-and-Holders that short-term timing doesn’t work is the second most important finding in the history of investing analysis.

    The second message is extremely dangerous. It is a false claim to say that long-term timing is not required. There are now 32 years of peer-reviewed academic research showing this. It is the relentless promotion of this false claim that was the primary cause of the economic crisis.

    I don’t think this fellow can be sued because he is merely expressing a viewpoint. As wrong as it is, there is no law prohibiting the expression of that viewpoint.

    The people who will be sued or who will face criminal charges are the people who have posted in “defense” of Mel Linduaer and John Greaney. Advancing death threats is not expressing an opinion. Demanding board bannings is not expressing an opinion. Putting forward tens of thousands of acts of defamation is not expressing an opinion. Threatening to get an academic researcher fired from his job is not expressing an opinion.

    I hope that helps a bit, my old friend.

    Rob the Helper

  6. The Pink Unicorn says

    Rob,

    The article does not distinguish between what you call short term and long term. It says:

    “But what these “experts” peddling the schemes fail to tell you: It’s nearly impossible to predict the market, even for professional investors”

  7. The Pink Unicorn says

    Rob,

    We can tell already that you don’t like Mel or John. That doesn’t change the fact that no one has been charged with a crime and nor will they as there lacks any factual basis. I am sure your feeling are hurt because they don’t agree with you and that a number of people have decided that you cannot participate on their boards because they don’t like your behavior. You will just have to deal with the rejection because you can already see that your 11 years to making threats has not made one bit of difference.

  8. Rob says

    The article does not distinguish between what you call short term and long term.

    Why doesn’t it?

    This is the most important distinction in investing analysis.

    The second most important finding in the history of investing analysis is that short-term timing never works. The first most important finding in the history of investing analysis is that long-term timing is always required. So why not make the distinction?

    There are two possible explanations.

    One, the guy may not know how important long-term timing is. He may be uninformed.

    Or, two, the guy may be afraid of what the Buy-and-Hold Mafia will do to him if he offers accurate and honest investing advice. The Buy-and-Hold Mafia has a long history of being absolutely ruthless in its efforts to keep millions of middle-class investors from learning what they need to know to become effective long-term investors.

    The answer in either case is the announcement of your prison sentence, Pink. The announcement of your prison sentence will go viral and will bring down The Buy-and-Hold Mafia. If this fellow is afraid today, he will no longer be afraid once the Buy-and-Hold Mafia is gone. If this fellow is uninformed today, he will no longer be uninformed after the Buy-and-Hold Mafia is gone and accurate and honest information on how to invest is available at every web site on the internet.

    Getting your prison sentence announced will be a huge advance, my old friend.

    Rob, the Guy Who Wants All Investing Analysts to Be Informed And No Investing Analysts to Be Afraid

  9. Rob says

    “But what these “experts” peddling the schemes fail to tell you: It’s nearly impossible to predict the market, even for professional investors”

    That’s a quote from the article linked to above. Here is how it would read if the fellow who wrote it were informed and unafraid:

    “But what these ‘experts” peddling the smelly Buy-and-Hold garbage fail to tell you: it’s easy and 100 percent required to engage in long-term timing, according to the last 32 years of peer-reviewed academic research.”

    Are you able to detect the subtle difference in approaches to the topic?

    Rob the Rewrite Man

  10. The Pink Unicorn says

    Why doesn’t it?

    Because the results are the same. We see time and again by countless studies that market timing has been a failure. The market is unpredictable and we can see that is the case for you as well. Look how long you have been telling everyone about a market crash and we see that you have been wrong. If you really were able to predict the market, you would be one of the wealthiest people alive today. Stop peddling you get rich quick scheme.

  11. Rob says

    We can tell already that you don’t like Mel or John.

    100 percent false claim.

    I am the only friend that Mel and John have who has been true enough to call them out on their b.s., Pink.

    These two are today engaging in financial fraud. That gets them a prison sentence following the next price crash. The prison sentences lengthen for every day that the Ban on Honest Posting remains in place. There is no one alive on Planet Earth who has called more frequently or more forcefully for a complete and total stop to the Ban on Honest Posting than old Farmer Hocus.

    You have confused the concept of “friend” with the concept of “enemy,” Pink. I am the friend here. You are the enemy.

    A friend is someone who tells you what you need to hear, not someone who tell you what you want to her. An enemy is someone who pretends to be your friend but cannot be bothered to call you out on your nonsense when it is in the process of getting you into a great deal of trouble.

    I am a friend of Mel Lindauer. I am a friend of John Greaney. I intend to do all that it is in my power to do to see that the prison sentences of my two friends (and of all my other friends who have posted in “defense” of these two) are shortened to the greatest extent possible.

    Take care, man.

    Rob the True and Loyal and Brave Friend of Mel Lindauer and John Greaney

  12. Rob says

    Why doesn’t it?

    Every word of your comment starting with these words is false, Pink.

    Wade Pfau and I published peer-reviewed academic research SHOWING in very compelling terms that it is false. Your response was to threaten to send defamatory e-mails to Wade’s employer in an effort to get him fired from his job if he continued publishing research showing the dangers of Buy-and-Hold strategies.

    Have you asked my good friend Jack Bogle to comment on that study?

    If not, why not?

    If you are afraid to show the study to Jack Bogle, why are you afraid?

    How can learning something ever hurt you?

    How can learning something ever hurt Jack?

    If you are afraid to show the study to Jack and to listen to his reaction, all of the words you have heard promoting Buy-and-Hold have not been enough to make you confident inside that this strategy will work in the long term.

    That’s not good, Pink.

    True and legitimate and scientific research inspires confidence.

    Mumbo-jumbo marketing garbage obviously does not.

    Rob, the Fellow Who Dislikes Mumbo-Jumbo Marketing Garbage As Much As He Likes True and Legitimate and Scientific Research

  13. Rob says

    We see time and again by countless studies that market timing has been a failure.

    Please show me the URL of one.

    Wade has a Ph.D. in Economics from Princeton. He spent a good deal of time trying to find ONE legitimate study showing that long-term timing is not required. He found nothing.

    This so shocked him that he did not trust his own finding. He went to the Bogleheads Forum and asked if anyone there was aware of a single study showing that there is no need to engage in long-term timing. Not one member of that community had ever heard of a single such study.

    Not John Bogle.

    Not Bill Bernstein.

    Not Larry Swedroe.

    Not RIck Ferri.

    Not anyone.

    Rob, the Fellow Who Sees a Subtle Difference Between There Being “Countless” Studies Showing Something and There Being “Zero” Studies Showing That Something

  14. bannwd plop contributor says

    Bennett:
    “Wade Pfau and I published…”

    “…my good friend Jack Bogle ”

    As usual, Rob today obviously finds you deliriously delusional; still lost in your narcissistic fantasy world. Get help.

  15. The Pink Unicorn says

    “Please show me the URL of one.”

    I have tried many times, Rob, but you keep deleting my posts, just like you have been doing over and over again today.

  16. The Pink Unicorn says

    The only baby I see around here is you as you have thrown an 11 year temper tantrum for getting kicked off a bunch of boards for your childish behavior.

  17. Evidence Based Investing says

    That gets them a prison sentence following the next price crash.

    It didn’t get them a prison sentence after the 2000-2002 price crash or the 2007-2009 price crash and it won’t get them a prison sentence following the next price crash or the one after that either.

  18. Rob says

    The only baby I see around here is you as you have thrown an 11 year temper tantrum for getting kicked off a bunch of boards for your childish behavior.

    It is childish behavior to post honestly on the numbers that people use to plan their retirements.

    That’s a good point, Pink.

    Rob the Child

  19. Rob says

    It didn’t get them a prison sentence after the 2000-2002 price crash or the 2007-2009 price crash and it won’t get them a prison sentence following the next price crash or the one after that either.

    You’re entitled to your opinion, Evidence.

    Rob, the Fellow Who Holds an Opinion Contrary to the One Held by Evidence

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