Robert Savickas, GWU Associate Finance Professor: “There Is Even a Bigger Elephant in the Room Nobody Is Talking About. We Had Too Much Party in the Markets Over the Last Few Decades. This Is Unsustainable.”

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

Friday’s blog entry reported on my correspondence with Robert Savickas, Associate Professor of Finance at the George Washington University School of Business. Set forth below is the text of the e-mail that Robert sent to me in response to the e-mail of mine described in the earlier blog entry:

Hi Rob,

>

Actually, from my observation over the years, the promotion of buy-and-hold is cyclical.  When the market is going exceptionally well, as was in the case of the late 1990′s, everybody trashes buy and hold like there is no tomorrow, enticing the public to do active trading, since that’s how they generate commission revenue. When the market is in the dumpster, they trash active strategies and promote buy-and-hold because that’s the only way to talk people back into investing.
>
So, if you time you critiques of buy-and-hold right, you could be a much-listened-to guy…
 >
Robert
>
Robert followed up with another e-mail response a few minutes later:
>
Rob,

 >
I think there is even a bigger elephant in the room nobody is talking about.  We had too much party in the markets over the last few decades.  Actually, too much return for the amount of risk.  This is the so-called equity premium puzzle: equities seemed to yield over the last at least half-century much more return than warranted by the risk they subjected investors to.
 >
To my mind this is unsustainable.  There are only two ways this can be resolved.  Either equity returns must become really bad to correct for the multi-decade party, or equity risk will have to be so high as to justify the prior half-century run-up.  Either outcome is undesirable: we either face a multi-decade brutal bear market, or we face excessive volatility that will scare anyone out of the markets, except those who use it to their advantage (sellers of volatility and swingtraders).  Or, we could have the combination of the two, which would be a double-trouble.  The only mitigation to that is extra-fast economic growth, which can occur but not before we go through more hard times.
 >
If you want to bring things like that to public attention, you have to do it smartly.  Individual-by-individual, slowly building a community.  If you broadcast your non-standard views too loudly, you get labeled as a nut, and then nobody listens to you, so you eventually disappear in infamy. So many reformists in many countries suffered this fate.
 >
Robert

Comments

  1. The Pink Unicorn says

    ” If you broadcast your non-standard views too loudly, you get labeled as a nut, and then nobody listens to you, so you eventually disappear in infamy.”

    That warning came about 11 years too late when it comes to Rob.

  2. says

    That’s pretty much what I said in my response e-mail, which I will report on here tomorrow, Pink.

    I’ve been called a nut. I’ve been called a loser. I’ve been called a mental case. I’ve been called a stalker of women. I’ve been called an alcoholic. I’ve been called a druggie. I’ve been called a troll. I’ve been called a bad husband. I’ve been called a bad father. I’ve been called a dumb ass. And on and on and on.

    You know what?

    It’s always been Buy-and-Holders calling me that.

    Do you know what would hurt worse?

    It would hurt worse if it were my own conscience calling me disloyal to all the friends I have made on the internet.

    I’ve played the cards I have been dealt, Pink.

    And I’ve never experienced a moment of remorse for the choices I have made.

    I am sad that you are going to prison. If I could wave a magic wand in the air and call for a do-over, I would do it so that you could be spared the pain. I am 100 percent confident that you would leave me with different choices if you had the option.

    But that’s not the way life works, as we both know.

    So we struggle on the best we can, given the options that are available to us in the real world.

    I certainly wish you all the good things that this life has to offer a person, in any event.

    Rob, the Fellow Without a Magic Wand

  3. The Pink Unicorn says

    And you are called those things because of what you say/post. It is all because of your own doing. Just look at this last post in which you yet again make unfounded prison threats.

  4. The Pink Unicorn says

    Tell you what, Rob. Maybe you can at least gain back some level of respect. The first thing is to get honest and make your “I was wrong speech”. After that, you can start on your long list of apologies starting with Wade, Jack, John, Bill and so on.

    No better time to start than now.

  5. Rob says

    I’m not asking you for anything, Pink. I’m happy with the cards I am holding.

    You are the one doing the asking.

    That tells the tale.

    My warmest wishes.

    Rob the Good Card Player

  6. The Pink Unicorn says

    I am not asking Rob. Just trying to help. As for the cards you have, we know that you are not playing with a full deck.

  7. Rob says

    Thanks for trying to help, Pink.

    My best wishes to you.

    Rob, the Fellow Who Is Satisfied to Have Less Than a Full Deck

  8. what says

    Who called you an alcoholic or a druggie? That seems weird.

    “Dumbass” – I can see that one.

  9. Rob says

    There’s no sense talking all nicey nice to me now, What. It’s a little late for that sort of thing at this point in the proceedings.

    Take good care, man.

    Rob the Non-Alcoholic Dumbass

  10. The Pink Unicorn says

    Proceedings? Perhaps you can direct our attention as to what legal action has been filed.

  11. Rob says

    Perhaps you had better come clean before the next price crash so that your prison sentence does not end up being longer than you have already assured it will be as a result of your thousands of acts of financial fraud over the past 11 years, Pink.

    Just saying’.

    Rob (aka Captain Obvious)

  12. Rob says

    As of today, there are no legal proceedings, Pink.

    You’ve got me re that one.

    My warmest wishes to you and yours.

    Rob, the Fellow Who Has Been Nailed Yet One More Time by the Greaney Goons

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