Set forth below is the text of a comment that I recently put to another blog entry at this site:
|“We need to punish…”
THERE’S your problem, right there, slick.
I don’t say that you are entirely wrong about this particular point, Anonymous.
The Buy-and-Holders see it as “unfair” that I talk about the 32 years of peer-reviewed academic research that shows how dangerous their “strategy” is. It’s not really me that is punishing them. It is the academic research that is punishing them. I am just the mild-mannered reporter that points to what the academic research says.
The Buy-and-Holders were pioneers. They were the first ones that said that investing strategies should be rooted in peer-reviewed academic research. I love them for that. It annoyed me when I read stuff about investing from four different “experts” and heard four different ideas about how to proceed. If the experts don’t agree on even the basics, they are not true experts. If they can’t agree on the basics, there is no legitimate body of knowledge to which they are making reference. If there is no legitimate body of knowledge to which the experts in a field make reference, knowledge in the field is not sufficiently developed for us to say that it is possible to come to possess a true expertise in that field.
The Buy-and-Holders feel burned. They want to use the fact that they root their strategies in peer-reviewed research to shut everybody else down. But, since they made a mistake about what the research says, they have ended up shutting themselves down. This is what makes them angry. This is what makes them feel punished. This is what makes them hate me.
I am 100 percent in tune with the ORIGINAL Buy-and-Hold mission. I believe in following what the research says. The nature of research-based strategies is that they must change when the things taught by the research change. All of us who believe in research-based strategies are essentially slaves to the research-based findings. We cannot just reject those findings because we don’t like them. We must obey the lessons of the research or stop putting ourselves forward as advocates of research-based strategies.
It is not my intent to punish the Buy-and-Holders. It is my intent to honor the research. But, yes, the Buy-and-Holders feel it as a punishment because they do not want to be bound by the findings of the past 32 years and I just refuse to stop making reference to them.
I like the Buy-and-Holders. I see my work as an extension of their work, a reform of their work, an improvement on their work, a correction of their work. I respect the work they did and I honor them in all my writings and I like them as people and I am grateful for their many powerful insights. There would be no Valuation-Informed Indexing today if we had not had Buy-and-Hold yesterday.
But I think that my Buy-and-Hold friends are making a terrible mistake by being unwilling to correct their mistakes. They are destroying the lives of millions of middle-class people and I do not believe that that was at all their intent when they started out. So I feel bound to point out those mistakes and to do all in my power to bring them around.
I like the Buy-and-Holders. It is BECAUSE I like them that I “punish” them by talking about what the research really says. In the long term, they won’t see it as a punishment to learn how stock investing really works. But in the short term they do indeed see it that way because of a false pride.
The Buy-and-Holders should take pride in their genuine achievements while correcting the things they got wrong. By causing financial devastation to millions, they are running the risk that in days to come many will not even give them credit for the many powerful insights they really did develop and offer to us all.
I see myself as the greatest friend the Buy-and-Holders have in this world. But you are correct that there are a good number of Buy-and-Holders who view any reference to the last 32 years of peer-reviewed academic research in this field as a terrible punishment.