“If You Asked My Father Whether Buy-and-Hold Worked for Him, He Would Answer “Yes!” I See That As a Misperception on His Part.”

Set forth below is the text of a comment that I recently posted to another blog entry at this site:

It worked for me.
It worked for my father, who has since passed on.
If I am correct in what I have read from you (and I literally BEG you to correct me if I am in error) it worked for YOUR father, too Rob!

So that’s three independent proofs that your nutty claim is wrong, from right off the top of my head, and of course I only needed one to do the job, anyway. End of argument.

If you asked my father whether Buy-and-Hold worked for him, he would answer: “Yes!” I think that much is fair to say, Anonymous.

I see that as a misperception on his part. Buy-and-Hold ALWAYS causes an economic collapse. It is a logical impossibility that persuading millions of investors to fail to exercise price discipline could produce any other result. And, sure enough, my father experienced an economic collapse during his investing lifetime (as does every Buy-and-Holder who lives long enough to invest for more than 40 years — and that’s all of them except for the ones who die early deaths). My father was too young to invest in the collapse of the 1930s. So he missed that one. He died shortly prior to the 2008 collapse. But he had to endure the stagflation of the 1970s, which was brought on by the overvaluation of the 1960s (which was made possible by the popularity of an “idea” that was pushed heavily at the time that there is no need for investors to lower their stock allocations in response to big valuation shifts — sound familiar?)

Few investors blame Buy-and-Hold for today’s economic crisis, Anonymous. That’s because discussion of the role played by Buy-and-Hold is prohibited on the internet. If we gave ourselves permission to discuss these things openly and clearly and frankly, we would all see it. The evidence is overwhelming.

That economic collapse hurt my father’s portfolio in a very serious way. Just as the economic crisis we are living through today is hurting all of today’s investors in a very serious way.

How do the Buy-and-Holders get off the hook for all the damage their “strategy” causes for millions? They blame The Economy. It’s all that darn Economy’s fault! Bad, bad Economy!

It’s always something, isn’t it?

The reality is that no one should be even a tiny bit surprised to see the economy collapse when $12 trillion of spending power goes “Poof!” And those who are familiar with the findings of the last 32 years of peer-reviewed academic research in this field knew in 2000 that we were going to see that much spending power disappear from our economy by the end of the first decade of the 21st Century. That’s why Shiller was able to predict an economic crisis that did not take place until September 2008 in a book published in March 2000.

Buy-and-Hold hurt my father big time. He didn’t know it. But that doesn’t mean that the hurt was not real.

My father had an excuse for not knowing what caused him to suffer those losses. Shiller didn’t publish his research until 1981 and most of the “experts” in this field have not yet seen fit to share with the millions of middle-class workers their analyses of the implications of Shiller’s “revolutionary” (his word) findings.

What’s your excuse, Anonymous?

And, more important than that, what’s Bogle’s excuse?

I say it. I don’t hold back. Can Bogle say that?

I think it would be fair to say that Old Saint Jack owes your father and my father and their sons and daughters an explanation for his poor behavior re this matter.

The Buy-and-Hold “idea” (that there is something special about stocks that makes them the one thing you can buy without being concerned about the price you pay) has caused an awful lot of people an awful lot of pain. Once upon a time, we didn’t know this. So it would be fair to say that it was just one of those things. Since 1981, we have “known” (intellectually if not emotionally). When are we going to get about the business of Taking Some Steps to set things right?



  1. says

    “If You Asked My Father Whether Buy-and-Hold Worked for Him, He Would Answer “Yes!” I See That As a Misperception on His Part.”

    Says the guy currently spending Daddy’s money.

  2. Rob says

    That he gave to me with certain expectations, one of them being that I would strive to do important and honest work.

    My dad loved John Bogle, Z. He would not want to see him getting tied up with the sorts of individuals who have put up posts in “defense” of Mel Lindauer and John Greaney.

    I am sure.


  3. Miasma says

    That he gave to me with certain expectations, one of them being that I would strive to do important and honest work.

    It really gets to the core question. If you believe you are doing something worthwhile, and literally everyone else in the world believes otherwise, then are you doing something worthwhile?

  4. Rob says

    EVERYONE is saying in one way or another that the work I have been doing for the past 12 years is of HUGE importance, Miasma.

    There are over 200 comments set forth in the “People Are Talking” section of the site in which both big-name experts and ordinary investors express the view that the transition from Buy-and-Hold to Valuation-Informed Indexing is the most important advance in the history of personal finance.

    And then we have you Goons, who have demanded that I be banned at every site on the internet. People don’t demand board bannings for no reason. You see my work as a huge threat to the continued promotion of the Buy-and-Hold mumbo jumbo and for 12 years you have not been able to come up with any reasoned defense of the Buy-and-Hold dogmas.

    Even more revealing, my good friend Jack Bogle has not been able to come up with anything. I have asked him to take action re the Lindauer matter and he has thus far elected not to do so. Huh?

    The world of investing advice is changing. And in a very, very positive way. I am proud to be leading the effort. My intent is to continue posting honestly re safe withdrawal rates and re scores of other critically important investment-related topics.

    I naturally wish you the best of luck in all your future life endeavors, Miasma.


  5. Miasma says

    And I wish you well. Since I see you’ve taken to editing my comments now, rather than simply accepting or rejecting them outright, I won’t bother you anymore.

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