Set forth below is the text of a comment that was recently posted to another blog entry here by a long-time critic of the Valuation-Informed Indexing concept, followed by my response:
“It’s true that Buy-and-Hold has lots of short-term success stories.”
Someone working for 20-30 years making a modest salary and still being able to retire a millionaire because of Buy and Hold is not a short-term success story. There are literally countless examples of this actually occurring. People have lived, retired on the back of buy and hold, had a good retirement, and died. Their story is over so you can’t say that it was only short-term success,Some the term is over. All you can possibly argue is that another method could have been more successful. There is honestly no room for debate and until you realize this you will have zero credibility. When you tell people who are currently retired with large nest eggs completely cashed out of stocks that Buy and Hold can’t succeed it is like telling a marathon runner who has already crossed the finish line that his training program will not work.
“Joe has somehow managed to figure out how to take price into consideration when buying cars and bananas and sweaters.”
This is actually a terrible example. Joe knows those things are overpriced only in comparison to other identical offering of that product. I have no idea what goes into creating a sweater or what a fair price is for those things I only know how much every store is selling them for. In the case of your theory all stocks are overpriced at the same time. There is never a time where Joe decides that all sweaters in the world are overpriced. This notion would be ludicrous and that is exactly what you are suggesting Joe does with stocks. Certainly if 10 people were selling stocks of MSFT for $40 and then one person was selling it for $100 Joe could make this value decision. What you suggest is the equivalence of Joe understanding intricacies of making a sweater from labor, to cost of fabric, shipping, etc.
“Throwing all your money on the floor and putting a match to it would be easier yet.”
Again a childish and ludicrous comparison. Buy and Hold is a proven system with LONG-TERM success stories that is incredibly easy to implement. You are arguing in favor of what may be a superior system but it is much more difficult to implement. So much so that you are incapable of laying out principles of how to do so and are incapable of actually following the system yourself.
I like your comment, Tron. Most of the points you make in it are reasonable and real. I am going to run this comment as a stand-alone blog entry. I wish that we could see more comments of this nature, comments in which you VII critics stick to your guns but generally avoid the nasty stuff in favor of making points that would strike many community members in the middle as thoughtful.
Rob
Anonymous says
Rob,
If you continue this pattern of hate and anger, you will spend your remaining years in misery. Instead, find something of real value to do with you life versus this fantasy you have with “goons”.
z says
F. Tron is logical and offers cogent points. I certainly don’t look at your site for stuff like that. No entertainment value whatsoever. You can still save the day, however. Just add a nice long comment in your usual style. Please.
Rob says
I obviously feel otherwise, Anonymous.
We are the luckiest generation of investors ever to walk Planet Earth. No earlier generation has had 33 years of peer-reviewed research available to them showing them how to reduce the risk of stock investing by 70 percent while also increasing their returns enough to permit them to retire five to ten years sooner. That’s exciting stuff.
You Goons are the only thing standing in our way.
Wade Pfau is not the only academic researcher who would like to be free to do honest work. There are THOUSANDS of academic researchers who would like to be spending their life energies helping us all out. That was their dream when they began their Ph.D. work. That was the driver behind their years of hard study. When ONE academic researcher is freed to do honest work, ALL academic researchers are freed to do honest work. I cannot wait to see what these guys and gals come up with!
It’s the same story with the Wall Street Con Men. They would LOVE to be doing real, honest, important work.
Why the heck do you think Jack Bogle included language in his book showing me that the numbers in the Old School safe-withdrawal-rate studies are wildly off the mark?
Why the heck do you think Bill Bernstein devoted an entire chapter of his book to honest reporting on what the last 33 years of peer-reviewed research tells us while obviously being very, very aware of just how ruthlessly he would be attacked by his peers if he was perceived as having gone “too far” by including an entire chapter of honest reporting rather than just a few paragraphs here and there, as is the usual custom among the “experts” of today?
Why the heck do you think Larry Swedroe was honest enough in his postings at the Bogleheads Forum to bring on Mel Lindauer’s ire and get himself banned from the forum for a time?
Why the heck do you think that the Wall Street Journal took the risk of publishing an honest column pointing out that the Buy-and-Holders have been “telling only half the story” for all these years and telling sick and twisted Get Rich Quick lies about the other half?
We have learned something important during the Buy-and-Hold years, Anonymous. We have learned that millions of middle-class investors are VERY interested in knowing what the peer-reviewed research says. It’s the claim that the Buy-and-Holders make (falsely, but still…) that their strategy is rooted in peer-reviwed research that made it so popular in the first place. All that I am saying is that we now need to take it to the next step. I think it would be fair to say that lying about what the research says has not been working out so great in recent years. Why not take the idea of rooting one’s strategies in the peer-reviewed research to the next step? Why not permit HONEST AND ACCURATE reporting of what the research says? I think that would make a big difference. I think that would be a big positive.
We have seen that 80 percent of all of our communities like the idea of permitting honest posting. Why not give them what they want? It would not only help the millions of middle-class investors whose lives have been destroyed by the reckless and relentless and ruthless promotion of the Buy-and-Hold garbage. it would allow us to recover from this economic crisis and thereby put millions of middle-class people in a mood in which they might be willing to reduce the prison sentences assigned to you Goons a bit. Is that not so? Is that idea not more than a little bit appealing to you, Anonymous? Tell the truth.
We need to overcome you Goons.
There’s not getting around it.
We have the tools that we need available to us. Every site has rules prohibiting the tactics that you have employed to block millions of people from learning what the peer-reviewed research says. We have adopted laws making financial fraud a felony, which means prison time for those found guilty of it. Why not enforce those site rules and U.S. laws for the benefit of everyone involved? My feeble brain is not even able to imagine any downside. Has your far superior Goon brain ever been able to come up with anything?
I believe that it is all going to flip following the next crash, Anonymous. If you want to experience a taste of what that is going to mean for you Goons, I urge you to enter the word “Phillies” into a search engine and then read comments about what the fans say about the general manager of the club today and then compare it to what they were saying a few years back. It’s a thin line between love and hate, my old friend. Pushing Get Rich Quick garbage makes you the toast of the town for so long as the Get Rich Quick garbage appears to be paying off. When the debt comes due, it’s a very, very, very different story.
We are as a nation of the verge of the biggest breakthrough in our understanding of how stock investing works ever attained in our history. I view that as a super cool reality. I am proud to be playing a big part in bringing it about.
I wish you all the best things that this life has to offer a person, my long-time abusive posting friend.
Rob
Rob says
F. Tron is logical and offers cogent points.
I liked that post a lot, Z.
Just add a nice long comment in your usual style. Please.
Done. Please see above.
Take care, man.
Rob
Sensible Investor says
It’s not accurate for you to say that buy and hold hasn’t been working out well in recent years. The stock market is at an all time high!
Rob says
If prices are at an all-time high, that means that Buy-and-Hold is causing even more damage.
I want no part of it, Sensible.
Please take good care.
Rob
Sensible Investor says
Have it your way. The rest of us will be enjoying early, successful retirements.
Rob says
Okay, Sensible.
My best wishes to you.
Rob
Z says
That’s no good! Let him have it. Vent your spleen! It’s not healthy to keep it bottled up!
Rob says
Yeah, yeah.
Take care, man.
Rob
Anonymous says
Your long response further confirms your problem with anger and bitterness.
Rob says
It’s an act of love, Anonymous.
Bringing the economic crisis to an end helps every human being alive on the planet today.
Making the change in the Buy-and-Hold strategy needed for it to work in the real world helps every single one of my Buy-and-Hold friends.
Teaching millions of middle-class investors what they need to do to reduce the risk of stock investing by 70 percent reduces the prison sentence of all of you Goons.
Posting honestly is good stuff piled on top of good stuff piled on top of good stuff.
Posting abusively is for losers and creeps.
Find someone else, you know?
My best wishes to you.
Rob