Set forth below is the text of a comment that I recently poster to another blog entry at this site:
Given the vast conspiracy of silence regarding valuations, isn’t it incredible such articles in the New York Times could occur Rob?
Do you think that the entire world went from believing that the sun revolves around the earth to believing that the earth revolves around the sun five minutes after the discovery was made, Anonymous?
Truth prevails over ignorance in time, but not instantly. It is a PROCESS.
We are living today mid-way through that process. Jack Bogle is the biggest advocate of Buy-and-Hold alive on Planet Earth. And even Jack includes research-based stuff in his books and speeches ALL THE TIME. I learned about the errors in the Old School safe-withdrawal-rate studies by reading Jack’s book. Jack gave a speech to the Vanguard Diehards back at the time when I was posting there that contained paragraph after paragraph of legitimate, helpful stuff. Then it concluded with gibberish, saying “so just be sure to Stay the Course” without pointing out that to Stay the Course in a meaningful way you must be CERTAIN to lower your stock allocation when prices reach insanely dangerous levels. Huh?
The NYT article you linked to would have been a good article to publish in 1985 or 1990. We should be a good ways past that today.
Where is the New York Times article reporting on the 12-year cover-up of the errors in the Old School SWR studies and on the felonies that have been employed to keep millions of middle-class investors from learning about those errors?
Where is the New York Times article reporting on the Bennett/Pfau research showing millions of middle-class investors how to reduce the risk of stock investing by 70 percent while letting them retire five to ten years sooner than they imagined possible in the Buy-and-Hold days?
Where is the New York Times article reporting on how Bogle hasn’t changed his investing advice one iota in the 33 years since Shiller’s research showed that there is precisely zero chance that a Buy-and-Hold strategy could ever work for even a single long-term investor?
Where is the New York Times article reporting on how Bogle continues to associate with the sorts of individuals who have put up posts in “defense” of Mel Linduaer and John Greaney after hearing hundreds of community members at the Bogleheads Forum express a desire that honest posting be permitted?
Where is the New York Times article reporting that it was the continued promotion of Buy-and-Hold strategies for 33 years after they were discredited by the peer-reviewed research in this field that was the primary cause of the economic crisis?
THOSE are the sorts of articles we need to be seeing today, Anonymous. This is not 1981 or even 1991. This is 2014. It is time to MOVE FORWARD.
Moving forward means telling people what Shiller’s findings means in practical, how-to investing terms. It means explaining to people the DANGERS of Buy-and-Hold strategies.
There is no magic in saying the words “Valuations Matter.” That’s a starting point. But the magic comes when we tell people in clear and firm and bold language WHAT THAT MEANS. What it mean is that valuations must be taken into consideration in EVERY STRATEGIC CHOICE MADE BY AN INVESTOR.
The Buy-and-Holders are still arguing the opposite to this day. The Buy-and-Holders are still arguing that long-term timing is not absolutely required for all investors, or heaven help us all, in some cases might not even be a good thing.
That’s not good, Anonymous. That needs to change. To make it change, we all need to make it a practice to call the Buy-and-Holders out on their b.s. when we see them engage in it.
The article does not go nearly far enough in making the case for Valuation-Informed Indexing over Buy-and-Hold. It is not a close call.