Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
Have you ever listened to the Dave Ramsey millionaire hour? They are all buy and holders. Millionaire next door? Buy and holders. These are average Americans that have successfully retired.
Those who follow research-based strategies do better, Anonymous. All of the peer-reviewed research shows that. That’s been so for 145 years running.
Stocks are an amazing asset class. The average long-term return is 6.5 percent real. So even investors going with extremely dangerous strategies are going to do okay for a time. Buy-and-Holders who appear to be doing well for a time are just tapping into the amazing power of stock investing.
But going with a pure Get Rich Quick approach always hurts you in the end. It always increases risk dramatically. And it always lowers return dramatically.
Why do you think the Buy-and-Holders are so hotly opposed to the idea of permitting honest posting re the last 34 years of peer-reviewed research? What do you think explains that?
It’s that the Buy-and-Holders themselves have doubts and it causes them pain to hear those doubts given verbal expression.
We all buy lots of things other than stocks. And we all get it that exercising price discipline is critical in all markets other than the stock market. So we all have a very hard time believing that a “strategy” that requires us to give up price discipline altogether could ever work for even a single long-term investor. And of course all of the peer-reviewed research confirms precisely what our common sense tells us must be so — Buy-and-Hold hurts every investor who falls for it in a very big way.
You think that it is my words that are causing you so much pain. But it’s not. I don’t possess that sort of power. What is causing you pain is your own common sense. You follow a Buy-and-Hold strategy. But you know on one level of consciousness that it cannot work. And when I give voice to your doubts, it drives you friggin’ insane.
I am not trying to hurt you, Anonymous. I am not one of the Wall Street Con Men. I am not exploiting your human weaknesses to turn a quick buck. It’s Jack Bogle who is doing that. If you were thinking clearly, you would see that Bogle is the guy causing you this pain, not me.
I think you will come to see it following the next crash. It will make you angry to see how much money you have lost. Your money is the product of your labor. You will come to see that, when the Wall Street Con Men sell you fantasy investing strategies to turn a quick buck, they are taking away years of your labor. They are essentially turning you into a slave for those years. You put in the work to earn that money and it will be gone. That’s going to hurt. For good reason. Losing years of your life energy for nothing should hurt.
There are lots of con men trying to separate you from your money. Most of them don’t even know that they are con men! They follow the strategies that they are advising you to follow. I think that Ramsey is in that category. I think that Bogle is too. They con you and millions of others. But they con themselves first. I think that that is an important point that everyone needs to understand.
I think that Ramsey and Bogle would like to help you and the millions of others who they are hurting today. I think that they are good and smart men. How do you think that they are ever going to be able to manage to come clean?
We are going to need to demand better of them. We are going to need to point out the contradictions in their crazy claims about how stock investing works and insist that they do better. When we do that, everything will change. They want to be popular. If we show them that we are willing to listen to research-based advice, they will be happy to give it.
This is a messed-up situation. We want to hear Get Rich Quick garbage. We like hearing fantasies. We like thinking that our fantasies are real. When experts tell us that they are real, that gives us a big kick.
But the fantasies hurt us in the long run. We cannot plan effectively when we have no idea of the true value of our portfolios. When we learn the truth late in life, it is too late to go back and invest more effectively. You only get one chance at this game. A bull/ bear cycle can take 35 or 40 years to play out. If you start investing at age 25, you might not see the bad side of Buy-and-Hold until you turn 65. Then it’s too late to have a do-over. Your high-earning years have come to an end.
Why are you so opposed to the idea of permitting honest posting on the last 34 years of peer-reviewed research at every discussion board and blog on the internet? Do you not agree that your hate for that idea reveals one of the dangers of going with a pure Get Rich Quick approach? It sure seems so to me.
I was a Buy-and-Holder once upon a time because I liked it that Buy-and-Hold was supposed to be rooted in what we have learned from the peer-reviewed research. It shocked me when I learned that the claim that Buy-and-Hold is rooted in peer-reviewed research was just a lie told for marketing purposes. Does it not bother you that you are being used in this way? It sure bothered me when I found this out.
I want nothing to do with Buy-and-Hold today. I love all of the genuine insights that the Buy-and-Hold Pioneers advanced, of which there are of course many. I incorporated all of those genuine insights into the Valuation-Informed Indexing strategy. But I left out the lie that it is not necessary for investors to practice price discipline. That one makes me sick. If the Wall Street Con Men were doing legitimate work, I do not see why they would feel a need to lie about such a thing.
My personal belief is that a lot of the con men would very much like to come clean. They don’t do it because they know that they have committed crimes and they will be going to prison when this all comes out. So they just keeping telling those same old, dangerous, financially destructive lies. For how long, Anonymous? How many more lives will be destroyed in the service of this massive con?
If Buy-and-Hold is so wonderful, why don’t the Buy-and-Holders correct the one big mistake that they made that was discovered 34 years ago? Why is that such a big deal?
That’s my gripe. I acknowledge that Buy-and-Hold can appear to be working for a time because stocks are such a great investment class and because Buy-and-Hold involves buying lots of stocks. I just don’t like the dishonesty involved in promoting a pure Get Rich Quick approach. I hate the idea of telling people lies about the numbers they use to plan their retirements. I like honesty as a general policy. I especially think that honesty is important when it comes to investment advice, where there is money involved and where people are planning for retirements that they will not be able to rebuild once they fail.
I cannot even imagine posting dishonestly re these matters. If you had told me back when I first posted about investing that there would be a day when even one person would demand that I post dishonestly, I would have said that you were out of your mind, that such a thing could never happen. It’s been a lot more than one! It’s been thousands and thousands! Yowsa!
I can’t go there, Anonymous. If you can’t see why after 13 years of this and the millions of words that have been spilled, I don’t think that there are any words that I can put forward that will make it clear to you. I think it will click for you following the next price crash, when you will see what the lies have done to your portfolio value and when you see the political frictions that we will all be seeing as we slip into the Second Great Depression. And when your prison sentence is announced!
I think that even you Goons will get it when the bad side of Buy-and-Hold fully evidences itself. But I can’t say for certain. We are just going to have to exercise a little patience and wait to see how things play out.
I certainly wish you the best with it.
I hope that helps a bit.