Set forth below is the text of a comment by one of the Buy-and-Hold Goons posted to the discussion thread for an earlier blog entry at this site, followed by my response post:
Bennett: “If ‘valuations affect long-term returns’, [then it follows that] stock investing risk is not static but variable.”
Of course it is. Not one soul that I can name or recall (or that YOU can, either!!!!!) has ever attempted to refute this obvious fact, that was well-discussed even as far back as 1930’s by Ben Graham.
Bennett: “If stock investing risk varies with changes in valuations (price) investors must change their stock allocations in response to big valuation shifts ”
And there we have it. The surmise which you make that can only still be made if you are willfully blinding yourself, and deafening your own ears, to the thousands of times you have been informed, re-informed, explained, directed, schooled, and otherwise appraised of the simple truth: that MANY processes and systems can best be managed NOT by ‘chasing the spikes’ or the noise, or the most recent temporary excursion, but by thoughtfully paying attention to the AVERAGE, the TREND, and the various other statistical quantities that define a processes’ past behavior (and, therefore, outside of discernible changed influencers going forward), and is almost certain likely to continue to govern it’s future behavior as well. You openly eschew science, engineering and mathematics, opting instead for your own peculiar brand of ‘touchy-feely’ intuition-driven data-free psychic divination. That is certainly your right, just as people with dousing rods can go look for water with a hickory stick. That is, as long as you don’t claim to be the Pied Piper of true reality and call everyone else a “felon”! LOL Me, before drilling a water well that I will depend upon for 30, 40, 50 years, I prefer to employ a survey, a geologist, a contour map, knowing the area’s water table, perhaps a test well, etc. Good luck with your soothsaying, Rob!
It’s you and the other Buy-and-Holders who are chasing the spikes, not me, Anonymous.
Stock prices went to three times fair value in January 2000. The Buy-and-Holders encouraged people to treat the numbers on their portfolio statements as real. I say that they needed to divide by three to know the true values of their portfolios (that is, the value that would be assigned to them but for the chasing of the spikes).
I say that people need to know the REAL value of their portfolios. I say that people need to know the REAL safe withdrawal rate. I say that people need to know the REAL risk they are taking on when they buy insanely overpriced stocks.
I don’t chase spikes. I don’t encourage my friends to chase spikes. I am not a con man. Bogle is a con man. Greaney is a con man. Lindauer is a con man.
I am the fellow seeking to EXPOSE the con men.
Do you see?