Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
I had a feeling you would hone in on the three decade thing so I have another example. The branch of my family that remained in Europe during WWII has a single family office manager. The investment record for the family office stretches back to the late 1800s. There is some data before that, all the way back to the mid 1600s but it isn’t enough to construct a full picture and the portfolio was probably managed in a highly active way at different points in that timeline.
In any case, that portfolio since the 1800s has been managed in mostly/semi a buy and hold manner. There have been major withdrawals at times but it has generally grown substantially over that time period, which is longer than 145 years.
You seem to be struggling with defining the problem you are solving. There are no failed middle class retirements because of buy and hold. The middle class doom has nothing to do with the stock market. They never had anything in the stock market. The middle class doom is because middle class jobs are becoming eliminated in favor of lower paying jobs or higher paying jobs and frankly there is nothing anyone can do about that. In my opinion you have always had mild psychological issues but the impact of the technology bubble and the financial crisis has created an immense clouded tunnel vision effect on you.
Here are some scientific discoveries achieved since the mid-1600s (from Wikipedia):
1665 – Robert Hooke: Discovers the Cell
1687 – Sir Isaac Newton: Classical Mathematical description of the fundamental force of universal gravitation and the three physical laws of motion
1751 – Benjamin Franklin: Lightning is electrical
1821 – Thomas Johann Seebeck is the first to observe a property of semiconductors.
1859 – Charles Darwin and Alfred Wallace: Theory of evolution by natural selection
1915 – Albert Einstein: theory of general relativity
1945 – Howard Florey Mass production of penicillin
2015 – Traces of liquid water discovered on Mars
Shiller’s “revolutionary” (his word) findings of 1981 represent the biggest advance in our understanding of how stock investing works in the history of investing analysis. The peer-reviewed research that I co-authored with Wade Pfau is a dream come true for millions of middle-class investors — it permits them for the first time in history to invest in stocks on a virtually risk-free basis while permitting capitalist economies to avoid the economic crises that the promotion of Buy-and-Hold strategies has been bringing on for many, many years, causing great misery for millions.
Yes, people struggled on somehow even in the Dark Ages. But we are moving on. Most of us LOVE the idea of being able to reduce stock investing risk by 70 percent while earning returns sufficiently greater to permit us to retire five to ten years sooner. Most of us LOVE the idea of avoiding the recessions and depressions that have given capitalism a bad name in the minds of millions of people.
We are not going to permit the insanely abusive behavior of an internet Goon who got an important number wrong in a retirement study that he posted to his web site hold us back.
Just one of those crazy hunches that I have been known to experience from time to time.
But please don’t take my word for it. You will be able to see for yourself how things play out following the next price crash. One of us is right and one of us is wrong. If I am right, I receive a windfall of $500 million. If you are wrong, you get sent to prison for a long stretch of time. I like the cards that I am holding. I wouldn’t trade my cards for your cards for anything in the world.
Hang on to your hat, my long-time Goon friend. It’s going to be a bumpy ride!