Set forth below is the text of a comment that I recently posted to the discussion thread for one of my columns at the Value Walk site:
Buy and hold is just one of your silly “strawmen”…….as if there are legions of people with the same portfolio. You just make up talking points and repeat them over and over again.
I am not sure what you mean when you refer to “legions of people with the same portfolio,” Sammy. There are millions of investors who don’t see a need to make adjustments in their stock allocations in response to big swings in the price of stocks. It’s the promotion of Buy-and-Hold that is responsible for that. It’s our failure as a society to encourage people to practice price discipline when buying stocks (as they do when buying everything else that they buy!) that was the primary cause of the economic crisis. And I think it would be fair to say that the economic crisis played a big role in bringing on the political frictions on both the left and the right that we are seeing evidence themselves today.
I am not a fan of Buy-and-Hold. I was obviously kidding up above when I said that I take it all back. I know from the thousands of conversations that I have held over the past 15 years with both ordinary investors and with experts that lots of smart and good people agree with me that Buy-and-Hold is dangerous or at the very least should be subject to intellectual challenges. If the Buy-and-Holders got it wrong when they concluded that there is no need for investors to practice price discipline when buying stocks, they have caused a mountain of human misery for millions of middle-class people. A failed retirement is not a life setback that it is easy to recover from.
Robert Shiller has described his research finding that valuations affect long-term returns (an impossibility if the market were efficient, as the Buy-and-Holders claim) as “revolutionary.” I think that’s right. I think that Shiller’s findings turn everything that we once believed about how stock investing works on its head. I believe strongly that we should be debating the merits of Buy-and-Hold vs. the merits of Valuation-Informed Indexing at every investing discussion board and blog on the internet.
We are not doing that today. I think it would be fair to say that the primary reason why we are not doing it is the behavior that we see from Buy-and-Hold “defenders’ like yourself when those of us who have grave doubts begin telling people about the many exciting implications of Shiller’s research findings, findings for which he was awarded a Nobel prize. I believe that you and your Goon friends have hurt millions of people in very serious ways with your relentless harassment and abusiveness. i think your behavior has been as unfortunate as unfortunate can be.
I think that the people of this country will overcome you in the end. I think we are close. We have had thousands of community members express a desire that honest posting on safe withdrawal rates and on scores of other critically important investment-related topics be permitted at every investing site on the internet. I have spoken to academic researchers who would like to do good and important work in this area but who are afraid to stick their necks out. I have spoken to investment advisors who are afraid to stick their necks out. I have spoken to journalists who are afraid to stick their necks out. I know that there are economists who are afraid to stick their necks out. I believe that there are policymakers who are afraid to stick their necks out.
The good news here is 50 times more good than the bad news here is bad. There’s only so long that you will be able to block millions of people from learning stuff that it is so important that they learn. I believe that we will see a huge advance in the days following the next price crash. I believe that the only thing keeping you Goons going today is that there is a big difference between there being a solid, research-based case that Buy-and-Hold can never work long term and people seeing with their own eyes how much human misery it causes them personally. Following the next price crash, people will be able to see with their own eyes what following a Buy-and-Hold strategy really translates into in the long run.
I am not God. I could be wrong. But that is my sincere belief.
And I really do wish you the best of luck in all your future life endeavors regardless of how all the investing stuff turns out.
Hang in there, my good friend.