Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
Hey Rob, I have a serious question. You say–falsely–that Buy & Hold is the dominant investment strategy. You also say that Buy & Hold has not nor can it ever work for a single investor. That presents quite the conundrum. If as you say your belief that Buy & Hold is the dominant investment strategy is true; that means millions of Americans have used it to acquire the funds for their retirements, then have retired and lived out their days in retirement until passing away to the great beyond. Seemingly that means that Buy & Hold did indeed work for far more than a single investor. Do you have some magic Bat$hit Crazy Hocomania Rationalization to account for the discrepancy between reality and HocoFantasy? Thanking you in advance for the MysticalMagicalHocoPixieDust which explains away this paradox.
There is no conflict, John.
There were many years when people typed out letters on typewriters and then mailed them. E-mail didn’t exist. So typewriters seemed like the way to go. Then computers were created and with them e-mail and that’s the more usual way of doing things today.
Now we have a choice. We can still find typewriters and use them if we please. Or we can be even less modern and write out our communications long-hand. Or we can go the modern way and send an e-mail. It’s up to us. The typewriter manufacturers do not threaten to kill our loved ones if we employ e-mail to communicate with others.
I don’t say that life did not exist on Planet Earth prior to 1981. We didn’t know how stock investing worked in those earlier days. We took on far more risk than was necessary. And we obtained greatly reduced returns. But, yes, we struggled on somehow. Buy-and-Hold hurt us. But we didn’t know any better. So we endured things we had to endure. And we survived.
Are you saying that because we survived with an inferior investing strategy that we should be forbidden for all time from ever discovering anything better? If that’s what you are saying, I disagree. The last 36 years of peer-reviewed research is the most exciting 36 years of peer-reviewed research in the history of investing analysis. I think we should make use of it to make our lives richer in every possible meaning of the word. I think we should tell all of our friends about it.
Typewriters do not “work” for me today because they are too much of a pain compared to e-mail. So I go with what works in a world in which human advances have been achieved over the course of time.
I hope that helps a small bit.