Beyond Buy-and-Hold #3 — Stocks Are a Lot Less Risky Than You Think

September 18, 2010 By Rob

The Out of Your Rut site has posted Entry #3 in my new Beyond Buy-and-Hold column. It’s titled Stocks Are a Lot Less Risky Than You Think.

Juicy Excerpt: Indexing changes everything. The sad thing is that most indexers (including Bogle) have little idea today just how important an innovation indexing is. The availability of indexes revolutionizes our understanding of stock risk. And in an entirely positive way. The truth is, stocks are far less risky than even the most enthusiastic stock advocates today realize. For investors willing to invest in indexes and open to taking valuations into consideration when setting their stock allocations, stocks are a significantly less risky asset class than bonds.

Beyond Buy-and-Hold #87 -- Bull Markets Transfer Wealth from One Group of Investors to Another 0 Comments
I've posted Entry #87 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's titled Bull Markets Transfer Wealth from One Group of Investors to Another. Juicy Excerpt: Bull markets do not generate wealth. Bull markets transfer wealth from one group of investors to another. If there were no bull markets, there would be no bear markets. Stocks would at all times offer a return in the neighborhood of the stock return justified by the annual productivity growth of the…
Beyond Buy-and-Hold #102 -- Retirement Warning: The Safe Withdrawal Rate Is NOT a Fixed Number 8 Comments
I've posted Entry #102 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Retirement Warning: The Safe Withdrawal Rate Is NOT a Fixed Number. Juicy Excerpt: Why is there no consensus? It’s not that there’s not a mountain of research supporting the New School approach to SWR analysis. There’s a mountain. The trouble is that the results you get when you perform the analysis are so darn shocking that a good number of prudent people just cannot get behind the…
Beyond Buy-and-Hold #21 -- What Buffett Isn't Telling Us, At Least Not Loudly 0 Comments
I've posted Entry #21 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called What Buffett Isn't Telling Us, At Least Not Loudly. Juicy Excerpt: Buffett keeps it vague. Thus, it’s easy for people hearing his words to ignore what he says. By delivering the message in the way he does, Buffett avoids making people mad. I put the reality that valuations affect long-term returns in people’s faces. That’s why controversy follows me wherever I…
Beyond Buy-and-Hold #108 -- How Bad Will the Next Stock Crash Be and When Will It Arrive? 2 Comments
I've posted Entry #108 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's titled How Bad Will the Next Stock Crash Be and When Will it Arrive? Juicy Excerpt: Trying to guess precisely when the next price crash will come or how deep it will be is a stupid parlor game that smart investors should avoid playing. Still, for purposes of this column… I am going to play the stupid parlor…
Beyond Buy-and-Hold #48 -- The Second Great Depression Cometh 0 Comments
I've posted Entry #48 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called The Second Great Depression Cometh. Juicy Excerpt: Stock prices reached fair value levels in early 2009. Had economic and political leaders taken efforts to stabilize stock prices at those levels, there would have been no Second Great Depression. We would be in the early stages of a recovery today. Unfortunately, our leaders took it just the other way. They talked stocks up, playing…
Beyond Buy-and-Hold #96 -- The Year In Which You Are Born Determines Whether You Will Be Able to Retire or Not 0 Comments
I've posted Entry #96 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's titled The Year In Which You Are Born Determines Whether You Will Be Able to Retire Or Not. Juicy Excerpt: That’s how a free market system should work. Wealth disparities are not a bad thing when they are the result of meaningful distinctions. Investors who save more should end up with greater wealth. But it’s arbitrary that some of us are able to retire years sooner solely because we…
Beyond Buy-and-Hold #89 -- The Three Factors That Affect Your Stock Return 0 Comments
I've posted Entry #89 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's titled The Three Factors That Affect Your Stock Return. Juicy Excerpt: The factor that determines which return in the range of possibilities will apply for you is the returns sequence. This is a luck factor—there is nothing you can do about it. So you are better off spending your time coming to understand valuations and how you need to change your allocation to keep your risk profile roughly…
Beyond Buy-and-Hold #112 -- Having Too Much Investing Information Is Just As Bad As Having No Investing Information At All 0 Comments
I've posted Entry #112 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Having Too Much Investing Information Is Just As Bad As Having No Investing Information At All. Juicy Excerpt: Contrast that with the poor investor who put his $100,000 into stocks at a time when the P/E10 value was 32. He has a chance of seeing no gain at all at 5 years out and at 10 years out and even at 15 years out. Going 5 or 10 or 15 years without a gain is discouraging. It is…
Beyond Buy-and-Hold #32 -- The Three Faces of Wall Street 0 Comments
I've posted Entry #32 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called The Three Faces of Wall Street. Juicy Excerpt: All humans are like Eve. We all have Get Rich Quick within us. That’s our Eve Black side. And we all have the desire for safety within us that is causing many today to swear off stocks forever. That’s the Eve White side of our personalities, a side no more authentic and balanced than the Eve Black side. We need to become Eve Grays,…
Beyond Buy-and-Hold #47 -- The Stock Market Makes Fools of Us Over and Over Again 1 Comment
I've posted Entry #47 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called The Stock Market Makes Fools of Us Over and Over Again. Juicy Excerpt: The reality is that stocks are not one asset class, but three. Stocks being sold at a fair price are nothing at all like stocks being sold at an insanely high price and stocks being sold at an insanely high price are nothing at all like stocks being sold at a fair price or stocks being sold at an insanely low…
Beyond Buy-and-Hold #7 -- You Invest Poorly for the Same Reason You Spend Too Much 0 Comments
I've posted entry #7 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called You Invest Poorly for the Same Reason You Spend Too Much. Juicy Excerpt #1: We’re human. We are affected by advertising. The people who develop marketing campaigns know what they are doing. They appeal to the emotions and they repeat their message thousands of times. That’s what works (for them, not for us). Long-term market timing is what works for us. Market timing is required for…
Beyond Buy-and-Hold #55 -- "I Don't Think I've Ever Heard Buy-and-Hold Described as a Get Rich Quick Scheme Before" 0 Comments
I've posted Entry #55 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called "I Don't Think I've Ever Heard Buy-and-Hold Described as a Get Rich Quick Scheme Before." Juicy Excerpt: Wouldn’t it be better if lots of people were saying that rather than just one? And given how Buy-and-Holders react to the one person saying it, can we say for sure that the reason why lots of people are not saying it is that they don’t believe it? Could it be that lots of people…
Beyond Buy-and-Hold #85 -- The Last 11 Years Have Been Lucky Ones for Stock Investors 0 Comments
I've posted Entry #85 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called The Last 11 Years Have Been Lucky Ones for Stock Investors. Juicy Excerpt: Say that we were back in January 1981, the beginning of the 30-year time-period that ended in January 2011. The realistic expectation would be that we would see an annualized 30-year return of something in the neighborhood of 6.5 percent real. That’s the long-term return that has applied for stocks going back as…
Beyond Buy-and-Hold #82 -- It's Because Investing Is So Important That We Get It So Wrong 12 Comments
I've posted Entry #82 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called It's Because Investing Is So Important That We Get It So Wrong. Juicy Excerpt: I can’t tell you how many times I have had people direct this sort of message to me. They tell me “it’s not your message that people object to, Rob, it’s your style.” Or “You can say whatever you want, you just need to use a different tone.” What people mean when they say that my style or tone is…
Beyond Buy-and-Hold #74 -- The Question That Should Terrify Investors 0 Comments
I've posted Entry #74 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called The Question That Should Terrify Investors. Juicy Excerpt: Why don’t we want to know when we have had too much to drink? Why don’t we want to know when we have had too many candy bars? Why don’t we want to know when we have been at the gambling tables too long? Why don’t we want to know when our current flame is bad news? We like to tell lies to ourselves. That’s…
Beyond Buy-and-Hold #78 -- The Crisis That Doesn't Really Concern Anyone All That Much 0 Comments
I've posted Entry #78 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called The Crisis That Doesn't Really Concern Anyone All That Much. Juicy Excerpt: If you were sick and went to a doctor for help and he gave you a diagnosis that vague, you would demand better. If we were seriously concerned about the crisis, we would demand better of those offering explanations for what happened. We’re not really that worked up about it just yet. Or maybe we don’t want to…
Beyond Buy-&-Hold #10 -- You Cannot Trust Me to Tell You the Truth About Stock Investing 10 Comments
I've posted Entry #10 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called You Cannot Trust Me to Tell You the Truth About Stock Investing. Juicy Excerpt: We’re all liars. So, whoever we choose to go to for investing advice, we are going to a known liar when we do so.…
Beyond Buy-and-Hold #61 -- Investing Is Not a Zero-Sum Game 0 Comments
I've posted Entry #61 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Investing Is Not a Zero-Sum Game. Juicy Excerpt: How do you think these bull market fantasies affected the spending decisions of millions of investors? It caused them to spend far more on high-priced homes and cars and vacations than they would have spent had they possessed an accurate understanding of how much wealth they possessed. That is, it caused companies that built and sold…
Beyond Buy-and-Hold #17: ...And the Bull Shall Lie Down with the Bear 0 Comments
I've posted Entry #17 in my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called ...And the Bull Shall Lie Down with the Bear. Juicy Excerpt: The trouble we are having as a society making the move from Buy-and-Hold to Valuation-Informed Indexing is due to the expanse that we have to travel to make the shift. The point that I am making in this column is that we actually need a new language to make this change. Words like “bull” and “bear” do not make sense in the…
Beyond Buy-and-Hold #113: Buy-and-Hold Works Better -- But Not At All Well -- After the Passage of 30 Years 0 Comments
I've posted Entry #113 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Buy-and-Hold Works Better -- But Not At All Well -- After the Passage of 30 Years. Juicy Excerpt: You only get that 5 percent return at the end of 30 years if you refrain from selling any stocks during the time-period when your you are seeing five sixths of the accumulated wealth of a lifetime disappear into thin air. Can you do it? Can anyone do it? I have my doubts. I just don’t…
Beyond Buy-and-Hold #103 -- The Strategy Implications of Deciding How Much You Want to Leave to Your Heirs 1 Comment
I've posted Entry #103 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called The Strategy Implications of Deciding How Much You Want to Leave to Your Heirs. Juicy Excerpt: That might surprise you. Lowering your spending by only $4,000 permits you to be sure that even in a worst-case scenario you will be able to leave $500,000 to heirs rather than $0. I see that as being a very nice trade-off. The thing I love about this calculator is the way it lets you play with…
Beyond Buy-and-Hold #5 --Why the Experts Don't Tell the Truth About Stock Investing 0 Comments
I've posted Entry #5 in my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Why the Experts Don't Tell the Truth About Stock Investing. Juicy Excerpt: There’s a fear of lawsuits. The mistakes made by the Buy-and-Holders were not deliberate. The reality is that our understanding of how stock investing works is today primitive and that the Buy-and-Holders advanced the ball in many important ways. Still, mistakes were made and those mistakes are likely going to cause…
Beyond Buy-and-Hold #54 -- Your Retirement Plan Is In More Trouble Than You Realize 0 Comments
I've posted Entry #54 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Your Retirement Plan Is In More Trouble Than You Realize. Juicy Excerpt: Stocks were so insanely overpriced in the late 1990s that even 12 years of zero returns has not been enough to pull valuations back to where they must go for the stock market to generate good returns on a going forward basis. We are today at the valuation levels that in ordinary circumstances would be causing informed…
Beyond Buy-and-Hold #2 — Valuation-Informed Indexing Is the Future of Stock Investing 0 Comments
The Out of Your Rut site has posted Entry #2 in my weekly Beyond Buy-and-Hold column. It's called Valuation-Informed Indexing Is the Future of Stock Investing. Juicy Excerpt: What’s not to like is that someone who cannot swim and is six feet tall is not going to do well in a pool that on average has a depth of five feet if he happens to be placed in the section that has a depth of twelve feet. Because Buy-and-Holders choose their stock allocations based on how stocks perform on average,…
Beyond Buy-and-Hold #69 -- In the Future There Will Be No Bulls or Bears 0 Comments
I've posted Entry #69 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called In the Future There Will Be No Bulls or Bears. Juicy Excerpt: I’m not a bear. Why not? Because I’m not guessing. When I say that stock prices are headed downward, I am going by what the academic research says. Valuation-Informed Indexing is a research-based approach, not a guessing game…
Beyond Buy-and-Hold #88 -- Longer Retirements Don't Cost Much More 0 Comments
I've posted Entry #88 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's titled Longer Retirements Don't Cost Much More. Juicy Excerpt: The point that I am objecting to is the idea that you need to add a lot of cash to your retirement plan if you expect it to last not until age 75 but to age 85 or 90 or 95. There’s a counter-intuitive dynamic at work here. Because of the compounding effect, some stages of retirement matter a great deal more than others. You…
Beyond Buy-and-Hold #39 -- A Clash of Investing Faiths 0 Comments
I've posted Entry #39 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called A Clash of Investing Faiths. Juicy Excerpt: Bill Sholar is a friend of mine (I met him at a Motley Fool discussion board a good number of years back) who created the FIRECalc retirement calculator. I view FIRECalc as analytically invalid because it does not contain an adjustment for the stock valuation level that applies on the day the retirement begins. There were often fireworks when I…
Beyond Buy-and-Hold #53 -- This Is the Best Time in History to be a Stock Investor 0 Comments
I've posted Entry #53 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called This Is the Best Time in History to be a Stock Investor. Juicy Excerpt: Please use Shiller’s data to choose any month from 1870 forward and look at the P/E10 level that applied to determine what stock allocation you should have been going with at that time. Then move ahead 10 years to see what return applied. Shiller’s data doesn’t identify the precise return. But, if the P/E10…
Beyond Buy-and-Hold #42 -- Are You Emotionally Invested in Stocks? 0 Comments
I've posted Entry #42 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Are You Emotionally Invested in Stocks? Juicy Excerpt: There’s your wife. She doesn’t bother with investing stuff. So when she said that stock prices just seemed too darn high to her — “What goes up must come down,” she would say — you told her she was being silly. You read Money magazine. You read books by John Bogle. You visit web sites that teach you how stocks are always…
Beyond Buy-and-Hold #93 -- The Myth of the Black Swan 0 Comments
I've posted Entry #93 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's titled The Myth of the Black Swan. Juicy Excerpt: There’s a psychological reason why we want to believe that crashes are unpredictable. If it were true that crashes were unpredictable, those of us who lose money in them are off the hook for having invested irresponsibly and of having lost a lot of money as a consequence. The “Black Swan” explanation for the crash lets us off the hook. Who…
Beyond Buy-and-Hold #36 -- What Is Passive Investing? 0 Comments
I recently posted Column Entry #36 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called What Is Passive Investing? Juicy Excerpt: I recently hosted the April Carnival of Passive Investing. It would be nice if I could say with certainty that I am a passive investor. I think I am. But there are some who would argue strongly that I am not. Shouldn’t we know the answer to this painfully basic question? Just what is Passive Investing? I don’t believe that…
Beyond Buy-and-Hold #72 -- Get Rich Quick: What Is It? 0 Comments
I've posted Entry #72 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Get Rich Quick -- What Is It? Juicy Excerpt: I think we might need to stop thinking of Get Rich Quick as “the Other” and just come to accept that it is part of us. Doing that might permit us to see it in places where we do not see it today. I don’t think for two seconds that the Buy-and-Holders want to be following a Get Rich Quick strategy. If they could become a bit more accepting…
Beyond Buy-and-Hold #50 -- Buy-and-Hold Is Either the Best Strategy of All Time or the Worst 15 Comments
I've posted Entry #50 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Buy-and-Hold Is Either the Best Strategy of All Time or the Worst. Juicy Excerpt: It’s not possible to reach a compromise on points re which both camps are in agreement. Thus, we need to turn to points re which the Buy-and-Holders and the Valuation-Informed Indexers are in disagreement to have any hope of developing a middle-ground position. Unfortunately, there’s only one point of…
Beyond Buy-and-Hold #59 -- All Studies That Support Buy-and-Hold Are Analytically Invalid 0 Comments
I've posted Entry #59 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called All Studies That Support Buy-and-Hold Are Analytically Invalid. Juicy Excerpt: This is true of every study that has been done under the Buy-and-Hold model. All of the studies really say what the Buy-and-Holders say they say. But they are all set up in the way that Jacob’s test was set up, that is, without valuation adjustments. In the eyes of Valuation-Informed Indexers, every study that…
Beyond Buy-and-Hold #28 -- Eeyore and Tigger on Stock Investing Risk 0 Comments
I've posted Entry #28 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Eeyore and Tigger on Stock Investing Risk. Juicy Excerpt: Buy stocks when they are priced reasonably and the risk is insignificant. I’ve looked at the historical data and I know how many times stocks provided a frighteningly poor 10-year return starting from a time of moderate or low valuations. Prepare yourself, Eeyore. This one is going to come as a shock. The number of times this…
Beyond Buy-and-Hold #34 -- 10 Important Things the Buy-and-Holders Got Right 0 Comments
I've posted Column Entry #34 of my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called 10 Important Things the Buy-and-Holders Got Right. Juicy Excerpt: I promote myself as the most severe critic of Buy-and-Hold Investing alive on Planet Earth today. Please don’t think that it follows that I am not grateful for the many important things that the Buy-and-Holders got right. Set forth below is a list of ten powerful insights brought to us by the smart and good and…
Beyond Buy-and-Hold #86 -- It's Not That Big a Deal WHEN You Change Your Stock Allocation So Long as You Are Certain to Change It From Time to Time 0 Comments
I've posted Entry #86 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called It's Not That Big a Deal WHEN You Change Your Stock Allocation So Long as You Are Certain to Change it From Time to Time (Kevin used a slightly different headline). Juicy Excerpt: Chill. You need to make the allocation changes. You don’t need to get them 100 percent right. The key to long-term investing success is making those allocation changes. Get them roughly right and you will be…
Beyond Buy-and-Hold #65 -- Few Investing Experts Understand the Meaning of the Word "Safe" 0 Comments
I've posted #65 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Few Investing Experts Understand the Meaning of the Word "Safe." Juicy Excerpt: Investors don’t want to hear that a withdrawal rate might or might not be safe. They have their retirements riding on this stuff. So they want certainty. The experts feel pressured into pretending to possess a high level of confidence even when they are experiencing grave doubts about what they are…
Beyond Buy-and-Hold #57 -- Why We Hate Sound Investing Strategies Today (But Will Embrace Them Tomorrow) 0 Comments
I've posted Entry #57 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Why We Hate Sound Investing Strategies Today (But Will Embrace Them Tomorrow). Juicy Excerpt: To follow a Get Rich Quick strategy is an act of self-betrayal. It’s hard for us to convince ourselves that Get RIch Quick can work the first time we try it. But once we have tried it for a time and enjoyed some of the temporary payoffs it really does provide, we come to hate anything that…
Beyond Buy-and-Hold #66 -- Recent Stock Market History Has Too Much Influence on Our Thinking 0 Comments
I've posted Entry #66 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Recent Stock Market History Has Too Much Influence On Our Thinking. Juicy Excerpt: The deciding years will likely be the next five. If the Valuation-Informed Indexing model is valid, we will be seeing another price drop of about 60 percent from where we stand today. A stock crash of that magnitude would be a fourth confirmation of the Valuation-Informed Indexing model. It’s hard to…
Beyond Buy-and-Hold #37 -- Do We Get Taken When We Buy Stocks? 0 Comments
I've posted Entry #37 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Do We Get Taken When We Buy Stocks? Juicy Excerpt: When it comes to cars, people know to be skeptical of salesman claims. No one takes the word of a car salesman as gospel. If only this were so when it comes to the people who sell us stocks! John Bogle is the slickest salesman alive today. I don’t mean that as a dig. It’s his job to sell stocks and he does his job exceedingly well.…
Beyond Buy-and-Hold #6 -- Some Experts Are Starting to Tell the Truth About Stock Investing 1 Comment
I've posted Entry #6 to my new weekly column at the Out of Your Rut site. It's called Some Experts Are Beginning to Tell the Truth About Stock Investing. Juicy Excerpt: The discussion boards and blogs that have banned honest posting on how stock investing works have almost invariably showed a great deal of reluctance to do so. Even ardent Buy-and-Holders are today experiencing serious…
Beyond Buy-and-Hold #55 -- "I Don't Think I've Ever Heard Buy-and-Hold Described as a 'Get Rich Quick' Scheme Before" 0 Comments
I've posted Entry #55 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called "I Don't Think I've Ever Heard Buy-and-Hold Described as a 'Get Rich Quick' Scheme Before." Juicy Excerpt: We’re caught in a Catch-22 situation. Few people are willing to point out that the emperor is wearing no clothes even though it is obvious that the emperor is wearing no clothes because so few dare to point out that the emperor is wearing no clothes that those who do point it out…
Beyond Buy-and-Hold #9 -- But How Long is the Long Run? 0 Comments
I've posted Entry #9 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Stock Investing for the Long Run -- But How Long is the Long Run? Juicy Excerpt: It’s often necessary to parse the words of those who claim to offer expert investing advice. Is it true that stocks always provide good returns in the long-term? There is a legalistic way in which this claim can be said to be true. It is not even a little bit true in the sense in which the vast majority of…
Beyond Buy-and-Hold #64 -- Most Stock Investors Are Gambling with Their Retirement Money 0 Comments
I've posted Entry #64 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Most Stock Investors Are Gambling with Their Retirement Money. Juicy Excerpt: We flatter ourselves when we suggest that today’s stock market is a true “market.” That’s not even close to being true. And it’s our fault. For the stock market to become a true market, we all need to start caring about price. I know how much opposition there is to this idea. I’ve been making the case…
Beyond Buy-and-Hold #83 -- How a Valuation-Informed Indexer Chooses His Stock Allocation 0 Comments
I've posted Entry #83 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called How a Valuation-Informed Indexer Chooses His Stock Allocation. Juicy Excerpt: The conventional advice is that only near-retirees need to be worried about the risk of stocks. It’s not so. Any investor who has a need for a portfolio of a certain size within ten years or so needs to take the uncertainty of the return on stocks into account. Most of us are in those circumstances. Some of us…
VII #75 -- Bogle's Crazy, No-Good, Terrible, Mixed-Up 15 Percent Rule for Tactical Asset Allocation 0 Comments
I've posted Entry #75 to my weekly Valuation-Informed Indexing column at the Value Walk web site. It's called Bogle's Crazy, No-Good, Terrible, Mixed-Up 15 Percent Rule for Tactical Asset Allocation. Juicy Excerpt: Bogle has never said. He has cited the 15 percent rule on numerous occasions. He has never once explained where it came from. I have a hunch. I think he pulled it out of the air. I really do. I think he recognized that an absolute prohibition on market timing sounds too…
Beyond Buy-and-Hold #16 -- Stock Picking Works (But Probably Is Not for You) 0 Comments
I've posted Entry #16 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's Called Stock Picking Works (But Probably Is Not for You). Juicy Excerpt: Warren Buffett is not just lucky. Warren Buffett knows what he is doing and he obtains far higher returns than indexers as a result. It’s wrong for indexers to argue that indexing is the only way to go. And it’s entirely unnecessary from a marketing standpoint. Indexing is wonderful. Why not just say that and explain why…
Beyond Buy-and-Hold #62 -- Nine Reasons Why Buy-and-Hold Can Never Work 0 Comments
I've posted Entry #62 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Nine Reasons Why Buy-and-Hold Can Never Work. Juicy Excerpt: The key to success in many types of life endeavor is learning from feedback. Because Buy-and-Holders don’t adjust their portfolio values to show the effect of valuations, the feedback they receive is often misleading. I was warning people back in 2002 that going with a high stock allocation at the price levels that applied…
Beyond Buy-&-Hold #1 -- How We Ruined Our Economy (& How We Can Rebuild It) 0 Comments
The Out of Your Rut site has posted the first entry in my new, weekly Beyond Buy-and-Hold column. It's called How We Ruined Our Economy (and How We Can Rebuild It). Juicy Excerpt: The reality is that we may end up someday looking back at this economic crisis as the best thing that ever happened to us. Many of us were not open to hearing the message for as long as Buy-and-Hold had not done too much damage, but now that we appear to be headed into the Second Great Depression, more and more…
Beyond Buy-and-Hold #22 -- Stock Cycles Make It Hard to Walk the Buy-and-Hold Walk 0 Comments
I've posted Entry #22 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Stock Cycles Make It Hard to Walk the Buy-and-Hold Walk. Juicy Excerpt: The average of the three P/E10 levels that brought on the first three economic crises is 27.3. The average drop in real value of stock shares is 68 percent. The average 20-year return is 0.7 percent. The average time from bull-market top to bull-market top is 33 years. If we presume that the next bull market will top…
Beyond Buy-and-Hold #107 -- Time Is the Forgotten Factor in Stock Investing 0 Comments
I've posted Entry #107 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Time Is the Forgotten Factor in Stock Investing. Juicy Excerpt: Say that you retired in 1996 and used a 4 percent withdrawal (the withdrawal rate identified as “safe” in the discredited studies). Stocks were insanely overpriced in 1996. So your retirement was by no mean safe. Under many returns sequences, your retirement would fail before you reached age 95. But, if we did not see a…
Beyond Buy-and-Hold #41 -- Robert Shiller Pulls His Punches 0 Comments
I've posted Entry #41 in my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Robert Shiller Pulls His Punches. Juicy Excerpt: My claim to fame on the internet is that I am the person who discovered the analytical errors in the Old School safe withdrawal rate studies. I helped lots of people out with that one. But it wasn’t the word “thanks” that I heard most often in response. I had people threaten to kill me. I had people say my parents are alcoholics. I…
The Bogle Revolution, Take Two 0 Comments
I've posted Entry #14 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called The Bogle Revolution, Take Two. Juicy Excerpt: It’s not that they are dumb. People are not dumb. It’s that stock investors have been focusing on the short-term for a long, long time. Yes, they get it that Bogle (and all other Buy-and-Holders) say that that’s wrong. But there is no force with a greater influence on human behavior than habit. It will take many years, perhaps decades,…
Beyond Buy-and-Hold #76 -- Let's Stop Blaming the Economy for Our Failed Investing Strategies 0 Comments
I've posted Entry #76 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Let's Stop Blaming the Economy for Our Failed Investing Strategies. Juicy Excerpt: When Buy-and-Hold produces good results, we credit the investing strategy. When the results are poor, we place the blame elsewhere. As Church Lady might observe, “How convenient for the advocates of Buy-and-Hold!” It’s a “heads I win, tails you lose” approach to investing…
Beyond Buy-and-Hold #84 -- Ten Years of Losses Will Leave You With a Bigger Portfolio Than Ten Years of Gains 0 Comments
I've posted Entry #84 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Ten Years of Losses Will Leave You With A Bigger Portfolio Than Ten Years of Gains. Juicy Excerpt: The assumptions that I entered are that you start with a portfolio of $10,000 and then add $10,000 each year. See a return of 5 percent for each of the first 10 years and you will at the end of 30 years have a portfolio value of $998,579. See a return of a negative 5 percent for each of the…
Beyond Buy-and-Hold #68 -- How Our Stock Addiction Grew Gradually Worse Over Time 0 Comments
I've posted Entry #68 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called How Our Stock Addiction Grew Gradually Worse Over Time. Juicy Excerpt: It happened gradually and without me taking much notice of it. Once I had a habit of drinking one cup per day, going to two cups per day did not seem like a big deal. Once I had a habit of drinking two cups per day, going to three cups per day did not seem like a big deal. You get the idea. This is how it works with…
Beyond Buy-and-Hold #45 -- Fear of Admitting Investing Mistakes Can Lead to Bigger Investing Mistakes 0 Comments
I've posted Entry #45 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Fear of Admitting Investing Mistakes Can Lead to Bigger Investing Mistakes. Juicy Excerpt: Buy-and-Holders don’t blame their strategy when it performs poorly. They blame the economy. They argue that stock crashes just happen randomly, that there is no correlation between the insane prices that were brought on by the massive promotion of Buy-and-Hold and the economic crisis that followed.…
Beyond Buy-&-Hold #19: There's No Such Thing As An Unemotional Investor 0 Comments
I've posted Entry #19 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called There's No Such Thing As An Unemotional Investor. Juicy Excerpt: It’s not my intent here to pick on Larimore and Bengen. Millions of Buy-and-Holder did what they did. They talked the Buy-and-Hold talk but the first time the theory was tested in a serious way they failed to walk the Buy-and-Hold walk. The human is The Rationalizing Animal. We do it so well that we fool ourselves into not…
Beyond Buy-and-Hold #110 -- Why 30-Year Stock Returns Are Far More Stable Than 10-Year Returns 0 Comments
I've posted Entry #110 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's titled Why 30-Year Stock Returns Are Far More Stable Than 10-Year Returns. Juicy Excerpt: Say that we see nine high-return years in a decade. If stock returns followed a random walk, the odds would be strong that, for the 30-year time-period starting with those ten years, we would see more than 15 high-return years. The same logic that applied with the 30 dice rolls applies here. The final 20…
Beyond Buy-and-Hold #30 -- What's So Bad About Buy-and-Hold? 0 Comments
I've posted Entry #30 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called What's So Bad About Buy-and-Hold? Juicy Excerpt: Picking indexes doesn’t free you of the need to identify strong value propositions and to refuse to put money on the table until you find one. What make the “hold” part of Buy-and-Hold work is that it takes time for strong value propositions to pay off. Guess what happens in the long term to poor value propositions? They reveal…
Beyond Buy-and-Hold #46 -- Predicting Stock Returns for Fun and Profit 0 Comments
I've posted Entry #46 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Predicting Stock Returns for Fun and Profit. Juicy Excerpt: The reason why I take a different view about long-term stock prices (the prices that will apply 10 years from now) is that predicting long-term stock prices calls for the use of an entirely different sort of skill. I’ve been predicting long-term stock prices since 1996 and I’ve never gotten one wrong yet. Historical…
Beyond Buy-and-Hold #63 -- Buy-and-Holders Must Sell Their Stocks Before the Economy Can Recover 11 Comments
I've posted Entry #63 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Buy-and-Holders Must Sell Their Stocks Before the Economy Can Recover. Juicy Excerpt: There’s a reason why the market can turn up again only after capitulation has been achieved. The thing that sends prices wildly up in bull markets is investor emotion. The purpose of a bear market is to wash the emotion out of the market. So long as there are still people claiming that Buy-and-Hold can…
Beyond Buy-and Hold #31 -- Ten Must-Read Investment Books 0 Comments
I've posted Entry #31 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Ten Must-Read Investment Books. Juicy Excerpt: A Random Walk Down Wall Street is the Irrational Exuberance of the Buy-and-Hold Era. Buy-and-Hold was a huge advance that has been discredited. You need to know what this book says to understand what the most important debates going on today are all…
Beyond Buy-and-Hold #56 -- Every Stock Investor Experiences One 20-Year Period of Poor Returns 10 Comments
I've posted Entry #56 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Every Stock Investor Experiences One 20-Year Period of Poor Returns. Juicy Excerpt: It is possible for non-timers to do just fine with their investments for five years or ten years or even fifteen years. That happens often. In fact, if you check the historical record, you will see that it is the norm. The trouble is — Most of us are investing to finance our old-age retirements. To…
Beyond Buy-and-Hold #51 -- Am I Crazy Saying What I Do About the Stock Market? 15 Comments
I've posted Entry #51 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Am I Crazy for Saying What I Do About the Stock Market? Juicy Excerpt: The first argument in support of the claim that I am crazy is that I put forward such outrageous claims. I don’t just say that Buy-and-Hold has a few flaws, I describe it as the most dangerous Get Rich Quick scheme ever concocted by the human mind. I say that the promotion of Buy-and-Hold caused the economic crisis.…
Beyond Buy-and-Hold #4 -- Long-Term Timing Is Not At All Similar to Short-Term Timing 0 Comments
I've posted Column Entry #4 to my new weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Long-Term Timing Is Not At All Similar to Short-Term Timing. Juicy Excerpt: Stock prices reached insanely high levels in January 1996. What happened if you missed that exit point? You got another change in 1997. And then another in 1998. And then another in 1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007, and 2008. It wasn’t hard to pick a good spot to get out. And what…
Beyond Buy-and-Hold #8 -- The How-To of Valuation-Informed Indexing 0 Comments
I've posted Entry #8 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called The How-To of Valuation-Informed Indexing. Juicy Excerpt: It is the Reversion to the Means phenomenon that makes Valuation-Informed Indexing so effective. Most strategies relying on market timing involve so much guesswork that the odds of them coming through are not great. Because Valuation-Informed Indexing relies on an “Iron Law” of stock investing, it almost always produce better…
Beyond Buy-and-Hold #25 -- Market Timing Is Frugality Applied to Stock Investing 0 Comments
I've posted Entry #25 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Market Timing Is Frugality Applied to Stock Investing. Juicy Excerpt: There are hundreds of blogs today preaching the merits of frugality. There are also hundreds of blogs preaching the merits of Buy-and-Hold. Can you imagine how much good we could do if we could get the owners of the latter group of blogs to take in the message of the former group of blogs and to start writing articles…
Beyond Buy-and-Hold #80 -- Nothing Brings Down the Savings Rate as Much as a Bull Market 0 Comments
I've posted Entry #80 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Nothing Brings Down the Savings Rate as Much as a Bull Market. Juicy Excerpt: To persuade millions of people who need to save that they they do not need to save is a bad thing. That’s what Buy-and-Hold did to us. It persuaded us that we didn’t need to save even though we did. It hurt us. It tricked us. It pandered to our most greedy and lazy and self-destructive emotional impulses. It…
Beyond Buy-and-Hold # 27 -- Don't Beat Yourself Up Over Your Investing Mistakes 0 Comments
I've posted Entry #27 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Don't Beat Yourself Up Over Your Investing Mistakes. Juicy Excerpt: There is one important respect in which Buy-and-Holders really are dumb. They possess a shockingly weak understanding of the role that investor emotions play in any effort to achieve long-term investing success. Even here though it is not fair to dismiss those who followed Buy-and-Hold strategies as dunces. The world’s…
Beyond Buy-and-Hold #24 -- Five Reasons Why We Don't Want to Know How to Invest Effectively 0 Comments
I've posted Entry #24 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Five Reasons Why We Don't Want to Know How to Invest Effectively. Juicy Excerpt: We are emotionally invested. Have you noticed how, when you make a major purchase (say, the purchase of a new computer), you ask lots of hard questions up to the time you put money on the table. However, once the transaction is completed, you take off the skeptic’s hat and become a booster of the product you…
Beyond Buy-and-Hold #98 -- Valuation-Informed Indexing Cuts the Risk of Stock Investing by 60 Percent 0 Comments
I've posted Entry #98 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's titled Valuation-Informed Indexing Cuts the Risk of Stock Investing by 60 Percent. Juicy Excerpt: I presumed that the investor starts with $10,000 in his portfolio and adds $10,000 to it each year for 30 years. I also presumed that the investor could earn a return of 3 percent real in a non-stock investment class. I had the Buy-and-Hold investor go with a 60 percent stock allocation. I had the…
Beyond Buy-and-Hold #18: Knowing the Mathematics of Investing Hurts More Than It Helps 4 Comments
I've posted Entry #18 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Knowing the Mathematics of Investing Hurts More Than It Helps. Juicy Excerpt: Nine out of ten investors use mathematics not to develop sound strategies but to develop rationalizations for making emotional choices that they couldn’t bear to follow if not the for the “support” offered by mathematics. Investing mathematics is not real mathematics. It’s a game. The aim of investing…
Beyond Buy-and-Hold #100 -- The Extent to Which Valuations Matter Is Highly Counter-Intuitive 0 Comments
I've posted Entry #100 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's titled The Extent to Which Valuations Matter Is Highly Counter-Intuitive. Juicy Excerpt: Look at the 30-year numbers. The Red Bar for Scenario One (a low starting-point valuation) ends at $1,190,150. That’s the value of the portfolio in the worst possible case, considering every return sequence we have seen in the historical record. The Red Bar for Scenario Two (a high starting-point…
Beyond Buy-and-Hold #20: How Do We Know When Stocks Are Overvalued? 0 Comments
I've posted Entry #20 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called. How Do We Know When Stocks Are Overvalued? Juicy Excerpt: Overvaluation is by definition a hidden danger. It can destroy us. But we cannot prepare for it. Once we sense a need to be wary, it is gone. Once our wariness fades, it returns. Overvaluation is like your shadow. Move in close to get a good look at it and it moves out of sight. The implications are…
Beyond Buy-and-Hold #44 -- How to Stop the Next Bull Market 0 Comments
I've posted Entry #44 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called How to Stop the Next Bull Market. Juicy Excerpt: Policymakers should educate voters about the damage that bull markets do to our political institutions. Both Republican and Democratic lawmakers often promise to take action to reduce the Federal budget deficit. But the budget deficit is a small matter compared to the debt we incurred to future investors during the bull market of the late…
Beyond Buy-and-Hold #35 -- Why Stock Market Timing Scares Us 4 Comments
I've posted Column Entry #35 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Why Stock Market Timing Scares Us. Juicy Excerpt: Market timing is the answer. For those of us willing to engage in market timing, stock returns are highly predictable and thus stocks are a high-return/low-risk asset class. But most of us are not today willing to do this. Most of us disdain market timing. Huh? We have available to us a means of investing in stocks that offers…
Beyond Buy-and-Hold #40 -- You Should Be Rooting for Stock Prices to Fall 7 Comments
I've posted Entry #40 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called You Should Be Rooting for Stock Prices to Fall. Juicy Excerpt: Small changes in the patterns by which stock returns play out can make all the difference. Few of today’s investors know this and it is in my view one of the most important realities of stock investing. In 1980, we saw a return of 15.76 percent. In 2008, we saw a return of a negative 39.29 percent. What if the returns for…
Beyond Buy-and-Hold #90 -- The Returns Sequence That Happens to Pop Up Makes a Big Difference 0 Comments
I've posted Entry #90 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's titled The Returns Sequence That Happens to Pop Up Makes a Big Difference. Juicy Excerpt: The returns sequence factor is a significant factor. You really do need to understand the concept to be an effective investor. It would be wrong of me to entirely ignore this factor. But the full truth here is that, while the dollar figures are huge, this is far from being the most important factor bearing on…
Beyond Buy/Hold #11:Only Thing More Dangerous Than Market Timing Is Failing to Engage In It 2 Comments
I've posted Entry #11 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called The Only Thing More Dangerous Than Market Timing Is Failing to Engage In It. Juicy Excerpt: You’re arranging a family reunion. Hundreds of people will be invited to the picnic event and many will need to travel long distances to ge there. There will be lots of good food, a magician is being hired to entertain the children and there will be a band playing music for the adults. Expenses…
Beyond Buy-and-Hold #105 -- Forget the S&P 500 Level, It's the P/E10 Value That Really Counts 0 Comments
I've posted Entry #105 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Forget the S&P 500 Level, It's the P/E10 Value That Really Counts. Juicy Excerpt: I was having a discussion with some Valuation-Informed Indexing skeptics when the words popped out of my head — “An S&P 500 priced at 1,000 when the P/E10 value is 30 is the same as an S&P 500 priced at 500 when the P/E10 value is 15.” That’s a pretty darn simple way of making the…
Beyond Buy-and-Hold #106 -- When Is It Better to Have a $100,000 Portfolio Than a $300,000 Portfolio? 0 Comments
I've posted Entry #106 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called When Is It Better to Have a $100,000 Portfolio Than a $300,000 Portfolio? Juicy Excerpt: Please look at that graphic again. It tells an important story. The graphic is telling us something crazy. It is telling us that we are investing in crazy ways and that our crazy investing practices are making the market go so haywire that things can reach a point where a $100,000 portfolio offers the…
Beyond Buy-and-Hold #29 -- Bubble Logic 0 Comments
I've posted Entry #29 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Bubble Logic. Juicy Excerpt: Magical thinking never works in the real world. When I was a boy, I watched “Superman” one too many times and came to persuade myself that, if I jumped from the top of the steps, I would be able to fly. You know what happened. We all have come face to face with the Reality Principle at some moment in our lives. The Reality Principle does not suffer…
Beyond Buy-and-Hold #99 -- Once Stock Prices Drop Hard, There's Only One Way They Can Go 2 Comments
I've posted Entry #99 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's titled Once Stock Prices Drop Hard, There's Only One Way They Can Go. Juicy Excerpt: We need to train ourselves to tune the market’s short-term message and focus in on the helpful, enriching, long-term stuff. I think that the best way to do that is by looking at the numbers. Say that stocks are priced as they were priced in 1982. What will a $100,000 stock portfolio be worth in 30 years?…
Beyond Buy-and-Hold #67 -- It Takes a Tough Man to Put Forward Sound Investing Advice 4 Comments
I've posted Entry #67 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called It Takes a Tough Man to Put Forward Sound Investing Advice. Juicy Excerpt: He really did use the word “bully” in the conversation. He also used the word “intimidating.” He said that he didn’t think that either word properly described me. He wasn’t able to think of the precise word that fits. But those were the two that came to his mind. If I am not quite a bully, I am…
Beyond Buy-and-Hold #114 -- Four Valuation-Informed-Indexing Portfolio Allocation Strategies 0 Comments
I've posted Entry #114 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Four Valuation-Informed-Indexing Portfolio Allocation Strategies. Juicy Excerpt: I steered away from advocacy of The Gradualist Approach in the early years of my development of the Valuation-Informed Indexing Model. I was influenced by the intense opposition of the Buy-and-Holders to allocation shifts into trying to avoid frequent changes. I’ve come to believe that that was a…
Beyond Buy-and-Hold #94 -- Obtaining Low Returns on Your Non-Stock Asset Classes Won't Do You Too Much Long-Term Harm 0 Comments
I've posted Entry #94 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's titled Obtaining Low Returns on Your Non-Stock Asset Classes Won't Do You Too Much Long-Term Harm. Juicy Excerpt: First, you need to ask yourself why it is that the returns provided by non-stock investment classes has dropped so hard. Entities trying to interest investors in non-stock asset classes had to make an incredible offer to entice them back in the late 1990s and early 2000s. Stocks were…
Beyond Buy-and-Hold #70 -- Why I Don't Pull Punches in My Discussions With Buy-and-Holders 4 Comments
I've posted Entry #70 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Why I Don't Pull Punches in My Discussions With Buy-and-Holders. Juicy Excerpt: But my goal is to bury Buy-and-Hold 30 feet in the ground, where it can do no further harm to humans and other living things. I would like to see all of the experts in this field endorsing Valuation-Informed Indexing, which I view as the investing strategy of the future. I look forward to the day when The…
Beyond Buy-and-Hold #111 -- Stock Cycles Are Real 0 Comments
I've posted Entry #111 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Stock Cycles Are Real. Juicy Excerpt: Alexander came up with a creative solution to the problem. Imagine that you engaged in a series of coin flips, noted the sequence of heads and tails obtained and then looked for signs of non-randomness. You would be surprised to see the pattern HTHTHTHT (with “H” representing “heads” and “T” representing “tails), THTHTHTH, TTHHTTHH or…
Beyond Buy-and-Hold #13: Calorie Counting for Stock Investors 0 Comments
I've posted Entry #13 for my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Calorie Counting for Stock Investors. Juicy Excerpt: It’s the things that affect investing that most of us don’t acknowledge have much to do with investing that are killing investors today. We need to begin talking about this human stuff. All investors are humans. So it applies. Humans are cheaters, mess-ups, self-deceivers. Investors are humans, so investors are all those…
Am I Crazy for Being Out of the Stock Market for 14 Years? 0 Comments
I've posted Entry #12 for my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Am I Crazy for Being Out of the Stock Market for 14 Years? Juicy Excerpt: Most middle-class investors are moderate people. They disdain extremism. When they hear that I have been going with a zero stock allocation for 14 years, it is a turnoff for…
Beyond Buy-and-Hold #97 -- Is It Possible to Get "Stuck" at a Low Stock Allocation as the Market Takes Off? 0 Comments
I've posted Entry #97 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's titled Is It Possible to Get "Stock" at a Low Stock Allocation as the Market Takes Off? Juicy Excerpt: Follow a Valuation-Informed Indexing strategy with the mindset of a Buy-and-Holder and you might indeed suffer the lock-in effect warned of by a good number of our Buy-and-Hold critics. Come to understand why Valuation-Informed Indexing always produces better risk-adjusted results in the long…
Beyond Buy-and-Hold #80 -- Financial Disinformation Is an All-or-Nothing Proposition 0 Comments
I've posted entry #80 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Financial Disinformation Is an All-or-Nothing Proposition. Juicy Excerpt: But the full truth is — all new ideas first need to be expressed by a single person. There’s no other way for the process to get started. And it’s unlikely that the person expressing the new ideas is going to be someone already widely recognized as an expert in the field. Those who have established themselves…
Beyond Buy-and-Hold #75 -- If Valuations Matter, It Must Be Possible to Profit From This Reality 0 Comments
I've posted Entry #75 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called If Valuations Matter, It Must Be Possible to Profit from This Reality. Juicy Excerpt: The next day, the manager releases the team’s best five pitchers on waivers. You are shocked. You tune in to the news that night to hear his explanation. He says: “I strongly believe that pitching matters. That said, I know of no reason to believe that teams with better pitchers win more games. So I…
Beyond Buy-and-Hold #60 -- Risk-Free Stock Investing 0 Comments
I've posted Entry #60 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Risk-Free Stock Investing. Juicy Excerpt: You are taking on more than one form of risk when you choose investment classes. One is the chance that the investment class will perform poorly. Another is that you might miscalculate how much you need to retire and thus end up in trouble even if all of your investment choices perform precisely how you hoped they would. Stocks counter this risk…
Beyond Buy-and-Hold #92 -- Buy-and-Hold Costs You Money Even in the Distant Long-Term 0 Comments
I've posted Entry #92 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's titled Buy-and-Hold Costs You Money Even in the Distant Long-Term. Juicy Excerpt: The Buy-and-Holders cannot do what they promise they are going to do. It’s easy to say you are going to stick with a Buy-and-Hold strategy during the Get Rich Quick years. It is not realistic to expect that you really will stick with it when the phony gains disappear from your portfolio statement. The full…
Beyond Buy-and-Hold #58 -- Nine Reasons Why Valuations Make a Big Difference in the Long Run 0 Comments
I've posted Entry #58 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Nine Reasons Why Valuations Make a Big Difference in the Long Run. Juicy Excerpt: The only difference between Buy-and-Holders and Valuation-Informed Indexers is that Buy-and-Holders say that there is no need to engage in market timing and Valuation-Informed Indexers say that those who fail to engage in long-term timing will sooner or later see their risk profiles go wildly out of whack…
Beyond Buy-and-Hold #38 -- What Should You Invest in If You Are Afraid to Invest in Stocks? 0 Comments
I've posted Entry #38 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called What Should You Invest in If You Are Afraid to Invest in Stocks? Juicy Excerpt: Say that it takes three years for the next crash to take place and that that crash will bring stock prices down 65 percent from where they are today, down to the P/E10 level of 8 that has applied at the bottom of every major bear market we have seen in U.S. history. Do you know what the most likely 10-year…
Beyond Buy-and-Hold #3 — Stocks Are a Lot Less Risky Than You Think 0 Comments
The Out of Your Rut site has posted Entry #3 in my new Beyond Buy-and-Hold column. It's titled Stocks Are a Lot Less Risky Than You Think. Juicy Excerpt: Indexing changes everything. The sad thing is that most indexers (including Bogle) have little idea today just how important an innovation indexing is. The availability of indexes revolutionizes our understanding of stock risk. And in an entirely positive way. The truth is, stocks are far less risky than even the most enthusiastic stock…
Beyond Buy-and-Hold #104 -- How Much Do You "Pay" for Various Improvements to Your Retirement Plan? 8 Comments
I've posted Entry #104 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called How Much Do You Pay for Various Improvement to Your Retirement Plan? Juicy Excerpt: There are lots of possible changes you might want to make to this plan to suit your personal preferences. You might want to be sure to have money to leave to heirs when you die (that’s the change we examined in last week’s column). You might want to take out more money each year and still have a…
Beyond Buy-and-Hold #95 -- Imprecise Return Predictions Are Better Than No Return Predictions At All 0 Comments
I've posted Entry #95 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's titled Imprecise Return Predictions Are Better Than No Return Predictions At All. Juicy Excerpt: Say that you determined that looking at return predictions is not for you because the 10-year numbers are too imprecise. You still would have benefited from examining what the P/E10 level that applied in 2000 told us about how stocks would be performing for the next 10 years. Investors who were…
Beyond Buy-and-Hold #26 -- A Truly Simple Way to Invest in Stocks 0 Comments
I've posted Entry #26 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's Called A Truly Simple Way to Invest in Stocks. Juicy Excerpt: A basic problem that plagues many of today’s middle-class investors is that they do not possess a good understanding of how investing works. I believe that much of the confusion we all feel is rooted in our effort to convince ourselves that it is not necessary to take price into consideration when buying stocks. We all buy lots of…
"Common Sense Tells Us That Market Timing (Price Discipline!) Must Work. Price Discipline Is Essential in Every Other Market That Has Ever Existed. We Now Have 40 Years of Peer-Reviewed Research Confirming That What Must Be So Really Is So." 0 Comments
Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site: If you haven’t been able to fully find your retirement by investing with the VII strategy, why should anyone follow your advice? Four reasons: 1) Common sense tells us that market timing (price discipline!) must work. Price discipline is essential in every other market that has ever existed; 2) We now have 40 years of peer-reviewed research confirming that…
Beyond Buy-and-Hold #43: A Big Opportunity for Personal Finance Bloggers 0 Comments
I've posted Entry #43 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called A Big Opportunity for Personal Finance Bloggers. Juicy Excerpt: We’re bloggers! We’re not rich boys! The reality is quite to the contrary! We’re poor boys (and girls)! We could do this thing! No? This is our chance. Money blogging should not be about rewriting press releases sent our way by our friends in The Stock-Selling Industry. Every personal finance blogger should be…
Beyond Buy-and-Hold #49 -- The "Inflammatory" Stock Investing Realities 0 Comments
I've posted Entry #49 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called The "Inflammatory" Stock Investing Realities. Juicy Excerpt: A high percentage of the community that meets at the Vanguard Diehards board (now the Bogleheads Forum) was very upset with things I said. But was it my words that caused such emotional discomfort to the Buy-and-Holders? Or was it that my words reported on the 30 years of academic research backing up Shiller’s finding that…
Beyond Buy-and-Hold #77 -- How Big An Advance Is Valuation-Informed Indexing? 0 Comments
I've posted Entry #77 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called How Big an Advance Is Valuation-Informed Indexing? Juicy Excerpt: Most advances in knowledge are of the building block type. But not all! We have been fooled into thinking that huge steps forward are not possible in the investing field. We need to rearrange our perceptions. We need to at least consider the possibility that those of us kicking around today are living through the days in…
Beyond Buy-and-Hold #71 -- Buy-and-Holders Are Good and Smart People 0 Comments
I've posted Entry #71 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Buy-and-Holders Are Good and Smart People. Juicy Excerpt: Do you know any field of human endeavor in which the pioneers got it all right on the first try? I can’t think of one. We shouldn’t be surprised that the Buy-and-Holders messed up big time. We should have expected it all along. That’s what usually happens when the humans go about making huge advances in their understanding of…
Beyond Buy-and-Hold #33 -- My Weight Problem and Your Investing Problem 0 Comments
I've posted Column Entry #33 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called My Weight Problem and Your Investing Problem. Juicy Excerpt: I don’t think that those of us who follow valuation-informed investing strategies are better in any ultimate sense than those who do not. I certainly believe that the strategies are more effective. But we have our fears that cause us to entertain our fantasies too (it is fantasy thinking for me to persuade myself even for…
Beyond Buy-and-Hold #109 -- Life Cycle Investing Won't Work If You Don't Consider Valuations 0 Comments
I've posted Entry #109 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Life Cycle Investing Won't Work If You Don't Consider Valuations. Juicy Excerpt: If Bernstein could get it so wrong in the years up to 2008 after studying stock investing for many years, how can we know that he has it right about how to react to the 2008 crash after having had only four years to absorb the lessons of that debacle? I think Bernstein is beginning a learning process that in…
Beyond Buy-and-Hold #15 -- Certificates of Deposit Will Be Paying Higher Returns in Days to Come 0 Comments
I've posted Entry #15 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Certificates of Deposit Will Be Paying Higher Returns in Days to Come. Juicy Excerpt: The natural return is the return paid by stocks (6.5 percent real). Saved money is put to productive use; it is used to expand business enterprises and the profits from such enterprises have in the United States always been sufficient to generate an average long-term return of 6.5 percent real. The puzzle…
Beyond Buy-and-Hold #91 -- Stock Valuations At First Don't Matter, Then They Matter a Lot, Then They Don't Matter Again 0 Comments
I've posted Entry #91 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's titled Stock Valuations at First Don't Matter, Then They Matter a Lot, Then They Don't Matter Again. Juicy Excerpt: What’s going on is that the factors determining the stock price are changing over time. It is investor emotion that determines prices in the short-term. Emotions are inherently irrational and thus unpredictable. That’s why short-term timing never works. It is the economic…
Beyond Buy-and-Hold #23 -- Why Rebalancing Doesn't Work in Stock Portfolios 2 Comments
I've posted Entry #23 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Why Rebalancing Doesn't Work in Stock Portfolios. Juicy Excerpt: When the P/E10 level is 7 (half of fair value), the fair-value magnet (stocks always move in the direction of fair value in the long term) is pulling the P/E10 level up hard and there is virtually no chance of a valuation drop (we never go below 7). So you could go with an 80 percent stock allocation and still enjoy a Risk…
Beyond Buy-and-Hold #101 -- What We Can and Cannot Predict About Stock Returns and Why 0 Comments
I've posted Entry #101 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called What We Can and Cannot Predict About Stock Returns and Why. Juicy Excerpt: It’s a shame that we cannot predict short-term returns. If my calculator did that, I would be rich and famous. Still, we should be grateful that we do get statistically significant results for time-periods of greater than 10 years. That’s a big deal. What it means is that, so long as you are willing to commit…
Beyond Buy-and-Hold #73 -- Your Favorite Investing Expert Is NOT Your Friend 0 Comments
I've posted Entry #73 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called Your Favorite Investing Expert Is NOT Your Friend. Juicy Excerpt: The people who follow an investing expert should be excited to see articles making a case against the fellow’s advice. There are three reasons: The guy might really be bad news and you want to find out as soon as possible if that is so, The guy’s approach might stand up well to criticism and you will gain…
Beyond Buy-and-Hold #52 -- The Social Taboo on Talking About the Realities of Stock Investing Is Holding Us Back 0 Comments
I've posted Entry #52 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called The Social Taboo on Talking About the Realities of Stock Investing Is Holding Us Back. Juicy Excerpt: The Ban on Honest Posting is a Social Taboo that instructs us that we shall not discuss in public our sincere beliefs about the effects of valuations on long-term returns. Everyone I know, even the most ardent Buy-and-Holders, acknowledges that valuations matter. But few are willing to…
Beyond Buy-and-Hold #79 -- It Breaks My Heart When People Don't Comment on My Investing Posts 46 Comments
I have posted Entry #79 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It's called It Breaks My Heart When People Don't Comment on My Investing Posts. Juicy Excerpt: I get the silent treatment all the time. I write three weekly columns and two monthly columns and lots of Guest Blog Entries. I can go weeks without seeing a single comment on my stuff. Here at the Out of Your Rut site, I got a good number of comments in my early days. Then people figured out what I am…

Featuring Top 117/117 of Beyond Buy-and-Hold

“We All Possess a Sincere Desire to Invest Effectively for the Long Run. But the Get Rich Quick/Buy-and-Hold Impulse That Resides Within All of Us Compromises Our Efforts. We Need Open Discussion of the Peer-Reviewed Research to Strengthen Our Resolve.”
Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site: Buy and Holders, by definition, continue to buy regardless of the daily swings of the stock market. The failures you describe are clearly market timers. These are the people that make emotional responses to the daily fluctuations and THEIR perception of the stock market valuation. This is why the top 10% continue to consolidate ownership of stock. You are a market timer, Rob. You are broke. Do Buy-and-Holders adjust their stock allocation in response to changes in valuations? That’s the question on the table, Anonymous. Do Buy-and-Holders Stay the Course in a meaningful way? Valuation-Informed Indexers do that. We engage in valuation-based market timing. That’s the only difference between Buy-and-Hold and Valuation-Informed Indexing. VII is Buy-and-Hold updated to reflect the last 44 years of peer-reviewed research in this field. It’s a big difference. As long as most investors are Staying the Course in a meaningful way, irrational exuberance, the cancer of the personal finance world, cannot get out of control. Stock prices are self-regulating so long as honest posting re the peer-reviewed research is permitted at every internet site. We all possess a sincere desire to invest effectively for the long run. But the Get Rich Quick/Buy-and-Hold impulse that resides within all of us, compromises our efforts. We need open discussion of the peer-reviewed research to strengthen our resolve. My sincere take. Rob Related Posts“At the Very Bare Minimum, We Need to Make It a Practice to Tell Both Sides of the Story. Reasonable People Need to Absolutely Insist on That Much.”“Is There Any CAPE Level at Which Stocks No Longer Represent a Bargain According to Your Perspective on Things?”“You’re Not Adjusting for Irrational Exuberance. If You Adjust for Irrational Exuberance, You Get Very Different Numbers.”“You’re a Liar. I Might Just As Well Say That You Are a Human. It Comes With the Territory. The Question Is Whether You Want To Make Use of the Tools Now Available to All of Us Who Want to Be More Honest and Thus More Successful Stock Investors.”“The Idea Behind Valuation-Informed Indexing Is to Take the Emotion Out of the Stock Investing Project. All That We Need To Do To Stop the Horrible Losses Is To Stop the Insane Highs.”“Buy-and-Hold Is a Marketing Gimmick. People Would Be Better Off Being […]

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“It Is the Roller Coaster Ride Created By the Buy-and-Hold Mindset (No Price Discipline When Buying Stocks Now!) That Causes All the Crazy Ups and Downs. All of That Is Optional Today and Has Been for 44 Years Now, All We Need To Do At This Point Is To Get the Word Out.”
Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site: The sellers are market timers because they don’t have enough dry powder. Someone sitting there with only a few hundred thousands has no ability to hang on for the long term. They will always bail during any perceived time of risk. I have already shared some of my details. You probably remember that my portfolio generates $300K plus a year in interest and dividends. I also have other sources of income. I don’t need to sell and I just keep doing just like the rest of the top 10% in that I keep accumulating assets. It is fine if you don’t want to hold stock. People like me will continue to buy. Remember the old saying: “The are two types of people with McDonald’s. One type is the customer that buys the burgers. The other type is the guy that owns McDonald’s (stock). Pick which one you want to be. Valuation-Informed Indexers don’t count phony gains as real. So they don’t perceive risk in the disappearance of the phony gains. They are looking at the realities and the realities of stock investing are very reassuring — gains of 6.5 percent real annually. It is the roller coaster ride created by the Buy-and-Hold mindset (no price discipline when buying stocks now!) that causes all the crazy ups and downs. All of that is optional today and has been for 44 years now, All we need to do at this point is to get the word out. Irrational exuberance is the cancer of the personal finance world. Shiller’s Nobel-prize-winning research is the cure for cancer. We should permit people to partake in the cure. Rob Related PostsValuation-Informed Indexing #264: Shiller’s Findings Revolutionize Our Understanding of How the Economy Works Too“Some People Have Been Waiting Since the Mid 90s for Stocks to Be Cheap Enough (in Their Opinion) to Buy.”“Those 29 Years Were Not Good Years for Stock Owners.”Buy-and-Hold Goon to Rob: “If Buy and Holders Did Not Have Confidence, They Would Have Done Something Different.”Valuation-Informed Indexing #596: Stock Prices Drift Upward Unless Most Investors Practice Market Timing“Shiller Showed Us That It Is Primarily INVESTOR EMOTION That Determines Stock Prices, Not Economic Developments. So We All Need to Make a Switch to Talking Primarily About Investor Emotion. We Should […]

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“The Idea Behind Valuation-Informed Indexing Is to Take the Emotion Out of the Stock Investing Project. All That We Need To Do To Stop the Horrible Losses Is To Stop the Insane Highs.”
Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site: Yep. Market timers are selling there stock and just look at how everything has been consolidated at the top. Not surprising and it is not just stock. Take a look at real estate holdings and how that has changed over the years. You can decide if you want to follow those that have been successful or you can go with the 90% that struggle. The people who you are calling “market timers” are just Buy-and-Holders who have lost confidence in their strategy. Buy-and-Hold is a confidence game. Excessive confidence causes prices to go to crazy high levels and excessive pessimism causes prices to go to crazy low levels. The idea behind Valuation-Informed Indexing is to take the emotion out of the stock investing project. Those times of low prices are horror stories. We should all want to bring an end to them. To do that, we need to focus on what causes them. It’s high prices that cause the insane price drops. All that we need to do to stop the horrible losses is to stop the insane highs. That’s done with valuation-based market timing. Valuation-based market timing is the key to long-term investing success. Irrational exuberance is a snare and a delusion, Anonymous. It is not real. It hurt us. We should all work together to to keep it from getting out of control. We should all work to keep the CAPE level at a reasonable levels. My sincere take. Rob Related Posts“We Don’t Accept the Phony Numbers. We Fear the Emotional Pain We Experience When Our Longstanding Game of Let’s Pretend Is Exposed to Daylight. We Are ASHAMED.”“The Losses That We Need to Cover as a Result of the Continued Promotion of Buy-and-Hold ‘Strategies’ are $24 Trillion, $6 Trillion More Than the Entire Federal Debt of $18 Trillion, Constituting All the Annual Budget Deficits Going Back to the Days of George Washington Added Together. Buy-and-Hold Is Truly Bad Stuff.”“Market Timing Is the Thing That Permits the Market to Do its Core Job — Get Prices Right. It Is Market Timing That Keeps the Market Functional.”“Is There Any CAPE Level at Which Stocks No Longer Represent a Bargain According to Your Perspective on Things?”“Child Porn and Slave Trading and Murder for Hire Are Far, Far, […]

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“Say That the Alcoholic Beverage Industry Con Men Didn’t Want to Acknowledge Their Mistake. They Might Say That the Explanation for the Millions of Deaths That They Caused Is That Six Beers Isn’t Really Enough, That People Need to Drink a Minimum of Eight Beers Before They Can Drive a Car Safely.”
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 do not intend to write fresh material.” When did you ever write fresh material? I have never seen anything new. Valuations affect long-term returns. That’s the story. It’s a pretty darn simple message. But it’s important. Say that that the alcoholic beverage industry got control of all the driving schools and put out a message that the key to safe driving is always to drink six beers before getting behind the wheel. That would be a catastrophe equal to the catastrophe that we have seen in the investment advice field with this garbage about how there might be some alternate universe in which valuation-based market timing might not be 100 percent required for every investor. Say that that the alcoholic beverage industry con men didn’t want to acknowledge their mistake. They might say that the explanation for the millions of deaths that they caused is that six beers isn’t really enough, that people need to drink a minimum of eight beers before they can drive a car safely. And on and on like that. When you make a mistake this big, the best thing to do is to acknowledge it and move on. Covering it up just makes things worse. My sincere take. Rob Related Posts“I Used to Believe in the Buy-and-Hold Garbage. I Know How It Feels to Be Tricked Re This Stuff. Legitimate Strategies Can Be Defended Without Death Threats. I Earned My Retirement Money. I Expect to Be Able to Find Accurate and Honest Reports re What the Peer-Reviewed Research Says About How to Invest It. I Deserve That. We All Do. We All Should Demand It.”“The Fact That Wade Pfau Won’t Speak to Me Today Definitely Tells a Tale That Needs to Be Widely Told.”“The Wall Street Con Men Are Not Convinced That Buy-and-Hold Cannot Work. They See the Holes in the Concept. They Become Insanely Defensive When Challenged. But They Tell Themselves That Buy-and-Hold May Work Well Enough. They Tell Themselves That There Is Nothing Better.”“There Are Cases in Which Someone Drinks Six Cans of Beer and Does Not Get in an Accident. So Those Who Follow the Buy-and-Hold Approach to Data Analysis Say: ‘You Cannot Look at the Number of Cans of Beer Consumed to Know If There […]

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“Maybe It’s Okay to Believe It So Long As You Don’t Give Voice to What You Believe in a Public Place.”
Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site: No, we are all not victims. Reasonable people know that they are responsible for their own well being. Making up these silly posts are not helping anyone. It seems your therapist has his work cut out for him. Anyone who believes that the Greaney retirement study lacks a valuation adjustment must be nutso. Or maybe it’s okay to believe it so long as you don’t give voice to what you believe in a public place. Rob Related Posts“It Means It [the Greaney Retirement Study] Never Needed Correction and That It Has Been Explained to You Well Over a Thousand Times.”“Is It My Failure If Many Buy-and-Holders Did Not Call for the Greaney Retirement Study to be Corrected Even Though It Is Obvious to Anyone Who Checks That It Lacks a Valuation Adjustment?”“I’m Not the One Who Permitted the CAPE Value to Rise to 37. That Was the Buy-and-Holders. That Number Suggests That It Is Today’s Stock Market That Needs a Therapist.”“Do You Think That I Should Lie About My Belief? Should I Say That It Appears to Me That the Greaney Retirement Study Contains a Valuation Adjustment Even Though My Sincere Belief Is That It Lacks One?”“You Need Either to Point to the Page in the Greaney Retirement Study Containing a Valuation Adjustment or Join Me in Insisting That He Correct the Error Immediately.”“At the Very Bare Minimum, We Need to Make It a Practice to Tell Both Sides of the Story. Reasonable People Need to Absolutely Insist on That Much.”

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“Unfortunately, There Is a Feeling Among Some Buy-and-Holders That They Will Not Be Perceived as Super Duper Experts If People Come to Learn That They Didn’t Always Know It All. “
Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site: You are always the victim, aren’t you Rob. The whole world has orchestrated a mass conspiracy against you and even your ex-wife is in on this scheme. Poor Rob. We are all victims of this massive act of financial fraud, Anonymous. We all would be living richer and freer and happier and better lives if every site on the internet had been opened to honest posting re the peer-reviewed research in this field on May 13, 2002, as I proposed at the time. I is not possible for the Rational human mind to imagine any possible downside, I mean, come on. Learning is this world one true free lunch. There was a time when we didn’t know all that we needed to know to invest in stocks successfully for the long run. Now we do. Shiller was awarded a Nobel prize for his research because it represented such a huge advance over what came before. Unfortunately, there is a feeling among some Buy-and-Holders that they will not be perceived as super duper experts if people come to learn that they didn’t always know it all. Well, they didn’t. I don’t think that the mistake they made was that big a deal. But the cover-up of the mistake has hurt millions of people and hurts more each day that it continues. We all need to pull together and insist that every site be opened to honest posting re the peer-reviewed research so that we can all move forward together into a better tomorrow. Where I’m coming from. Rob Related Posts“The Bennett/Pfau Research Shows That Market Timing Is 70 Percent of What It Takes to Achieve Long-Term Stock Investing Success. So 70 Percent of What We Hear From Investment Experts Should Be Telling Us Ways to Avoid Getting Sucked in By the Get Rich Quick/Buy-and-Hold Garbage.”“I Certainly Am Not Going to Demand Prison Sentences If Most Others Do Not See a Need for Them.”“My Buy-and-Hold Friends Are Good and Smart and Hard-Working People. They are Trapped in Unfortunate Circumstances. But They Want To Be Giving Sound Investing Advice. I Know Because I Have Talked To a Good Number of Them re How They Feel About All This.”“This Is a Field Where People Don’t Admit Their Mistakes. The ‘Experts’ […]

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“Say That There’s a 1 in 100 Chance That What I’ve Been Saying for 23 Years Now — That the Greaney Retirement Study Lacks a Valuation Adjustment — Is Accurate. After 23 Years of This Stuff, I Personally Would Put the Odds at 99.9999 Percent. But Let’s Say for Purposes of Discussion That There’s Only a 1 Percent Chance That Greaney Got the Numbers Wrong in His Study. If There’s a 1 Percent Chance, Then We Should Be Talking About It at Every Site on the Internet.”
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 did many things to help her. She owns her own home today. That came from money that I provided” From what money? You haven’t worked in 25 years. Meanwhile, your ex-wife has been working multiple jobs the whole time. Notice you even admit in your last post, like you have done before that she needed you to bring in an income. There is zero excuse for ANYONE to not support his family if you are physically able. I don’t think that there’s any excuse for anyone who knows about the 44-years cover-up not to do everything in his or her power to bring it to an end. It affects the retirement accounts of millions of people. I couldn’t sleep at night knowing that I was aware of the problem and just let another Buy-and-Hold Crisis take place. Say that there’s a 1 in 100 chance that what I’ve been saying for 23 years now — that the Greaney retirement study lacks a valuation adjustment — is accurate. After 23 years of this stuff, I personally would put the odds at 99,9999 percent. But let’s say for purposes of discussion that there’s only a 1 percent chance that Greaney got the numbers wrong in his study. If there’s a 1 percent chance, then we should be talking about it at every site on the internet. Greaney isn’t the only person who advanced that loony-tunes 4 percent rule. There are millions of people who put together their retirement plans thinking that that was something real and who need to be advised that it was all just a scam. How do you think that word is going to get out if no one works up the courage to stand up to you Goons. There’s no other way that it could happen. And look at today’s CAPE level. It’s pretty darn scary. If we had opened every site to honest posting re the research on the afternoon of May 13, 2002, as I proposed at the time, we would obviously never again have to endure such an insanely dangerous CAPE level. We would have people explaining why valuation-based market timing is the key to long-term stock investing success at every site. How do you think we are going […]

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“The Thing That Is Really Off in the Investment Advice Field Is That the Non-Experts — the People Who Will Be Suffering Huge Losses in the Event That the Stock Market Continues to Perform in the Future Somewhat As It Always Has in the Past — Tolerate the Cover-Up. That’s Nuts. But They’ve Got That Get Rich Quick Impulse Residing Within Them That Makes Them Like Buy-and-Hold, that Makes Them Think That This Might Be the First Time in History When It Doesn’t End in Tears for Everyone.”
Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site: Did you care about what happened to your ex-wife’s retirement account? Very much so. If we experience another Buy-and-Hold Crisis, she is one of the millions and millions of people who will get hurt by it. I obviously don’t want to see that happen. The question is — Why do we not apply the same rules that apply in every field other than the investment advice field in the investment advice field as well. That’s what makes sense. In every other field, we apply laws that show that we understand that experts can make mistakes and that those mistakes need to be corrected over time. So we permit honest posting re new research and thereby provide a means for the experts to come to terms with the mistakes that they have made and to develop stronger ideas. The thing that is really off in the investment advice field is that the non-experts — the people who will be suffering huge losses in the event that the stock market continues to perform in the future somewhat as it always has in the past — tolerate the cover=up. That’s nuts. But they’ve got that Get Rich Quick impulse residing within them that makes them like Buy-and-Hold, that makes them think that this might be the first time in history when it doesn’t end in tears for everyone. Can we overcome it? I believe that we are working up to that magic moment. I believe that the arc of history in the personal finance field bends toward rationality. I believe that opening up one large site to honest posting re the peer-reviewed research will get us over the line will get us there. At that point, my ex-wife and millions and millions of others will be able to have some confidence that the numbers on their portfolio statements are accurate. I see that as being a huge step forward. We’ll see. Rob Related Posts“We Don’t Accept the Phony Numbers. We Fear the Emotional Pain We Experience When Our Longstanding Game of Let’s Pretend Is Exposed to Daylight. We Are ASHAMED.”“Peer Pressure Is a Huge Influence on the Human Mind. Bull Markets Are the Product of Peer Pressure. Buy-and-Hold Is the Product of Peer Pressure.”“Jeff at the Sustainable Life Blog […]

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“You Are Broke. You Are Divorced. You Got Everything Wrong. Take Responsibility and Stop Blaming Everyone Else.”
Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site: You are broke. You are divorced. You got everything wrong. Take responsibility and stop blaming everyone else. And I was right about the Greaney retirement study lacking a valuation adjustment. Rob Related Posts“I Developed the Ideas Tested in the Study That I Co-Authored with Wade Pfau. Wade Did Great Work Testing Them and Proving Their Legitimacy. He Never Tried to Hog Full Credit for the Study. He Said Many Times That He Considered Me the Lead Person Behind the Development of the Valuation-Informed Indexing Concept and That He Believed That the Shift from Buy-and-Hold to Valuation-Informed Indexing Is the Biggest Advance That We Have Seen in the Investing Field in Many, Many Years.”Goon Poster to Rob: “Why Do You Continue to Do What You Do? Clearly You Are Not Making Any Money.”“You Are Broke. Who Got the Numbers Wrong?”Buy-and-Hold Goon to Rob: “You Are a Quintessential Don Quixote.” Rob’s Response: “This Nation Is a Don Quixote Nation. People Tell Us Good Things That We Are Trying to Do Are Impossible and we Go Ahead and Do Them Anyway.”Goon Poster to Rob: “Any Wife Would Be Saddened by a Husband Who Is Capable of Working But Hasn’t ‘Made a Dime in 13 Years.’ Since You Acknowledge That Fact, To What Extent (If Any) Does It Bother You?”“That Explains Why I Am Banned at Every Large Investing Site — I Never Had Any Success Convincing People. Makes Sense!”

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“Buy-and-Hold Fails Every Time There Is a Change in Valuations and There Is an Investor Who Fails to Change His Stock Allocation”
Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site; Just because you say something, it doesn’t make it true. Buy and hold has never failed and you cannot point to one single person with a buy and hold failure. To the opposite, you can’t point to even one single successful outcome with market timing. You are broke, Rob. You lost the game. You got everything wrong. Everyone abandoned you. You fail to acknowledge your long list of mistakes. Buy-and-Hold fails every time there is a change in valuations and there is an investor who fails to change his stock allocation. I mean, come on. Even the Buy-and-Holders say that investors should seek to “Stay the Course.” Well, an investor who stays at the same stock allocation when the CAPE value has changed is not exactly staying the course, is he? The Buy-and-Holders got it right about staying the course and about following the peer-reviewed research. They got it wrong about there not being a need to practice valuation-based market timing. Price discipline is critical in all markets. We now have 44 years of peer-reviewed research showing that the stock market is not the sole exception to the common-sense rule. Buy-and-Hold is a marketing gimmick. It’s what sells. Valuation-Informed Indexing (Buy-and-Hold updated to reflect what we’ve learned from the last 44 years of peer-reviewed research) is what works. I would permit honest posting re the peer-reviewed research at every site and see what happens. Rob Related Posts“Shiller Has Never Put Forward a Single Word Suggesting That Investors Should Not Be Using CAPE to Practice Effective Long-Term Timing. If It Is True That Valuations Affect Long-Term Returns, As Shiller Showed, Then Long-Term Timing MUST Work.”“There’s Risk in Long-Term Market Timing? Huh? Long-Term Market Timing Is Price Discipline. The Risky Thing Is to Exercise Price Discipline? I See It Just the Other Way Around. I Exercise Price Discipline With Every Single Good and Service I Buy. The Risk Is in FAILING to Exercise Price Discipline.”“The Peer-Reviewed Research Looks at the Entire History of the Stock Market While Your Scoreboard Is How Things Feel at a Moment in Time When Irrational Exuberance Is Out of Control and the CAPE Value Is Scary High.”“The Buy-and-Holders Don’t Subtract for Irrational Exuberance When They Determine Whether Their Retirement Is Fully Funded […]

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“The Buy-and-Hold Team Has Failed for 23 Years to Insist That the Greaney Retirement Study Be Corrected. The Object of the Game Is Not to Avoid Admitting That You Ever Got Anything Wrong. The Object of the Game Is to Help the People Who Listen to Your Investment Advice. Acknowledging Mistakes Is a Key Part of What It Takes to Win the Game.”
Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site: When two sports teams compete, one side wins and the other side loses. The losing team accepts the fact that they were wrong (did not do the right things to win the game). The losing team doesn’t blame the winning team for their own failures. Get the picture? You are broke. You are on the losing team. You made the wrong choices. The buy and hold crowd one the game with consistent retirement successes. Stop blaming those that made the successful people for making the right choices. Accept the fact that you were wrong and are broke as a result of your decisions. The Buy-and-Hold team has failed for 23 years to insist that the Greaney retirement study be corrected. The Buy-and-Hold team lost the game. The object of the game is not to avoid admitting that you ever got anything wrong. The object of the game is to help the people who listen to your investment advice. Acknowledging mistakes is a key part of what it takes to win the game. That’s where I’m coming from re this terribly important matter, in any event. Rob Related Posts“We Don’t Accept the Phony Numbers. We Fear the Emotional Pain We Experience When Our Longstanding Game of Let’s Pretend Is Exposed to Daylight. We Are ASHAMED.”“At the Very Bare Minimum, We Need to Make It a Practice to Tell Both Sides of the Story. Reasonable People Need to Absolutely Insist on That Much.”“Do You Think That the Buy-and-Holders Support This Cover-Up? I Surely Do Not Think That.”“The Side Pushing the Death Threats (the Buy-and-Holders) Are Also the Side Pushing the Pure Get Rich Quick (No Market Timing!) Approach to Stock Investing.”“If Shiller Put Forward a Statement That ‘The Buy-and-Hold Retirement Studies Are in Error and Should Be Corrected Within 24 Hours Because of the Harm That They Will Otherwise Do to Lots of People,’ He Would Get the Same Reaction That I Have Gotten. It Is Not That It Is Rob Bennett Saying the Things That I Say That Causes Buy-and-Holders to Lose Their Freakin’ Minds, It Is the Content of the Message.”“The Primary Effect of Buy-and-Hold Is to Take People’s Attention Away From the Most Important Factor Affecting Long-Term Stock Investing Success — Valuations.”

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“Buy-and-Hold Is Not Based on Research. Wade Pfau Devoted 16 Months of His Life to the Project of Trying to Find One Iota of Research Showing That Valuation-Based Market Timing (Price Discipline!) Is Not Always 100 Percent Required for Every Investor. He of Course Came Up Empty-Handed. There of Course Is No Such Research. It Is a Logical Impossibility That There Could Ever Be Any. It’s Like Looking for a Perpetual Motion Machine.”
Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site: Buy and hold is based on research. Market timing is all speculation as there has never been one successful outcome. Why go on speculation when we all know what works and what has failed. Buy-and-Hold is not based on research. Wade Pfau devoted 16 months of his life to the project of trying to find one iota of research showing that valuation-based market timing (price discipline!) is not always 100 percent required for every investor. He of course came up empty-handed. There of course is no such research. It is a logical impossibility that there could ever be any. It’s like looking for a perpetual motion machine. Rob Related PostsBuy-and-Hold Goon to Rob: “Valuation-Informed Indexing Failed. You Have Been Wrong. You Just Can’t Bring Yourself to Ever Admit It Because Then You Would Have to Admit That the Last Two Decades of Your Life Have Been Wasted.”“The Thing That They Call a Price Crash Is Really an Emotions Crash.”“Looking for Data to Support the Idea That Market Timing Is Not Required Is Like Looking for Data to Support a Perpetual Motion Machine.”“The Price That Is Set at a Time When Honest Posting re the Research Is Banned Is Obviously Not the Price That Would Apply If Honest Posting re the Research Were Permitted.”“If Buy-and-Hold Were a Real Thing, Those Who Advocate for it Would Welcome Questioning of Their Strategy.”“For Investors to Set Prices Properly, They Need Access to the Information Needed to Make Good Choices. The Peer-Reviewed Research Is Obviously Critically Important Information.”

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“I’m Not the One Who Permitted the CAPE Value to Rise to 37. That Was the Buy-and-Holders. That Number Suggests That It Is Today’s Stock Market That Needs a Therapist.”
Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site: Perhaps this is a topic best discussed with your therapist. I’m not the one who permitted the CAPE value to rise to 37, Anonymous. That was the Buy-and-Holders. That number suggests that it is today’s stock market that needs a therapist. I believe that the best possible therapy for a stock market that has produced a CAPE value of 37 is open discussion of the last 44 years of peer-reviewed research in this field. Rob Related Posts“After the Crash, the Floodgates Open. People Will Give Up Their Feelings of Embarrassment and Shame and Become Determined to Get Things Back on the Right Track. At That Point the Owners of the Bogleheads Forum Are Not Going to Be Resisting My Efforts to Take Over. They Are Gong to Be Asking Me to Take Over. We Are Going to Be Friends.”“The Fact That Wade Pfau Won’t Speak to Me Today Definitely Tells a Tale That Needs to Be Widely Told.”“I Used to Believe in the Buy-and-Hold Garbage. I Know How It Feels to Be Tricked Re This Stuff. Legitimate Strategies Can Be Defended Without Death Threats. I Earned My Retirement Money. I Expect to Be Able to Find Accurate and Honest Reports re What the Peer-Reviewed Research Says About How to Invest It. I Deserve That. We All Do. We All Should Demand It.”“The Primary Effect of Buy-and-Hold Is to Take People’s Attention Away From the Most Important Factor Affecting Long-Term Stock Investing Success — Valuations.”Goon Poster to Rob: “Any Wife Would Be Saddened by a Husband Who Is Capable of Working But Hasn’t ‘Made a Dime in 13 Years.’ Since You Acknowledge That Fact, To What Extent (If Any) Does It Bother You?”“The Greaney Study Hasn’t Been Corrected to This Day. What Does That Tell You?”

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