“The Buy-and-Holders Believe That All Gains Are Real, That All Gains Are Caused By Economic Realities. The Valuation-Informed Indexers Believe That Gains That Are Caused By Overvaluation Are Temporary in Nature and Disappear Into Nothingness in the Long Run.”

Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:

Honest posting better come soon, before more retirements are ruined by this incredible bull market. Rob, what am I going to do with all this money?

You are being sarcastic, Anonymous. But I very much agree with the point that you are attributing to me. This is the difference between Buy-and-Hold and Valuation-Informed Indexing, the difference between the peer-reviewed research that was available up to 1981 and the peer-reviewed research including that published from 1981 forward. The Buy-and-Holders believe that all gains are real, that all gains are caused by economic realities. The Valuation-Informed Indexers believe that gains that are caused by overvaluation are temporary in nature and disappear into nothingness in the long run. Since those gains are not real, you are better off not treating them as real. If you treat non-real gains as real, it becomes impossible for you to engage in effective financial planning.

The sarcastic tone reveals the lack of inner confidence that the gains are real. If you were 100 percent confident that the gains are real, nothing I said would worry you one iota and you would not even react to what I say. Buy you do react. You are troubled by the last 36 years of peer-reviewed research. Not enough to change your investing strategy. But enough to advance sarcastic comments on an internet blog. That’s not a good way to cope with your disquiet, in my assessment, Anonymous.

The better way is to discuss your uncertainty in a civil and reasoned way. That approach will eventually take you to one of two places. One is that you might end up no longer feeling the disquiet and having achieved a greater level of confidence in your strategy. Two is that you might give up your strategy. The venting of sarcasm doesn’t get you anywhere. It has kept you spinning in circles for 15 years now.

Anyway, I do indeed believe that more retirements are being ruined every day by this incredible bull market. It makes me sad. But I have done my bit and then some more on top of that and then some more on top of that. I will be back in teaching mode in the days following the next price crash, when being in teaching mode will again be producing good fruit. In the meantime, I will answer your questions if I think that I can put forward answers that will help you or someone else. And I will endeavor always to respond to you with a combination of complete honesty and complete love. And we will both just have to wait to see how that approach to things plays out in the long term.

My best and warmest wishes to you, in any event.

Bull-Market-Critic Rob