“In Every Market That Exists, Price Is the Most Important Thing That Buyers Need to Keep in Mind at All Times.”

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

This makes no sense. Because stock crashes have always occurred you could say that just about anything creates them.

I think it makes perfect sense, Laugh.

It is the very purpose of a market to get prices right. That’s what markets DO.

Now, think what happens to the stock market when people become Buy-and-Holders and just flat-out REFUSE to consider price when making their purchases. The price just keeps going up and up and the long-term value proposition just keeps going down and down until we get into the sort of situation where we are today. The market wants to get the price back to fair-value levels. But the only way it can do it when purchasing decisions become as dysfunctional as they are today is to crash. Crashes hurt us all. I think we should all be doing what we can to avoid crashes, not to encourage them.

Buy-and-Hold is the ultimate crash-inducer. What causes crashes? The lack of price discipline. What is the key Buy-and-Hold principle? Don’t ever, ever, ever consider price when buying. Huh? What the f? In every market that exists, price is the most important thing that buyers need to keep in mind at all times. But what do the Wall Street Con Men tell us? They say that there’s is some mystical, magical secret sauce that they apply to the stock market so that price makes no difference when buying stocks — stocks are ALWAYS worth buying, say the people who sell stocks. Um — sure they are. Um — I believe that! No, really, I do! Really!

It’s a scam, Laugh. Price has mattered for the entire 150 years for which we have good records of stock prices. It will continue to matter for the next 150 million years. It is a logical impossibility that there could ever be a market in which price did not matter. That’s a marketing gimmick that the Wall Street Con Men use to separate us all from our money. It’s a lie that has made the Wall Street Con Men very rich indeed. But it is not working out so great for the millions of middle-class people who are seeing their hopes of being able to afford decent retirements some day destroyed. That is causing political frictions on both the left and the right. I OPPOSE that sort of thing. I love my country.

Get Rich Quick is not the answer, Laugh. Not in this boy’s sincere opinion. I wish you all good things. But I cannot say that I do have much confidence that all of the laws of stock investing that have applied since the beginning of time are going to be turned on their heads and that the pure Buy-and-Hold “strategy” is going to work for one or two long-term investors for the first time in history.

I guess we will all get to see how it plays out, right?

My best wishes to you in any event, my dear Buy-and-Hold Goon friend.

Research-Believing Rob