“People Who Try to Share Their Thoughts on the Implications of Shiller’s Research Are Intimidated Into Silence By Advocates of the Buy-and-Hold Model. So Most Investors Have No Idea How Dangerous the Buy-and-Hold Strategy Is.”

Set forth below is the text of an e-mail that I sent on December 10, 2018, to the editors at Buzzfeednews.com:

Buzzfeed Editors:

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My name is Rob Bennett. I have been working for a long time on a story that has huge public policy implications and that has been covered up (in some ways but not in other ways) for many years now. The question is whether the Buy-and-Hold Model for understanding how stock investing works is legitimate or not.

Buy-and-Hold is rooted in research that was published in the 1960s. That research was discredited by research published in 1981. The author of the more recent research, Robert Shiller, was awarded a Nobel prize for his work, so he is obviously a very serious person. But people who try to share their thoughts on the implications of Shiller’s research are intimidated into silence by advocates of the Buy-and-Hold Model. So most investors have no idea how dangerous the Buy-and-Hold strategy is.

I have attached an article telling the story in some detail. It is long. In this case I think the length is justified because it is only by reading multiple accounts of the same basic story that one can come to appreciate the amazing realities. Shiller’s model (I called it “Valuation-Informed Indexing”) is far superior to the Buy-and-Hold Model. It reduces risk dramatically while also increasing returns dramatically. And it greatly mitigates the boom/bust cycle in the general economy.

Everyone benefits if we make the move to the new model. But academic researchers are threatened with career destruction if they publish research making the case for the switch. Why? The benefits of the advance are so great that it makes the advocates of Buy-and-Hold look bad for people to learn what the new research shows. We can only escape the dangers of Buy-and-Hold by educating the public re what really works. But education efforts threaten the Buy-and-Holders, who possesses the power to block progress because today’s high stock prices make Buy-and-Hold temporarily look appealing.

Please let me know if you have any questions or require documentations of any aspect of this story. Thanks for the good work that you do.

Rob