Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
These posts have been answered thousands of times. You have learned absolutely nothing.
I still believe that the retirement study posted at John Greaney’s web site lacks an adjustment for the valuation level that applies on the day the retirement begins, that much is fair to say. It was my claim to that effect that set this whole thing off on the morning of May 13, 2002, and I still believe that to this day. So you are right in a sense that I have “learned nothing.” I still believe today what I believed then re this critical matter.
Price discipline.
That is what is lacking in Buy-and-Hold.
If you publish retirement studies showing that the safe withdrawal rate changes when we see changes in the price of stocks, you have price discipline. And it is price discipline that makes markets work. So, if your model for understanding how stock investing works gives proper attention to price discipline, everything falls into place.
If you do not have price discipline, everything goes to pieces. If the effect of price is the most important factor that needs to be considered when setting one’s stock allocation and you ignore price in your calculations, you are going to get every calculation wrong. If the core job of the market is to get the price right and you encourage participants in the market to ignore price, sooner or later prices are going to crash because there is no other way for the market to do its job but to crash prices. Crashes don’t just happen, we bring them on when we come to believe in Buy-and-Hold strategies.
That’s my sincere take in any event, Anonymous.
I naturally wish you all the best that this life has to offer a person.
Slow Learning Rob
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