“Price Discipline Is the Key to Making Markets Work.”

Set forth below is the text of a comment that I recently posted to the discussion thread for one of my columns at the Value Walk site:

Imagine being a market timer. That is really taxing. Look at Rob Bennett, the author of this article. He has been peddling his VII concept for years. You can search out his failed retirement plan by doing a quick internet search. When it fell apart, he came up with a crazy story about these mysterious goons and how Jack Bogle was the biggest con-man to come along. He then said that John Bogle would help him collect $500 million in settlement payments (based on some delusions). Of course, Jack passed away not to long ago. Rob won’t admit the failure yet, but has now mentioned on his website that he will return to work at the end of this year or beginning of next year. Given that Rob has not worked for a regular paycheck since sometime in 2000 (about 19 years ago) and is now over the age of 60, it will not be an easy task.

I love Bogle. I rank him as the second most important investment analyst in history (second only to Robert Shiller).

However, it is true that I believe that Bogle made a terrible mistake. Short-term timing really doesn’t work. The research backs Bogle up on that one. But long-term timing is price discipline. Price discipline is the key to making markets work. When Bogle discouraged investors from practicing long-term timing (price discipline), he hurt them in very serous ways. The error that Bogle made does not take away from his many hugely important contributions. But it is an error that needs to be acknowledged and corrected.

I believe that we need to work together as a society to launch a national debate on the question of whether investors should be practicing price discipline (long-term market timing!) when buying stocks. It is my belief that this is 100 percent essential. If Shiller is right that valuations affect long-term returns, investors who fail to engage in long-term timing see their risk profile change dramatically when stock prices rise to the levels where they reside today.

I naturally wish you all the best that this life has to offer a person, Sammy.

Rob