Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
Show me the returns on a buy and hold portfolio that did not work.
Wade Pfau and I spent 16 months studying the matter together. He concluded that “Yes, Valuation-Informed Indexing works!” He was amazed that other researchers had not looked at the question before he did because the case that market timing always works is so strong.
Buy-and-Hold does not call for market timing, Anonymous. It does not. Yes, Jack Bogle at one point acknowledged that Valuation-Informed Indexing works. But there are also hundreds of cases in which Bogle advanced suggestions that market timing might not be required for long-term success. Anyone who cares to do a Google search on this question can check this out for himself.
I think it would be fair to say that Bogle was afraid of what Mel Linduaer would do to him if he offered a clear endorsement of Valuation-Informed Indexing instead of the hedged and reluctant endorsement that he put forward instead. A man of Bogle’s accomplishments should not have to live in fear of an internet goon like Mel Linduar. I mean, come on. But that’s the state of the investment advice realm today.
It’s the 39-year cover-up that has caused the problem. If Shiller had published his Nobel-prize-winning research showing how important it is for all investors to practice market timing last week, we all would be talking about it on every site on the internet and we all would be enjoying an amazing learning experience and living richer lives from this point forward. But that’s not how things plated out. Back in the real world, Shiller published that research 39 years ago. So it makes the Buy-and-Holders look bad for anyone to post honestly on any investment-related matter. Why the 39-year cover-up?
It won’t look better for the Buy-and-Holders to make it a 40-year cover-up. The best thing for every single person involved is to open every investing discussion board and blog on the internet to honest posting and just let the U.S. system for handling such matters — a system which PERMITS honest posting in every field of human endeavors other than the investment advice realm — play out.
That’s my sincere take, Anonymous.
Market timing rules!
Research-Oriented Rob
When did Bogle say he was afraid? I missed that.
Bogle put forward a post saying that he could see how it would work for an investor to change his stock allocation six times during the course of an investing lifetime, three times when prices reached insanely high levels and three times when prices reached insanely low levels. That’s Valuation-Informed Indexing! That should have settled the matter.
Why didn’t it? It didn’t because Bogle did not take the obvious next step of saying: “Given that there is 39 years of peer-reviewed research supporting market timing, all of the criminally abusive stuff we have seen from the sorts of individuals who have put up posts in “defense” of Mel Lindauer needs to come to a full and complete stop by the close of business today.” Why didn’t he do that? Bogle was afraid of what you Goons would do to him if he posted in complete honesty. There is no other possible explanation of his strange behavior.
We are all afraid of you. Our nation adopted laws against extortion and against financial fraud and against threats of physical violence for good reasons. Without those laws, we can never achieve progress as a society. There are always going to be some people who don’t want to move on from the old ways and who will turn to criminal acts to block the progress that benefits all of us.
This has been our problem re the safe withdrawal rate matter going back to the morning of May 13, 2002. It doesn’t tale 18 years to determine whether or not a retirement study posted at some guy’s web site contained a valuation adjustment or not. I mean, please give me a freakin’ break.
Bogle (the Honest Version, Not the Goon-Intimidated Version) Fan Rob