I’ve posted Entry #499 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called The Fair-Price CAPE Can Anchor Your Thinking About Where Stock Prices Are Headed.
Juicy Excerpt: But of course the reality is that recent prices tell us next to nothing about intrinsic value. What investors want to do is to buy stocks when they offer a strong long-term value proposition and not to buy them when they offer a poor long-term value proposition. Shiller’s CAPE value gives is the information we need. The fair-value CAPE is 16. When the CAPE is less than 16, stocks are a buy. As the CAPE value rises more and more above 16, the value proposition diminishes. The CAPE value today is 27. Stocks are a terrible value. The fact that the CAPE value was 32 not too long ago does not change that.
Investors don’t want to read your silly little taking points. They want to see how you implemented your strategy and what resulted. They want to see how much money you put in and then how much you have now after executing your plan. Simple as that. You are all talk and no results.
Some want to take what the research says into consideration, Anonymous. Not all. Not most. But some. And those who want to hear what i have to say (and what the others who believe that Shiller’s Nobel-prize-winning research is legitimate research have to say) have every right to be able to do so.
I believe that more of us will work up the courage to stand up to you Goons in the days following the next price crash. And then the thing will just grow. Deep down inside, we all want the same thing. We all want to know how to invest effectively. So the potential here is unlimited.
My best wishes to you.
Rob
Do you really think someone wants to gamble their life savings on someone’s interpretation of what another guy wrote? That’s silly. People want to see outcomes data. If you needed chemo to treat cancer, would you want to try some guy’s theory or would you want to see actual outcomes from other patients? Get it?
I know what people want. Thousands of people have either put up words saying that they want to be able to hear what I have to say or have endorsed posts saying that. The laws of the United States permit me to post honestly and prohibit you from engaging in threats of physical violence or acts of extortion to silence me or those posting in support of what I am saying
If I were seeking treatment for cancer, I would want to know that the research backing up the treatment plan that I was considering had passed peer review. I would be alarmed if the thinking behind a treatment plan that had become popular in an earlier day had since been discredited by 39 years of peer-reviewed research.
You can choose for you, Anonymous, You cannot choose for others. If you block others from hearing about options that they want to hear about, then you become liable for any losses that they suffer as a result. In this case we are talking potential losses in the many trillions of dollars. Not good.
I believe that you are going to end up in a prison cell, I am going to try to help, There are some things that I can say that I believe will help your case a bit. But I am not a miracle worker. There are things that I can do but there are also limits to what I can do. The bottom line here is that we are just going to have to wait to see how it all plays out in the days following the next price. I will be rooting for you (while remaining steadfast in my claim 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).
All of the things that you are saying about Buy-and-Hold were said by the people who invested in the Madoff fund in the days before it collapsed. Those people became mighty, mighty, mighty pissed after the collapse. Get Rich Quick strategies are a lot less fun on the other side of the price crash that exposes them for what they are.
My best wishes to you.
Rob
“ I know what people want. ”.
No you don’t. If you did, you would have plenty of following here on this board as evidence to back this up.
“ If I were seeking treatment for cancer, I would want to know that the research backing up the treatment plan that I was considering had passed peer review.”
You call your comments as being research based, but they are not. Your comments are interpretations. That is a BIG distinction.
“ If you block others from hearing about options that they want to hear about, then you become liable for any losses that they suffer as a result. In this case we are talking potential losses in the many trillions of dollars. Not good.”
Tell us how this is consistent with your practice of blocking posts?
“ I believe that you are going to end up in a prison cell”
How can anyone take this comment seriously? You might as well say that the moon is made of green cheese.
“ Get Rich Quick strategies are a lot less fun on the other side of the price crash that exposes them for what they are.”
You mean like the expectation of getting a $500 million windfall?
“No you don’t. If you did, you would have plenty of following here on this board as evidence to back this up.”
There would be thousands posting here every day if not for your criminal acts. The very fact that you engaged in those criminal acts shows the power of the ideas. If you didn’t see people being persuaded by my stuff, you never would have crossed he felony line. Crossing the felony line is an act of desperation.
“You call your comments as being research based, but they are not. Your comments are interpretations. That is a BIG distinction.”
When I say that the title of Robert Shiller’s book is “Irrational Exuberance,” is that an interpretation or is that an obvious fact that can be checked by ordering the book from Amazon.com? If irrational exuberance is a thing, then it is a logical impossibility that Buy-and-Hold could ever work for even a single long-term investor. If irrational exuberance exists, then stock investing risk is not stable but variable; risk is greater when there is more irrational exuberance. If risk varies, then the investor seeking to keep his risk profile stable over time MUST engage in market timing to do so.
We desperately need thousands of people offering their interpretations of Shiller’s work. That how Valuation-Informed Indexing will over time become increasingly popular until it becomes the dominant strategy. The entire reason why we have this problem today is that not enough people were offering interpretations of Shiller’s work all over the internet before I came along. I am doing my part to take us all to a better place. I certainly do not offer any apologies for doing so.
Is offering interpretations of Shiller’s work the “bad behavior” that you say justified me being banned at so many boards? Please mark me down as 100 percent guilty as charged. It is my prayer and my expectation that in the days following the next price crash we will be seeing a lot more bad behavior at every investing discussion board and blog on the internet.
“How can anyone take this comment seriously? You might as well say that the moon is made of green cheese.”
Bernie Madoff was the toast of the town until his fund collapsed and he landed in a prison cell. It is in the nature of Get Rich Quick schemes that they make people happy until they are exposed for what they are. A friend tries to help a friend at the time when it remains possible for his efforts to do some good. After the crash, there is not going to be anything that I will be able to do. So I do what is available to me today. I wouldn’t be helping you if I said that I do NOT believe that you will end up in a prison cell.
“You mean like the expectation of getting a $500 million windfall?”
There is no one on the planet who was worked as hard as I have to open the internet to honest posting re the past 39 years of peer-reviewed research in this field. Shiller’s research findings stand to benefit millions of people in very big ways. Had you not engaged in criminal acts to hold me back, I would have earned a lot more than $500 million from the work that I have done over the past 18 years. This is the most important work that anyone is doing in this field, Would the world be a better place if I had just kept my mouth shut about the error that I saw in the Greaney retirement study? How will a jury see things in the days following the next price crash? That’s what will decide things.
My best wishes to you and yours.
Rob
I am getting close to 60. As you know, that would mean that the last ten years would have been critical to my retirement success. If I had followed VII, I would have lost m ability to have retired at 60. I am not alone. On average, 10,000 people are reaching retirement age every day. Think of the mass devastation that would have occurred with all these people following VII. We are too old to “wait and see how things turn out”.
Seeing a 70 percent price drop just prior to retirement followed by 10 years at which stocks remained at super low prices would be more devastating. The best thing is to know the realities. This is why I am such a big believer in the idea of permitting honest posting re the last 39 years of peer-reviewed research at every discussion board and blog on the internet.
The peer-reviewed research helps us to perceive the realities more clearly. Seeing the realities is a plus. It may not seem that way at times to Buy-and-Holders. But seeing the realities clearly is always best in the long term, in my sincere assessment. The realities always catch up to those who try to ignore them. At least that’s been the case for as far back as we have good records of stock prices.
“ Seeing a 70 percent price drop just prior to retirement followed by 10 years at which stocks remained at super low prices would be more devastating.”
But all of your other market crash predictions haven’t come true. Further, the markets have all recovered from drops and have rewarded the buy and holder.
We cannot know in advance precisely when a crash is coming. I said that when I made the predictions. We cannot say precisely when a crash is coming but we can say with certainty that one is indeed coming. And we can adjust our stock allocation to reflect the greater risk that applies when a crash is coming.
The market will certainly recover. But the more money the investor has in stocks at the time the price crash takes place, the less he has to invest in stocks at the low prices that apply after the crash. The Buy-and-Holder misses out on years of compounding returns. That’s why the Valuation-Informed Indexing always ends up ahead in the long run.
The best approach is to keep your risk profile constant over time. That requires market timing. No excuses, no exceptions.
Rob
The 60 year old guy who followed VII has been waiting and missed out on a massive bull market. Even if the crash comes, it is too late for him. They buy and holder is so far ahead of him, even with a drop. They would both should now be establishing their retirement income plan and time has run out.
It’s not so. A 60-year-old might have 30 years to go. If the CAPE falls to 8, as it has at the end of every bull/bear cycle, the most likely 10-year annualized return from that point forward will be 15 percent real. The odds are that the Valuation-Informed Indexer will end up ahead, possibly far ahead.
The best way to check this is to go all the way back to 1870. That’s what Wade Pfau and I did in research that we co-authored and had published in a peer-reviewed journal. It’s no accident that you Buy-and-Holders threatened to send defamatory e-mails to his employer in an effort to get him fired from his job if he continued doing honest work. That response to our research tells the tale that needs to be told.
Rob
“ It’s not so. A 60-year-old might have 30 years to go.”
You are thinking about it all wrong, You need to have your retirement funded by 60. Time is up. You cannot have a plan in which you are still waiting to have your retirement funded after that age. The VII guy that in now 60 has so much gap to make up that he can not draw down now. The drop and recovery did not come in time. It is simple math.
It’s simple math in which you get all the calculations wrong. The market today is comprised 50 percent of irrational exuberance. Adjust for that and the numbers come out very different. You don’t have your plan “funded” if you are treating a pile of money that is comprised 50 percent of irrational exuberance as if it is real money.
That’s why Greaney got the numbers wrong in his study, He treated the irrational exuberance as if it were real. I don’t think that’s a good idea.
Rob
“ It’s simple math in which you get all the calculations wrong. ”
We both made predictions. Your’s didn’t happen. Mine did. We have reached the finish line. Time has expired. If you are working in your 60’s, you are not retired and you have lost.
If it feels this good to lose, I hope that I can just manage to stay on a losing streak a wee bit longer.
I wish you all good things, Anonymous.
Rob
“ If the CAPE falls to 8, as it has at the end of every bull/bear cycle, the most likely 10-year annualized return from that point forward will be 15 percent real.”
So what you are saying is that the market recovers if it has such a dramatic fall. That is what people have been telling you for years. That means the buy and holder is just fine. The market timer needs the crash and recovery just to catch up somewhat, yet will still be behind given the huge run up. Yet, if the drop does not hit your target, you are not getting back in and you have continued to miss out on the stock gains.
The market certainly recovers after a dramatic fall.
But that doesn’t leave the Buy-and-Holder “just fine.”
Stocks offer lower returns when they are overpriced. So the risk of investing in them is greater at such times. To keep your risk profile constant over time, you MUST practice market timing.
Wade Pfau and I co-authored research that was published in a peer-reviewed journal that shows that Valuation-Informed Indexing has been far superior to Buy-and-Hold for as far back as we have good records of stock prices. This is why you Goons threatened to get him fired from his job if he continued doing honest work in this field.
Extortion is a crime, Anonymous. A felony.
Rob
Yes, the buy and holder is fine. You just said the market goes back up. Not only that, he is better off right now. If the buy and holder and the VII are taking money out of investments right now to fund retirement expenses, the buy and holder is taking out a lower percentage versus the VII as he has a much larger balance from the last decade of the huge run up. The VII investor has spent down a much larger percentage of his portfolio and now has less in the market to take advantage of the run up. Market timing killed the VII in this last decade.
Again, you are counting the irrational exuberance as if it were real.
Subtract the irrational exuberance and see what happens.
What you will find is that you would have been better off keeping your risk profile constant over time. Staying the Course — What a concept!
Rob
“ Again, you are counting the irrational exuberance as if it were real.”
I am talking about real numbers, not just fluffy words. We all know about the HUGE run up over the last decade that has left the 60 year old guy miles apart from his VII counterpart. Simple math tells you the VII guy has to take a much larger percentage of his savings to match the same spending as the buy and hold guy. Thus, he has substantially spent down his savings waiting out the market drop. He can never catch up. The buy an$ hold guy is just fine. As you have admitted in a previous post, the market comes back after the drop.
Irrational exuberance is not fluffy words. Robert Shiller was awarded a Nobel prize for his research.
The market comes back after a drop for both the Buy-and-Holder and the Valuation-Informed Indexer. The difference is that the Valuation-Informed Indexer has been engaging in market timing to Stay the Course in a meaningful way. That gives him a big edge The peer-reviewed research that I co-authored with Wade Pfau shows that that edge pays off big time in the long run.
If you didn’t think that our research was powerfully persuasive to all investors who learned of it, you never would have threatened Wade or engaged in the other criminal behavior that you have engaged in to keep investors from learning about the implications of Shiller’s research. People just don’t behave that way without some reason.
Rob
“ Irrational exuberance is not fluffy words. Robert Shiller was awarded a Nobel prize for his research.”
Your words are fluffy words. Shiller does not say what you say and that bothers you. In fact, no one says what you say. You then use more fluffy words, by making up a story about how they are scared to say what you want them to say.
“ The market comes back after a drop for both the Buy-and-Holder and the Valuation-Informed Indexer. The difference is that the Valuation-Informed Indexer has been engaging in market timing to Stay the Course in a meaningful way.”
But your timing didn’t work and the market didn’t do what you said it would do and that is why the 60 year old VII guy is so far behind the buy and hold guy and time ran out.
No one has taken Shiller’s ideas as far as I have. That much is so. I have spent 18 years exploring their implications. Thinking about them, writing up my thoughts, incorporating reactions into my take, thinking some more, all that. I have taken Shiller’s ideas far beyond where Shiller has taken them. My guess is that there are lots of things that Shiller thinks that he has not shared with us. But I doubt that even privately Shiller has explored all the issues that I have explored. I certainly don’t say that Shiller has endorsed my every word. I say that every word of mine is rooted in Shiller’s “revolutionary” (his word) research findings but not that Shiller has endorsed all of my takes.
You say that “no one says what you say.” That’s what makes what I say so valuable. Not because I am necessarily right. Because Shiller’s core insight (that the market is not efficient and that therefore Buy-and-Hold cannot possibly work for even a single long-term investor) is so profound that we all need to be taking it into consideration. I don’t have to get them right for my stuff to be of great value. There are numerous people saying today that the 4 percent rule is garbage. There was no one saying that on the morning of May 13, 2002. I believe that everything that I have said about safe withdrawal rates is correct. But if that’s not so, so what? We still have people saying things about safe withdrawal rates today that they were not saying on May 13, 2002. Good for me for getting that conversation started. Getting the conversation started is huge. That’s a very big contribution that I made and I am very proud of it.’
There is zero chance that Shiller’s research can be reconciled with Buy-and-Hold. The two things are opposites in every way. If the market is efficient, risk is constant, If valuations affect long-term returns, risk is variable. That’s what matters. The rest is details. My core message is that we all should be exploring this all the time and at every place where people get together to talk about investing. The Shiller Revolution is so important that it is silly for anyone in this field to be directing his or her energies on things over than coming to terms with it. I am not the first human being not capable of making a mistake. But there is no one alive who has put more energy into the project of coming to terms with the Shiller Revolution in thinking about how stock investing works. Good for me. I offer zero apologies re that one.
I 100 percent say that the reason why others don’d do it is that they are scared. I say that partly because I experienced those feelings of fear myself. I am ashamed that I did not speak up sooner. But at least that experience helps me to understand why others do not speak up. And I have seen the fear in the conversations that I have had with others. It comes up over and over and over again. People tell me that my stuff is amazing, top-grade stuff. Then they say “now you are not going to tell anyone that I said that, are you?” Huh? What the f? Are we going to keep the top-grade stuff a secret? People are afraid because Shiller revolutionized the field and revolutions always leave some people behind. People who are big shots to day will not be big shots after we have opened every discussion board and blog to honest posting re the last 39 years of peer-reviewed research. So those of us seeking to post honestly have encountered a good bit of resistance.
Your behavior tells the tale. You Goons come here day after day after day, year after year after year. If you truly believed that Shiller thinks the safe withdrawal rate is always 4 percent, you would ask him. There’s a reason why you have never done that. You know as well as I do what he would say.
The Buy-and-Holders are living on borrowed time. When prices crash, the entire thing disappears from the world.It’s sad. I prefer to live in the future than in the past. I believe that, once the peer-reviewed research was published showing that there is precisely zero chance that a Buy-and-Hold strategy could ever work for a single investor, we all should have just moved on. I think you cause yourself more pain with each day that the Ban on Honest Posting remains in place. I think it is garbage. But the criminal acts scare people. So that stuff has been enough to keep Buy-and-Hold hanging on a little bit longer.
If you want to call that a victory, I can’t stop you, But it ain’t a victory in my eyes. If my stuff didn’t stand up to scrutiny, I would make changes in my stuff, I wouldn’t try to intimidate people into silence. That’s sure how I hope I would react if the tables were turned, in any event.
My best wishes.
Rob
“That’s what makes what I say so valuable”
It is not valuable just because you say it is. Someone else has to see value in it. Someone else has to have an upside from it. If people followed what you did, they would not have seen an upside.
“that the market is not efficient and that therefore Buy-and-Hold cannot possibly work for even a single long-term investor”
You have not been consistent on this point. In this point, you say it hasn’t worked. In other points, you will acknowledge that is has worked, but will then fall apart after the big crash (which you are still waiting for).
“If my stuff didn’t stand up to scrutiny, I would make changes in my stuff”
It hasn’t worked. You have even acknowledged that by saying that you either have to go back to work or wait for your big payoff with the $500 million windfall. How is that working? It isn’t.
“It is not valuable just because you say it is. Someone else has to see value in it. ”
Thousands of people have responded positively to my investing work. There is no one who has written on the internet about stock investing who has generated as much positive feedback as I have and it is not a close call. Now, I have also generated insanely negative takes in ten times the number. That’s so too. But there is an important sense in which those negative takes send the same message as the positive takes. If those who respond negatively to my stuff did not feel super threatened by it, they would not engage in criminal behavior to suppress it. If my critics see that much power in what I say, then what I am saying must be really something, no?
“You have not been consistent on this point. In this point, you say it hasn’t worked. In other points, you will acknowledge that is has worked, but will then fall apart after the big crash (which you are still waiting for).”
Buy-and-Hold certainly can work for short time-periods and indeed it has worked for short time-periods for as far back as we have good records of stock prices. If you count only from 1996 through today and you do not adjust for irrational exuberance, Buy-and-Hold is far ahead. I don’t deny that. But I think that it is foolish not to adjust for irrational exuberance. And I think that 24 years is a small stretch of time in the grand scheme of things. The typical investor will be invested in stocks for about 60 years. I want my investing strategy to provide good results for my entire investing lifetime. That’s Valuation-Informed Indexing, not Buy-and-Hold.
And that 24-year time-period is the longest time-period for which Buy-and-Hold has provided better results in the history of the U.S. market. Unless something fundamental changed in 1996, that’s not a good sign for Buy-and-Holders. That means that Buy-and-Holders are living on borrowed time, that they are pushing their luck to the limit.
Now, if something fundamental changed in 1996, then all bets are off. If that’s so, then everything that I have ever said about stock investing is wrong. But that’s a big claim to swallow. Stock investing worked in one way from 1870 through 1996 and then suddenly everything changed and it began working in a very, very different way? People who believe that should invest pursuant to that belief. I wish them the best of luck with it, But not this boy, you know? I think it would be fair to characterize that belief as an extremely far-fetched one.
And, if there are people who possess confidence in that belief, wouldn’t they be happy to open every site to honest posting and engage in civil and reasoned discussions of that belief? We sure don’t see that happening. So I think that it would be fair to say that even the Buy-and-Holders don’t possess much confidence in that belief. They tell themselves that they believe. They very, very, very much want to believe. But that’s something different. Their behavior reveals their doubts, which I very much share.
“It hasn’t worked. You have even acknowledged that by saying that you either have to go back to work or wait for your big payoff with the $500 million windfall. How is that working? It isn’t.”
A $500 million settlement payment is going to pay the bills for many generations to come. Are you joking?
Rob
“Thousands of people have responded positively to my investing work. ”
Who has been willing to pay you for it?
“Buy-and-Hold certainly can work for short time-periods and indeed it has worked for short time-periods for as far back as we have good records of stock prices.”
Show me just one failed retirement based on buy and hold.
“A $500 million settlement payment is going to pay the bills for generations to come.”
You are admitting that VII hasn’t built your investment portfolio as a way of funding your retirement. Further, the $500 million claim is just plain silly. It is just as made up as expecting to see a pot of gold at the end of a rainbow.
“Who has been willing to pay you for it?”
My investing work hasn’t earned me a dime in 18 years. The full story is that it has subtracted from my income. If I hadn’t ventured forward with that famous post from the morning of May 13, 2002, I would have earned hundreds of thousands, probably millions, from my work on savings strategies. The criminal behavior of you Goons cut me off from that source of income. So the investing stuff has COST me millions.
So the investing stuff must be truly out of this world, Does that not follow?
“Show me just one failed retirement based on buy and hold.”
Show me one that wasn’t. My guess is that just about every failed retirement that has ever taken place had some sort of Get Rich Quick/Buy-and-Hold element to it. Stocks are an amazing investment class. It’s not that hard to get this stuff right if you keep your emotions somewhat under control.
“You are admitting that VII hasn’t built your investment portfolio as a way of funding your retirement.”
It wasn’t intended to. I used VII to finance my transition my corporate employment to building a business on the internet. That business is now an asset with a value in excess of $500 million. I’d say that VII has been a huge success for this boy. No regrets there. No regrets whatsoever.
“Further, the $500 million claim is just plain silly. It is just as made up as expecting to see a pot of gold at the end of a rainbow.”
I am the co-author of the most important price of research published in this field in the past 30 years. How many other personal finance journalists can say something like that? The answer is: Zero. Leading the transition from Buy-and-Hold to Valuation-Informed Indexing is worth a lot more than $500 million. If you didn’t think so, you wouldn’t be fighting me so hard, you would just let it go. I mean, please give me a freakin’ break.
Rob
“ My investing work hasn’t earned me a dime in 18 years.”
That is all you needed to say. You haven’t earned anything and you haven’t provided a reason for anyone to pay you anything. No one owes you anything nor do they have to follow or believe in what you say. You act as if everyone needs to follow you and agree with you.
Everyone needs to follow the law, Anonymous.
There is no place for death threats in discussions of stock investing.
There is no place for unjustified board bannings in discussions of stock investing.
There is no place for acts of extortion directed at academic researchers in discussions of stock investing.
Take away the criminal stuff and you have the merits of Valuation-Informed Indexing vs. Buy-and-Hold being debated at every site on the internet. People can believe what they like. But they need to have access to both sides of the story. You Goons can decide what you believe, you can not decide for anyone else. If you engage in criminal acts to block others from hearing what they need to hear, you go to prison down the road a piece. That is how our system works.
My best wishes to you.
Rob
How odd that you can’t find anyone that can provide proof or verify your claims about death threats, job threats and felonies. Also add that people would avoid your timing scheme even though it would make them money. Also odd that Wade wouldn’t list you as an author. Very odd that every investment expert is too scared to say what you say. It is just one big vast conspiracy.
Was the Madoff fund a conspiracy?
Is alcoholism a conspiracy?
Is smoking a conspiracy?
Was racism a conspiracy?
Humans have weaknesses. There are some circumstances in which money can be made exploiting human weaknesses. When there is a lot of money to be made going in that direction, there is always going to be a widespread temptation to do that.
The Buy-and-Holders made a lot of valuable contributions. I respect them for that and I feel gratitude to them for that. But I do not believe that humankind knew everything that there ever would be to know about the subject of stock investing in the year 1980. Shiller added something of great value and we should be exploring his contributions at every discussion board and blog on the internet.
Shiller’s advance was so great that it threatens people who developed their reputations promoting the model that he discredited, So, yes, there is a lot of resistance to exploration of the new model. If we all were thinking clearly, there would not be one objection to the idea of permitting honest posting everywhere. But this is a subject that pushes people’s buttons. Partly because their common sense tells them that there must be some price at which stocks are not worth buying. It works that way with everything else that can be bought or sold in this world.
I don’t think that the answer is to keep quiet about what Shiller did. I think the answer is for those of us who believe that Shiller’s Nobel-prize-winning research is legitimate research to speak up. In a respectful and charitable way. But also in a firm and non-apologetic way.
I naturally wish you all good things.
Rob
Shiller, Pfau, Bernstein, Ferri, Swedroe, Burns………they all would have to be in on this conspiracy. When Jack Bogle was alive, he would have to have been playing a big role in this conspiracy as well……………or Rob Bennett is making all this up. What is more believable?
Shiller, Pfau, Bernstein, Ferri, Swedroe, Burns………they all would have to be in on this conspiracy. When Jack Bogle was alive, he would have to have been playing a big role in this conspiracy as well……………or Rob Bennett is making all this up. What is more believable?
Brett Arends wrote an article titled “The Market Timing Myth” in the Wall Street Journal on October 14, 2010. It stated that: “For years the investment industry has tried to scare clients into staying fully invested in the stock market at all times, no matter how high stocks go. It’s hooey. They’re leaving out more than half the story. Anyone who followed the numbers would have avoided the disaster of the 1929 crash, the 1970s or the past lost decade on Wall Street…. I wonder how many stayed fully invested because their brokers warned them ‘you can’t time the market’.”
Everybody in this field reads the Wall Street Journal. So everybody in this field is in on it. Everyone knows that Buy-and-Hold is “hooey” and that the idea that market timing is not required is a “myth.” People don’t want to see their high-paying careers come to an end. So they keep their mouths shut. I think that we all should be speaking up. I think that we should be pointing out that the emperor is wearing no clothes. That’s my contribution, to state that plainly.
Please understand that all of the people who are in on it rationalize their behavior. They tell themselves “oh, it will be okay.” I think it is going to be harder to say that in the days following the next price crash. We’ll see.
Everyone is in on it to one degree or another. Everyone over the age of seven understands that it is a logical impossibility that there could ever be an asset that is worth buying at any possible price. That is a perfectly ABSURD claim.
Rob
“ Everybody in this field reads the Wall Street Journal. So everybody in this field is in on it. Everyone knows that Buy-and-Hold is “hooey” and that the idea that market timing is not required is a “myth.” People don’t want to see their high-paying careers come to an end. So they keep their mouths shut. I think that we all should be speaking up. I think that we should be pointing out that the emperor is wearing no clothes. That’s my contribution, to state that plainly.”
If Everybody knows about it, why aren’t they investing via VII? Why aren’t they paying you your $500 million settlement?
Why didn’t everybody stop smoking on the day that the first research was published showing that smoking causes cancer?
Humans are subject to addictions. Get Rich Quick/Buy-and-Hold investing is addictive.
If we are going to get people to overcome their Buy-and-Hold addiction, we are going to have to open every site on the internet to postings pointing out the dangers of a pure Get Rich Quick approach. Humans are CAPABLE of rationality. But sometimes they need a helping hand to achieve it. That’s the case in the stock investing realm.
Rob