“Going With a Buy-and-Hold Strategy Is Always a Negative Because Buy-and-Holders Refuse to Engage in Market Timing and Market Timing Is Essential If You Want To Keep Your Risk Profile Constant Over Time.”

Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:

You said that Buy and Hold never worked.  If that is the case, we would have had mostly retirement failures.  If you knew how investing worked (with VII) of course you should be wealthy.  Now you seem to be saying something totally different.

I never said either of those things.

Going with a Buy-and-Hold strategy is always a negative because Buy-and-Holders refuse to engage in market timing and market timing is essential if you want to keep your risk profile constant over time. But just because you use a sub-optimal strategy doesn’t mean that you can never retire. It means that it is going to take you longer and you are going to be taking on unnecessary risk.

The other side of the story is that, if you are willing to engage in market timing (to practice price discipline!), you will earn higher returns while taking on less risk. That doesn’t mean that you are going to be wealthy. It means that you are going to do better than if you had followed a strategy that does not call for market timing.

Rob