I’ve posted Entry #538 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Every Investor Should Know the Basics of How the Stock Market Works.
Juicy Excerpt: Trillions of dollars of market value were lost in the space of a few days during the 2008 economic crisis. There was one fellow on a discussion board who asked: “Where did all the money go?” I loved that because it is such an obvious and important question. It is my belief that fewer than one in ten of all investors know the answer to that question and that no one should invest one dollar in the stock market until she does.
Anonymous says
And here you are making a case for buy and hold yet again. Why do I say that? Because buy and hold people held their stock and kept buying. Take a look where the buy and holders are today. They have been richly rewarded, while market timers have suffered significant financial harm.
Rob says
You count the accumulation of more irrational exuberance in one’s portfolio as a “reward,” Anonymous. I do not. The more irrational exuberance there is in a person;s portfolio, the less able he is to engage in effective financial planning. You need to know how much you really have before you can determine how much you should spend or how much you need to save.
I believe that we should be permitting honest posting re the last 40 years of peer-reviewed research at every discussion board and blog on the internet, without a single exception.
My best and warmest wishes to you and yours.
Rob
Anonymous says
I don’t think a single person alive would take your market timing portfolio over my buy, hold and rebalance portfolio.
Rob says
We disagree.
I think it’s telling that you are the one who insists that the Ban on Honest Posting re the last 40 years of peer-reviewed research remain in place while I argue that it should be lifted. I have had many people tell me that I am the first person they have come across that talks about stock investing in a way that makes complete sense, If Buy-and-Hold were a real thing, the Buy-and-Holders would welcome the challenges to it that I bring to the table. The defensiveness shows that even the Buy-and-Holders do not have strong confidence in their strategy. They very, very, very much want to believe. But it is such a struggle for them to do so that they feel compelled either to engage in criminal behavior to block discussion of the peer-reviewed research or in many more cases to tolerate criminal behavior on the part of others. Not good.
That’s my sincere take, Anonymous.
I naturally wish you all the best that this life has to offer a person.
Rob