I’ve posted Entry #629 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Buy-and-Hold Made Stock Investing More Emotional Than It Has Ever Been Before.
Juicy Excerpt: Investors have always wanted to believe that the irrational exuberance that they create by practicing price indifference is real. And so stocks have always been a high-risk asset class at times of sky-high prices. But the Buy-and-Hold Model, which would have greatly diminished our ability to create irrational exuberance had Shiller’s Nobel-prize-winning research been available at the time it was being developed, made matters much worse than they have ever been before.
Yep. Everyone else has been wrong for the last 20 years and continues to be wrong. Meanwhile, only Rob Bennett is right. Because of a secret society of goons, Rob Bennett has been kept from the spotlight as the one and only financial guru that has figured it all out.
I’m not the only one. We have seen thousands of our fellow community members express a desire that honest posting re the last 41 years of peer-reviewed research be permitted at every site. Bill Bernstein wrote in his book that the 4 percent rule was wildly off the mark at the top of the bubble. Rob Arnott wrote to me and we had a back-and-forth discussion in which he said that all of my ideas about stock investing check out. Wade Pfau spent 16 months researching my ideas and concluded that: “Yes, Virginia, Valuation-Informed Indexing works!” Robert Shiller was awarded a Nobel prize for his research and his book was a best-seller. And on and on and on.
About 10 percent of the population today believes that long-term market timing (price discipline!) is required. Once we open every site to honest posting, I believe that we will be able to get that number up to 20 percent within about six months. It will take much longer to get it to 40 percent but in time we will do it. And then eventually we will get it to 80 percent. We will all be able to live better and fuller and richer lives from that point forward than we ever imagined possible during the Buy-and-Hold Era.
But it needs to be every site permitting honest posting. We all have a Get Rich Quick/Buy-and-Hold impulse residing within us. We would like to believe that market timing is not absolutely required, that for the first time in history we might be able to get away with creating a mountain of irrational exuberance and not pay a terrible price. It has never yet happened and our common sense tells us that it is impossible that it could ever happen. But, like an alcoholic who tells himself that maybe it won’t be such a terrible thing if he takes just one drink, we do very much want to believe it. If we are going to tune out the Get Rich Quick/Buy-and-Hold noise, we are going to need to have some people citing the last 41 years of peer-reviewed research at every site we visit.
I believe that we will get there in the days following the next Buy-and-Hold Crisis. It will be interesting to see how things play out.
My best wishes to you.
Rob
So you are now saying that these guys are right? They each disagree with you on very major issues. Wade even sent you a scathing email not only explaining how you are wrong, but he also spoke about the harm you caused him.
I believe that people in the investment advice field are like people in every other field — they would like to be free to do honest work, they would like to be able to go to bed at night feeling that they had helped people.
Shiller has described the intellectual leap from the finding that short-term price changes are unpredictable (University of Chicago Economics Professor Eugene Fama showed this in research published in the 1960s) to the Buy-and-Hold belief that the market sets prices properly as “one of the most remarkable errors in the history of economics.” Humans did not come to Planet Earth with perfect knowledge of how stock investing works. The way it is done in every other field of human endeavor is that people take educated guesses and then learn over time where they have gotten something wrong and then fix it.
The “fix it” part is broken in the investment advice field. The feeling is that making a mistake in this field would be such s terrible thing that the “experts” must keep it zipped when new research shows that they have made a mistake. So the mistake just keeps compounding and compounding. Precisely 100 percent of the evidence available to us today shows that long-term market timing (price discipline!) is always 100 percent required and presisely 0 percent of the evidence supports the “idea” that they might be some mystical, magical alternate universe where market timing (price discipline!) is not 100 percent required. Gee, I wonder why so many Buy-and-Holders feel the need to resort to abusive posting to “defend” the idea that long-term market timing is not always required.
Everyone in the field would like to see every site opened to honest posting re the peer-reviewed research. But who is going to be the one to pin the bell to the tail of the cat? Who is going to be the site owner brave enough to permit honest posting and take on the wrath of the Buy-and-Hold Goon Squads? I believe that someone will appear in the days following the next Buy-and-Hold Crisis. I believe that that fellow or gal will live to see his or her head carved on Mount Rushmore in recognition of the great good that he or she will have done for millions and millions of people who need access to honest and accurate and research-based advice on how to plan their retirement. We’ll see.
Rob