“I Learned That the Get Rich Quick/Buy-and-Hold Urge Is a Very Strong Thing. It Would Be Very Easy to Overcome It If Investors Were 100 Percent Rational, As Was Assumed By the People Who Concluded That There Is No Real Need for Market Timing Because the Market Is Efficient.”

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

“ The miracle is the learning process that is taking place in the background as we speak.”

You lost all your money, you lost your wife and you lost your home. What did you learn from all that?

I learned that the Get Rich Quick/Buy-and-Hold urge is a very strong thing. It would be very easy to overcome it if investors were 100 percent rational, as was assumed by the people who concluded that there is no real need for market timing because the market is efficient. It’s not easy to overcome at all. Getting investors to appreciate the critical importance of market timing/price discipline is a big job. It’s a point that needs to be made daily if we are as a nation of people going to rein in irrational exuberance and avoid having to suffer another one of these horrible Buy-and-Hold Crises.

Leave you Goons aside. You bring a lot of ugliness to the table. But the full reality is that you are extreme outlier personalities. In ordinary circumstances, you couldn’t get to first base with the 90 percent of Normals. So how the heck do you pull off what you have pulled off for 21 years running now? A lot of the Normals LIKE irrational exuberance. They want to believe in Buy-and-Hold. They count irrational exuberance gains as if they were real, just as you Goons do.

It’s nice to have 42 years of peer-reviewed research showing us all the realities of stock investing. But having Shiller’s book carried in quality libraries everywhere doesn’t get the job done. We will need to open every discssion board and blog to honest posting if we want to get that CAPE level down to a reasonable level.

Irrational exuberance isn’t hard to understand. It’s the oldest story in the book — humans have a desire within to get something for nothing. But it takes a lot of work to protect ourselves from the ocean of misery that inevitably follows once Get Rich Quick/Buy-and-Hold strategies become popular.

Do you see?

Rob