Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
https://www.cnn.com/2024/02/22/investing/tech-stocks-surge-higher-as-nvidia-rallies/index.html
“A good day for 401(k)s: S&P 500 and Dow hit new highs as Nvidia fervor takes hold of Wall Street ”
It is a good day for those who have invested in the US economy.
For those that haven’t, not so much
It’s not a good day when a market already flooded in irrational exuberance takes on even more irrational exuberance. That’s the difference between Buy-and-Hold and Valuation-Informed Indexing. Buy-and-Holders cheer on irrational exuberance because their core belief is that investors are rational and therefore price increases are justified by good economic news. Valuation-Informed Indexers understand that gains that are caused by investor emotion rather than by the economic realities hurt investors. Irrational exuberance is a negative.
My sincere take.
Rob
All of us buy and holders are just exuberant to own all this stock and are happy to take it off your hands. You don’t have to own stock. No one is forcing you. Just be prepared to continue to live in poverty. Is it any wonder why the top 10% own the vast majority of stock, while the market timers go broke?
I share your view that stocks are a super investment class.
I don’t believe that it follows that I should want to buy stocks without taking price into consideration. I take price into consideration. The peer-reviewed research shows that stocks offer a better long-term value proposition when they are priced well than they do when they are priced poorly. So I believe that all investors should change their stock allocation in response to price swings. The aim should be to keep one’s risk profile constant over time, to Stay the Course in a meaningful way.
i would describe the “idea” that there might be some alternate universe 50 million light years away in which valuation-based market timing is not 100 percent required for every investor as a marketing gimmick, nothing more and nothing less.
That’s where I am coming from re this one, Anonymous. My best wishes to you.
Rob
I one said you had to buy stocks. You can choose to stay broke. The rest of us can decide to pay what we want. We don’t need a broke guy telling us what to do.
You obviously are free to do whatever you please. Anonymous.
If I am part of a discussion board community in which someone advances a study purporting to reveal the safe withdrawal rate but the study lacks a valuation adjustment, I am obligated to point out the error to my fellow community members. They are all free to ignore the study because of the error or to ignore the error and use the study for guidance. No one is free to engage in abusive and criminal behavior in an effort to suppress the discussion of one of the points of view. Both the Get Rich Quick/Buy-and-Hold and the research-based./Valuation-Informed Indexing points of view should be expressed and each community member should be free to decide on his own which point of view to adopt as his own.
That’s where I’m coming from re this one, in any event. I of course appreciate the huge short-term marketing benefits of recommending a pure Get Rich Quick/Buy-and-Hold strategy. But I don’t see the investment advice field as being solely about what turns a quick buck. The people who participate on our boards and blogs are real human beings, not pieces of plastic on a chessboard. There were people at the Motley Fool board who believed that the Greaney retirement study was a legitimate piece of research. I know. I was there.
Do you think it would have been better if I had kept it zipped re the error in the Greaney retirement study?
Rob
You are not part of a discussion board community. Your bad behavior got you kicked out. There is no error, except for the error you made. No one wants to get dragged down with you. No one wants to be broke like you. Broke people like you should not be giving out investment advice.
Okay, Anonymous.
I do wish you all the best that this life has to offer a person, in any event.
Rob