Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
I just checked my accounts. My net worth hit another all time high. It’s only August but it’s gone up by significantly more than our annual household income. Most of these gains are contributions and gains to the stock market. After this crazy runup in real estate our house is still only worth $300K which in coastal Connecticut means it’s a modest house (we got a modest house for a reason…)
You cannot buy groceries with your theories, but I could buy groceries with my market gains.
Okay, Sensible.
I still believe that we should be Permitting honest posting re the peer-reviewed research at every site.
Research papers do not advance theories. Research papers TEST theories. They determine which theories reveal realities and which theories fail to do so. The theory behind Buy-and-Hold, that the market is efficient and that valuation-based market timing (price discipline!) is not needed, has been discredited. We need to move on to development of the theory that has passed the test, the theory behind Valuation-Informed Indexing, that the stock market is like every other market that has ever existed and that price discipline (valuation-based market timing) is always 100 percent required for every investor.
If the theory is valid, then Valuation-Informed Indexing will permit you to buy more groceries over the course of an investing lifetime. It’s important to know which theory is valid. If we are not going to permit ourselves to use research to test theories, why have peer-reviewed research? If we are going to contunue the ban on honest posting, we should just shut down all the peer-reviewed journals. I vote for permitting honest posting re the research.
Rob
Can you buy more groceries versus Sensible? Of course not. There goes your strategy.
Sorry, but we all like to eat and pay the bills.
If you’re not willing to calculate the safe withdrawal rate accurately, then you shouldn’t calculate it at all. The people who congregated at the Motley Fool board were looking for guidance on how to put together their Retire Early plan. We should show them the respect of providing them with accurate, honest, research-based numbers.
Where I’m coming from.
Rob
Research shows that buy and hold always works and those that follow it can pay the bills. The leader of the VII market timing strategy is broke. I would rather be paying my bills vs spinning stories.
The last 43 years of peer-reviewed research shows that Buy-and-Hold does NOT work. It increases risk dramatically while also diminishing long-term returns dramatically. 10 percent of the population already understands this and another 80 percent is open to hearing about it, which means that in time they would be won over. It is the 10 percent that act like Goons, with abusive and in some cases even criminal behavior, that has been holding us all back for 22 years now.
I believe that we are fundamentally a good people. I believe that we will overcome you Goons in time, probably in the days and years following the onset of the next Buy-and-Hold Crisis, when everyone will be able to see with their own eyes the long-term practical results of endless promotion of a pure Get Rich Quick approach (no market timing now, no price discipline when buying stocks!).
My sincere take.
Rob
Wrong again. The research has looked at EVERY 30 year period and it has always worked. Meanwhile, we have never seen one successful outcome with market timing and you, as the poster child, went totally broke.
Wade Pfau spent 16 months trying to find one iota of research showing that valuation-based market timing isn’t always required and came up empty-handed. Then, when he tried to tell people on the internet about what he found, you Goons threatened to destroy his career if he continued doing honest work. Gee, I wonder what is going on here.
Our common sense tells us that valuation-based timing (price discipline!) must always work and every bit of research that has ever been done on the subject confirms what our common sense tells us.
Rob
Wade Pfau told us this year that VII failed. He said so on a Podcast. You should have listened to everyone, but you didn’t and now you are broke.
He said it on a podcast. And he said otherwise before he was threatened.
People make mistakes. And people learn new things. That’s how the world works. We didn’t have Shiller’s Nobel-prize-winning research in the days when Buy-and-Hold was being developed. So we made some mistakes. Now that we have learned some new things, we can do better.
Wade Pfau and thousands of others will be able to say better things once we make clear to them that we would like to see them doing their very best work even if it means showing how Buy-and-Hold was discredited as an investment strategy in 1981.
My sincere take.
Rob