A Rich Life

The Old Ideas on Saving & Investing Don't Work -- Here's What Does

” It Is the Lack of Confidence That Is Typical of People Following Buy-and-Hold Strategies That Causes Bear Markets.”

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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 Empower. My net worth hit another all time high. Having over a million dollars in cash + assets and a house that’s mostly paid off (no rush, though, with a 2.5% rate) at the age of 40 is “good stuff on top of good stuff”.

It’s nice that you’re happy with your circumstances, Sensible. But I don’t believe for two seconds that you are truly confident about your strategy (Buy-and-Hold). If you were, you wouldn’t behave the way you do. People who are confidence in their strategy are okay with knowing that other people follow other strategies.

And that lack of confidence will have an effect on our entire nation somewhere down the road. It is the lack of confidence that is typical of people following Buy-and-Hold strategies that causes bear markets. Falling prices brings on feelings of panic among people who are trying to persuade themselves that irrational exuberance gains represent something real.

I think we would all be better off permitting honest posting re the peer-reviewed research. Our economic system would be more stable and so would our political system.

My best wishes.

Rob

Comments

  1. “ But I don’t believe for two seconds that you are truly confident about your strategy ”

    Back at you, Rob.

  2. I’m confident enough to argue for permitting both sides to post honestly re their beliefs. if Buy-and-Hold prevails over Valuation-Informed Indexing in a fair fight, then so bet it, you know? No one knows everything. So no one should go with Valuation-Informed Indexing just because I endorse it. But no one should go with Buy-and-Hold just because Lindauer and Greaney endorse it either. They need to be challenged too.

    Part of the scientific process is adopting a skeptical attitude. You might think that you have it all figured out but you might be wrong. To remain in the realm of scientific investigation, you must always permit new research and new discussion of what the research shows. I love what the Buy-and-Holders set out to accomplish. It pains me that they betrayed their own vision when they determined that new research could not be considered just because finding that that research is valid would require them to acknowledge that they got it wrong back in the days when the research needed to get it right was not available.

    I think that my attitude toward these matters is a more confident one than yours. No, I am not 100 percent certain of every single thing I believe. It wouldn’t be healthy to be 100 percent certain across the board. At some point that becomes an excessively dogmatic attitude. But I am not afraid to have people hear both sides. I believe that, once people are able to hear both sides, Valuation-Informed Indexing will begin gaining ground on Buy-and-Hold. I believe that there will come a day when it will surpass it in popularity. We’ll see.

    Rob

  3. Confidence isn’t everything, Rob. Just see your own confidence and compare that to your results. Results are what matters in this game.

  4. Research reports on results. The only thing different about research is that it looks at the long-term as well as the short-term.

    Rob

  5. It has been over 20 years since you put out your retirement plan. That is clearly long term. You failed. You are broke. Buy and hold worked. You just can’t admit you are wrong and you lost.