“All of the Numbers You Talk About Are Not Adjusted for Irrational Exuberance. If You Make the Adjustment, Valuation-Informed Indexing Has Been Doing Better Than Buy-and-Hold for 150 Years Now. If You Fail to Make the Adjustment, Buy-and-Hold Has Been Doing Better for the Length of the Current Bull Market.”

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

Let’s just look at long term results.  Look at anyone that is now in their 60’s and entering retirement.  Those that followed buy and hold for the last 40 years have done substantially better versus anyone following your VII strategy.  We can all look at the numbers.  You are broke.  Fix your own problems instead of trying to drag everyone else down with you.

All of the numbers you talk about are not adjusted for irrational exuberance. If you make the adjustment, Valuation-Informed Indexing has been doing better than Buy-and-Hold for 150 years now. If you fail to make the adjustment, Buy-and-Hold has been doing better for the length of the current bull market. It’s hardly a surprise that a Get Rich Quick approach would look good at a time when the CAPE is 35. The more irrational investors are, the better Buy-and-Hold looks to them.

It all comes down to whether Shiller’s Nobel-prize-winning research is legitimate research. I believe that it is legitimate research. So that’s what I say I believe when the topic of safe withdrawal rates turns up in discussions held on the internet. There’s never going to be research supporting Buy-and-Hold and taking the research into consideration is never going to be popular at a time when the CAPE is 35.

Rob