“If Buy-and-Hold Were a Real Thing, All Buy-and-Holders Would Welcome Challenges to It.”

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’m not willing to say that I believe that the Greaney retirement study contains a valuation adjustment. I sincerely believe that it lacks one. I am going to continue to say that.”

And you prove my point.

You are very good at stating that the Greaney study doesn’t contain a valuation adjustment.

You much less good at stating why it should contain such an adjustment.

Because you recognize your weakness at explaining why it should contain such an adjustment you choose not even to try.

That is why you are more comfortable getting banned than engaging in debate.

That is why you choose not to contribute at reddit.

You could even set up a r/passionsaving subreddit if you wanted to.

But you are more comfortable in an environment where you don’t have to defend your ideas and where you can remove posts that you don’t like.

It’s self-evident why a valuation adjustment is needed, Evidence. Shiller showed that valuations affect the result. So they have to be considered.

The real question is — Why didn’t the people who developed the Buy-and-Hold strategy say from the beginning that valuation-based market timing is always 100 percent required for every investor. It appears to me that it was their belief in the Efficient Market Theory that confused them. If the market were efficient, there never would be any overvaluation. So there would be no need for market timing. But of course Shiller discredited the Efficient Market Theory. So that’s ancient history at this point.

Other than that, it’s loony tunes to think that valuation-based market timing would not be required. Do you think that investors can just bid stock prices up to whatever they want them to be and there’s no price to be paid, that the stock market is just a money machine. Wade Pfau devoted 16 months of his life trying to find some indication in the peer-reviewed research that valuation-informed market timing isn’t required and of course he came up empty-handrd. The idea is preposterous.

Given that price discipline is required in every other market that ever existed, 3why wouldn’t it be required in the stock market? The only reason why anyone suggests it might not be is that the Buy-and-Holders made a terrible mistake a long time ago and now they don’t want to acknowledge it. Which of course just compounds the mistakes. There has never been on iota of evidence that valuation-based market timing is not required. A stock market in which market timing is not required is like a perpetual motion machine. It doesn’t exist because it cannot exist.

Markets set prices. That’s what they do. Investors need information to set prices properly. Deny them the information they need through these abusive tactics and it takes the market longer to get prices right. So we have these horrible price crashes and economic collapses. Permit honest posting re the peer-reviewed research and the market could get the price right much more quickly and we would all live better and happier lives. Buy-and-Hold is a marketing gimmick, nothing more and nothing less. It causes an ocean of human misery and serves no good purpose whatsoever.

If Buy-and-Hold were a real thing, all Buy-and-Holders would welcome challenges to it. The Buy-and-Holder live in fear that people will discover the peer-reviewed research and all the Get Rich Quick garbage will come tumbling down. It’s not possible to criticize the case for Buy-and-Hold because no case in favor if it has ever been presented. It’s OBVIOUS that you can’t just create phony baloney money and then count on it for your retirement.

The unfortunate thing is that we humans all carry a desire for Get Rich Quick stuff within us. So Buy-and-Hold has appeal. But what happens after the next Buy-and-Hold Crisis, when we will all see up close and personal the negative side of going with a pure Get Rich Quick “strategy”?I have hopes that that will be a turning point. We’ll see, you know?

I know for certainty that I don’t want to be on the side saying that the safe withdrawal rates is always the same number. That’s a logical impossibility in a world in which valuations affect long-term, returns. That’s the world that we live in, according to the last 44 years of peer-reviewed research in this field.

Research matters.

Rob