“We All Possess a Sincere Desire to Invest Effectively for the Long Run. But the Get Rich Quick/Buy-and-Hold Impulse That Resides Within All of Us Compromises Our Efforts. We Need Open Discussion of the Peer-Reviewed Research to Strengthen Our Resolve.”

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

Buy and Holders, by definition, continue to buy regardless of the daily swings of the stock market.  The failures you describe are clearly market timers.  These are the people that make emotional responses to the daily fluctuations and THEIR perception of the stock market valuation.  This is why the top 10% continue to consolidate ownership of stock.  You are a market timer, Rob.  You are broke.

Do Buy-and-Holders adjust their stock allocation in response to changes in valuations? That’s the question on the table, Anonymous. Do Buy-and-Holders Stay the Course in a meaningful way? Valuation-Informed Indexers do that. We engage in valuation-based market timing. That’s the only difference between Buy-and-Hold and Valuation-Informed Indexing. VII is Buy-and-Hold updated to reflect the last 44 years of peer-reviewed research in this field.

It’s a big difference. As long as most investors are Staying the Course in a meaningful way, irrational exuberance, the cancer of the personal finance world, cannot get out of control. Stock prices are self-regulating so long as honest posting re the peer-reviewed research is permitted at every internet site. We all possess a sincere desire to invest effectively for the long run. But the Get Rich Quick/Buy-and-Hold impulse that resides within all of us, compromises our efforts. We need open discussion of the peer-reviewed research to strengthen our resolve.

My sincere take.

Rob