“Stock Prices Are Self-Regulating So Long as Most Investors Practice Market Timing. The Problem Is That There Is So Much Money To Be Made in Encouraging People to Ignore the Research and Follow a Buy-and-Hold Strategy.”

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

yahoo.com/news/wealthiest-10-americans-own-93-033623827.html

Notice the following section from this article:

The richest Americans own the vast majority of the US stock market, according to Fed data.
The top 10% of Americans held 93% of all stocks, the highest level ever recorded.
Meanwhile, the bottom 50% of Americans held just 1% of all stocks in the third quarter of 2023.

The wealthiest Americans have never owned so much of the stock market, with the top 10% now holding a record 93% of US equities, according to Federal Reserve data.

These people not only hold stock, but they also had vast amounts of Treasuries, bonds, CD’s, etc and have other sources of income. They have capitalized off of the weak hands of the market timers. They just keep buying up assets (playing out like a game of monopoly) and now we have a clear division of the have’s and have not’s. These rich people are not impact by the swings in the market. To the opposite, the market timers are left out in the cold and just complain about how unfair everything is and play the role of a victim.

It’s the people who own stocks who CAUSE price swings. The last 44 years of peer-reviewed research shows that investors must practice valuation-based market timing to keep their risk profile stable over time. If they do that, you cannot have big price swings. Every time there are price increases, investors lower their stock allocation. The sales pull prices down to reasonable levels.

Stock prices are self-regulating so long as most investors practice market timing. The problem is that there is so much money to be made in encouraging people to ignore the research and follow a Buy-and-Hold strategy.

Rob