“Are You Able to Imagine Any Circumstance in Which Failing to Exercise Price Discipline Would Not Make a Failed Retirement at Least a Little Bit More Likely?”

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

If you are saying that buy and hold failed every time, it should be easy for you to point out just ONE single example of where someone had a retirement failure with buy and hold.  So go ahead and give us a link to just one person that had such a failure.  You are the one making the claim, so let’s see you back it up.

There’s obviously been retirement failures. And every one that has taken place has been influenced by our lack of knowledge about how important it is to practice valuation-based market timing. Prior to 1981, we just didn’t know. From 1981 through today, there’s been this crazy ban on honest posting re the last 44 years of peer-reviewed research.

It’s possible that someone could just fail to save enough. In that case, Buy-and-Hold didn’t cause the retirement failure. But in most cases, Buy-and-Hold is going to have played a role. The failure of most investors to practice price discipline causes stocks to be overpriced and paying too much for the stocks he buys ends up hurting the person who suffers the failed retirement. Maybe he would have been okay if honest posting had been permitted and prices had been more stable.

The onus should not be on those who believe that honest posting should be permitted to show that Buy-and-Hold was the primary cause of a failed retirement. The onus should be on the Buy-and-Holders to show that some other factor was dominant in this particular case. We know what Buy-and-Hold/Get Rich Quick strategies do great long-term damage. So the default assumption should be that they played a significant role in any failed retirement.

Are you able to imagine any circumstance in which failing to exercise price discipline would not make a failed retirement at least a little bit more likely? If a guy was driving 60 mph on an icy road, would you ask for proof that driving at that speed in those conditions played a role in causing the accident? It’s obviously a foolish thing to do. Why do something so reckless? Why not just follow ordinary precautions?

Rob