Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
No one takes dieting advice from a 600lb person. No one takes sobriety advice from a drunk. As such, it is a logical impossibility that a broke guy in his 60’s knows what he is talking about when it comes to investing.
No one says that calories don’t matter for someone trying to stay fit. Irrational Exuberance gains are the stock investing equivalent of empty calories. The Buy-and-Holders say that irrational exuberance gains are the same as economic-growth gains. I don’t buy it. I say that it is a mistake to treat empty calories as if they were real food.
Rob
Half of Americans have no retirement savings, just like. Yet here you are, telling a bunch of successful millionaires that you are right and they are all wrong.
Who is dishing out the empty calories???
Anything good that seems to come about because of Buy-and-Hold comes not from the strategy but from the productivity of the U.S. economy. Buy-and-Hold encourages people to invest in stocks and stocks are an amazing asset class because of the productivity of the U.S. economy.
The thing that is distinctive about Buy-and-Hold is that it encourages the creation of irrational exuberance to the max and that only subtracts and never adds. Irrational exuberance makes it impossible for people to know how much genuine wealth they have accumulated and that makes effective financial planning impossible. It would be better to let people know what the research says. Then they could practice price discipline re their purchases of stocks as they do with the purchases of everything else they buy. In a world in which most investors acted in their self-interest and practiced price discipline, stock prices would be self-regulating. That would mean no more bull markets and no more bear markets and no more economic collapses.
All of the good associated with stocks and none of the bad. Investor heaven.
Rob