Set forth below are some words put forward by Joe Pitzi, a financial planner, to the comments section for a post at the Nerd’s Eye View blog (run by Michael Kitces, also a financial planner) titled What Is the Difference Between “Being Tactical” and “Market Timing:”

I find it amusing that some planners consider anything other than passive investing to be market timing. What you are describing here as “tactical” is essentially what you find in the teachings of Benjamin Graham. In his book, The Intelligent Investor, he outlines that investors ought to stay between 25% and 75% stocks at all times, and that valuations ought to be the driving force behind that decision. That provides a whopping 50% swing in your allocation to stocks when markets are extremely overvalued versus extremely undervalued. I would hardly call Graham a market timer…which leads me to ask, isn’t this simply value investing?

I submit that this concept is precisely what “value investors” like Grantham, Eveillard, Klarman, de Lardelmelle, Romick, Hussman and Leuthold preach year in and year out.

To your point Steven, there is no reason you cannot integrate a “value investing” strategy using index funds, ETFs, Vanguard or DFA. It doesn’t require “active fund management” to integrate a tactical approach. Furthermore, I completely disagree about your risk comment. You will never convince me that a 60/40 portfolio had the same risk in 2009 as it did in 2007. If you define risk as volatility (as the academic world tends to do), then the portfolio in 2009 actually had more risk. For a long-term investor, I submit that this definition of risk does not make sense. If you define risk as permanent impairment of capital (as value investors do), the opposite is true. A portfolio with higher prices, by definition, must have more risk than the exact same portfolio with lower prices.