My Buy-and-Hold critics do not post in good faith. They have zero desire to learn. They want to suppress learning. They believe in an investment strategy that was developed in the 1960s and they fear that, if people come to feel free to discuss the last 42 years of peer-reviewed research, what they hear will cause them to lose confidence in a strategy that has made them feel rich and smart. Yet I interact with my critics on an almost daily basis at my blog. Why do I do that?
I don’t want to make the mistake that they made. I don’t want to settle on a strategy and then close my mind to any heretical thoughts. I want to continue learning. I can count on my critics to tell me things that I don’t want to hear. And, after all, they have every reason in the world to want to become the most effective investors possible. Perhaps they will notice something that I have missed. There’s great value to having someone pointing things out that you could not see on your own. So I continue to interact with my critics, no matter how unpleasant they make the experience.
Today one of them made a point that I believe is worthy of your consideration. I often make the point that thousands of my fellow community members have expressed a desire that honest posting re the last 42 years of peer-reviewed research be permitted. They ask: So why is it that none of these people post at my blog? I point out all the abusive stuff. People don’t like to see the lives of their loved ones threatened, I argue. People don’t like to see their careers destroyed. People who support me could post to my blog anonymously, one of my critics observed today. Why don’t they?
That’s a good question. I feel that there’s value in considering the valid points that my critics advance.
Market timing doesn’t work
It’s not just that people have a fear of seeing their loved ones threatened or their careers destroyed. The humans possess an innate desire (placed within us by evolution, I believe) to remain part of the tribe. We don’t like the feeling of being cut off from our fellow community members. If the majority view is that market timing doesn’t work, we want our friends to believe that we believe that market timing doesn’t work. We are not weirdos. We are not outcasts. We are not cranks.
Now….
Many of us are drawn to unconventional thinking. That’s why many have expressed a preference for me being able to post honestly re the research. The idea that market timing might not only work but be required intrigues people. It makes sense. Price matters in all markets other than the stock market. So it seems reasonable that it would work when buying stocks as well. And of course there’s that 42 years of peer-reviewed research showing that what our common sense tells us must be so really has always been so for as far back as we have records of stock prices. The experts have been saying otherwise for decades now. The thought that the experts might have gotten it wrong is a compelling one. And getting the numbers right in retirement studies is important. So this is a debate that naturally holds interest for most investors.
But the Buy-and-Holders have managed to make the idea that practicing price discipline when buying stocks seem so out there through relentless repetition of the claim that timing doesn’t work that it has become taboo in the investment advice field to question the orthodoxy. Once a taboo has been erected, you don’t need censors, people censor themselves.
Getting retirement planning right
I have done it. On the day when I first challenged the Greaney retirement study, I was still a Buy-and-Holder. If you had given me a lie detector test on the afternoon of May 13, 2002, and asked me if I thought that Buy-and-Hold was a sound strategy, I would have answered “yes” and passed the test. Is that not a remarkable reality? I knew that the Buy-and-Hold retirement studies were in error. I had known this for several years. Getting retirement planning right is core to the investment advice project. If you get that one wrong, you pretty much need to return to first principles and start over. Why had it not occurred to me to question not just the safe withdrawal rate studies but the entire shebang?
That taboo neutralized my brain cells. I am one of the humans. I want to be part of the tribe. I do not want to be viewed as a fool or a crank or a party pooper. So I continued to believe things (that Buy-and-Hold is a sound strategy) that couldn’t possibly be true given other things that I believed (that the Buy-and-Holders got the numbers wildly wrong in their retirement studies).
I don’t like the pressure tactics that have been employed by the Buy-and-Holders to block people from thinking through the last 42 years of peer-reviewed research and helping us all to live better lives as a result. But I think that it is important that you know that much of the censorship that we have seen has been self-censorship. The Buy-and-Holders have been telling us tall tales about stock investing. But in the vast majority of cases they believe those tall tales themselves. And the primary reason why they continue to tell us those tall tales is that we very much want them to continue doing so and have made it clear that we will punish them if they fail to continue doing so.
We want to remain ignorant of how stock investing works. We have constructed a massive wall of indifference to the findings of the last four decades of peer-reviewed research so that we can remain ignorant. That’s where things stand today. Most of us have thrown up our shoulders and concluded: “It cannot be done, the humans will elect to remain ignorant for all time.”
Because I possess a journalism brain rather than an investing expert brain, finding out that we are all afraid to talk about this stuff makes me want to talk about it all the more. It’s when you attract a lot of flak that you know that you are flying over the target. There is no subject in the United States today that generates as much controversy as this one. Take my word. I have had a front-row seat to the craziness for 21 years now, We’ve caught a tiger by the tale re this one.
Rob’s bio is here.
