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Beyond Buy-and-Hold # 39
By Rob Bennett
 Some people believe in God.
Some people don’t.
Have you noticed that those who believe find new evidence of God in everything they see? They look at the stars and they see evidence of God. They look at the grass and they see evidence of God. They experience hard times and that brings them to a closer relationship with God.
But those who do not believe find evidence that there is no God in everything they see. They look at the stars and they see evidence there is no God. They look at the grass and they see evidence that there is no God. They experience hard times and they become more confirmed in their minds that there is no God.
Both groups see the same things. They come to opposite conclusions about just about everything. Because they examine the same inputs from entirely different perspectives. It’s often the starting point in a logic chain that determines its ending point. Get the fundamentals wrong and you can never end up in the right place no matter how much work you put into the project.
Continue reading A Clash of Investing Faiths →
Beyond Buy-and-Hold #33
By Rob Bennett
 I’m fat.
I’ve never talked about this on the internet before. It’s a personal matter. My general thought is that my weight problem is properly none of your concern and none of your business.
I bring it up here because of my never-ending quest to get people talking openly about the true cause of our economic crisis. When large numbers of people come to believe that there is no need to consider the price at which stocks are selling when setting their stock allocations, there is always an economic crisis. I want to get us back on the right track and that requires helping people come to a better understanding of the dangers of Buy-and-Hold Investing.
I’ve run into a bit of a brick wall.
The case against Buy-and-Hold is rock solid. And yet most of us don’t care. Most of us continue to follow Buy-and-Hold strategies. Many of us go so far as to continue to promote them.
I must be doing something wrong.
Continue reading My Weight Problem and Your Investing Problem →
Beyond Buy-and-Hold #32
By Rob Bennett
 Do you remember the movie The Three Faces of Eve?
It’s about a young woman with a split personality. One of her personalities is uptight and repressed and just generally no fun at all; that’s Eve White. Another is full of fun and fire but not exactly the sort you can count on in a sticky situation; that’s Eve Black. The psychologist’s job is to strengthen the third personality (Eve Gray), the one that integrates the two extremes into a moderate, realistic and yet warm and loving and somewhat adventuresome personality.
This movie comes to mind for me when I hear people blame Wall Street for the economic crisis.
Is it Wall Street’s fault?
You could say that. The academic research showing that Buy-and-Hold can never work was published in 1981 and Wall Street continued pushing this Get Rich Quick strategy for another 30 years. Wall Street has not covered itself in glory over the past three decades.
Continue reading The Three Faces of Wall Street →
By Rob Bennett
Where do you get your “how to” knowledge of the stock market? Do you seek “how to” knowledge of the stock market? Or do you rely on other sources to provide it for you—like the financial media?
There are bits of information to be gathered from the financial media, but little of it qualifies as the foundational knowledge that all investors should have before committing their hard earned money to the financial markets. For that you need a good book—actually several of them!
Don’t know which ones to choose out of the many that are available? Here’s a list of ten that I recommend.
1. Irrational Exuberance, by Robert Shiller
Few understand today how important Shiller’s book is. He does not just offer a different perspective — his research supports an outright rejection of today’s conventional investing wisdom (Buy-and-Hold). All the work that I have done in this field is an effort to show people how to implement Shiller’s theory.
Continue reading Ten MUST READ Investment Books →
Beyond Buy-and-Hold #30
By Rob Bennett
I bill myself as the most severe critic of Buy-and-Hold Investing alive on Planet Earth today. I say that it is likely going to cause millions of failed retirements. I say that it was the primary cause of the economic crisis. I say that it cancels out the effect of teeth whiteners.
Well, maybe not that last one. But if there’s something bad and scary going on in the world, there’s a good chance that Rob Bennett has attributed it to the popularity of Buy-and-Hold Investing.
This angers some and mystifies many. What’s the story? Why have I made this my obsession? What can’t I just let it go? What has Buy-and-Hold ever done to me?
When an investment strategy looks too perfect watch out!
Continue reading What’s So Bad About Buy-and-Hold? →
Beyond Buy-and-Hold #27
By Rob Bennett
I have been pointing out the dangers of Buy-and-Hold Investing for nine years now. Before the stock crash, lots of people would react with hostility when I would explain why Buy-and-Hold can never work in the long term. In more recent days, I have seen a greater willingness to hear the other side of the story. But there’s one big emotional reality that still holds lots of people back — Many of us cannot bear to acknowledge that we have been getting it so horribly wrong for so horribly long.
Don’t give in to that feeling!
We all make mistakes. The thing to do is to acknowledge them and move on. We possess today more knowledge about what works in stock investing than any people who came before us has ever possessed. So the future looks bright!
Continue reading Don’t Beat Yourself Up Over Your Investing Mistakes →
Beyond Buy-and-Hold #22
By Rob Bennett
The average long-term stock return is 6.5 percent real. The Stock-Selling Industry uses that fact to push stocks and properly so. There is no other asset class available to the typical middle-class worker that offers returns so high. You need to invest a good portion of your retirement savings in stocks.
There’s a problem with the pitch as it is generally put forward, however. Most of the people pushing stocks fail to tell you that your odds of obtaining the 6.5 percent return are slight. The only way I know to do it is to tune out the heavy marketing of Buy-and-Hold strategies and follow a valuation-informed approach.
Continue reading Stock Cycles Make It Hard to Walk the Buy-and-Hold Walk →
Beyond Buy-and-Hold #14
By Rob Bennett
I am the world’s #1 Boglehead.
I am also the world’s leading critic of Buy-and-Hold, the investing strategy advocated by Bogle.
It’s entirely possible to be both at the same time. The big-picture perspective is that Bogle is going someday to be known as the figure that led middle-class investing out of the dark ages. The Bogle Revolution is an extremely powerful force, one that will one day permit us all to obtain far higher returns at far less risk and one that may even do much to stabilize our free market economy.
But –
Before we get to that wonderful place where we all long to be, Bogle will need to face the music re the mistakes he made in his initial version of the Buy-and-Hold strategy, mistakes that were the primary cause of the economic crisis and that are likely to cause millions of failed retirements in days to come.
Continue reading Is the Key to Stock Market Success in the Past? →
Beyond Buy-and-Hold #12
By Rob Bennett
I sold my stocks in the Summer of 1996. My money has been in Treasury Inflation-Protected Securities (TIPS), IBonds and Certificates of Deposit (CDs) for the past 14 years.
Some people think I have made “extreme” choices. I do not. I hope you are willing to listen to my case.
The words “extreme” and “moderate” are relative terms. What is extreme in some circumstances can be entirely moderate in others. For example, driving at a speed of 60 miles per hour is certainly not extreme for those driving on a highway but is entirely out-of-the-ballpark nutso for those driving in residential neighborhoods.
Any fair analysis of the question of whether my stock allocation is an extreme one or not requires consideration of the circumstances in which that allocation was elected.
From a Buy-and-Hold perspective, my allocation is extreme. The Buy-and-Hold Model posits that it is not possible to know in advance how stocks are going to perform at any given time. If that is so, then the best way to assess whether stocks are a good buy or not is to assume that you will receive a long-term return somewhere in the general neighborhood of the average long-term return — 6.5 percent real.
Continue reading Am I Crazy For Being Out of the Stock Market for 14 Years →
Beyond Buy-and-Hold #10
By Rob Bennett
I’ll tell you why in a moment.
But first things first. Investing is a money issue. When you can’t trust someone to tell you the truth about a money issue, you have a great practical need of a means of finding out how that person is steering you wrong. Before I do anything else, I am going to provide those of you who cannot trust me to tell you the truth about stock investing (that’s all of you!) links to four articles that may help a bit:
Continue reading You Cannot Trust Me to Tell You the Truth About Stock Investing →
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General: Any information in regard to money, credit, personal finance, or in regard to any other monetary topic, provided or shared on OutOfYourRut.com is presented for information and entertainment purposes only and does not constitute financial advice. It is intended to provide general information only and does not constitute personal financial advice in regard to your specific circumstances...MORE-->
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