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Beyond Buy-and-Hold #55
By Rob Bennett
 I put up a guest post at another blog in which I referred to Buy-and-Hold as a Get Rich Quick scheme and a fellow posted a comment containing the words quoted above. “Exactly!” I cried. “That’s it! That’s why we are in an economic crisis. That’s why everything is so messed up today.”
I often point out that honest posting on the dangers of Buy-and-Hold is not permitted at most investing discussion boards and at a number of blogs today. Buy-and-Holders often take exception to that claim. “We permit criticism of Buy-and-Hold,” they say. “It’s just that you are so extreme — you are the only one saying that it is a Get Rich Quick scheme.”
Okay.
But what if Buy-and-Hold really is a Get Rich Quick scheme?
Continue reading “I Don’t Think I’ve Ever Heard Buy-and-Hold Described as a Get Rich Quick Scheme Before” →
Beyond Buy-and-Hold #54
By Rob Bennett
It’s Sunshine Rob here again to bring you more happy face news on the wonders of Buy-and-Hold. The topic of today’s sermon is: Your Retirement Plan Is In More Trouble Than You Realize.
Everyone knows that we have experienced a Lost 12 Years in the stock market. Stock prices are today close to where they were at the top of the bubble. Investors have earned a small gain from the receipt of dividends but most of that has been eaten up by inflation. We have essentially been standing still.
All acknowledge that that’s bad news. But few realize how bad.
Twelve years doesn’t sound like all that long a time. Most of us have life expectancies of perhaps 80 years. We certainly never wanted to go 12 years without seeing the numbers on our retirement portfolios increase, but into every life some rain must fall. My sense is that the general feeling is that this too will pass.
Continue reading Your Retirement Plan Is In More Trouble Than You Realize →
Beyond Buy-and-Hold #53
By Rob Bennett
Not many see it that way.
That’s unfortunate.
But the case that this is the best time in history to be a stock investor is strong.
You don’t believe me?
Here’s what I suggest. Please spend just a few moments looking at the historical stock-return data to see for yourself what huge advances we have made in our understanding of how stock investing works with the academic research of the past 30 years. Here’s a link.
That link will take you to the Online Data section of Robert Shiller’s web site. Please click on the link there marked “Excel File.” Then please click on the box at the bottom marked “Data.” The Data section of Shiller’s site tells you the P/E10 level that applied for every month of stock market history going back to 1870. It is by knowing this number that you know whether it is a good idea to invest in stocks or not and how high a stock allocation you should choose.
How the P/E 10 level works
Continue reading This Is the Best Time in History to Be a Stock Investor →
Beyond Buy-and-Hold #52
By Rob Bennett
I often make reference to something that I call “the Ban on Honest Posting.” Others, even others who share my views on investing, rarely make mention of it. I think we need to change that. I think the ban is a big deal. I will attempt in this column entry to put forward some reasons why I think so.
First, what is it?
The Ban on Honest Posting is a Social Taboo that instructs us that we shall not discuss in public our sincere beliefs about the effects of valuations on long-term returns. Everyone I know, even the most ardent Buy-and-Holders, acknowledges that valuations matter. But few are willing to quantify this effect. Robert Shiller’s investing ideas are Politically Incorrect. It’s not that people think they are wrong. It’s that people believe it is wrong to even think about them or discuss them.
There are five reasons why I view this Social Taboo as a disaster.
Continue reading The Social Taboo on Talking About the Realities of Stock Investing Is Holding Us Back →
By Jessica Wagner
 Earlier this month, the announcement came that American’s triple A credit rating was being downgraded to double A plus status. The Federal Reserve announced that it was making no plans to raise the near zero interest rates that have been set in place for some time now. This announcement came on the heels of the worst drop in market shares since the market collapse that happened back in 2008.
It seems that the FED isn’t planning to raise the interest rates for the foreseeable future and the near zero figure is likely to stay in place for another two years. This has many in the private and public sector seriously concerned as it’s widely seen to be a major factor in sustaining such poor economic results. Keeping the rate low was seen as a way to inspire investment growth, but it appears to have had the opposite effect and seems to be hurting the economy’s ability to recover.
What the Fed HOPED low interest rates would accomplish
Continue reading Why Near Zero Interest Rates Are Hurting Economic Recovery →
Beyond Buy-and-Hold #50
By Rob Bennett
This question has been raised by numerous people, a good number of them smart and good people. So I think it needs to be addressed.
The problem with me being the one to address it is that truly crazy people often don’t recognized their own craziness. It could be that that’s the case here.
I’ll try to circumvent this problem to the extent possible by presenting both sides of the story with the greatest amount of fairness that I am able to muster as a lifelong practitioner of journalism who believes that fairness is the essential trait that a reporter must possess to do good work.
Do “outrageous” claims make someone crazy?
Continue reading Am I Crazy saying what I do about the Stock Market? →
Beyond Buy-and-Hold #50
By Rob Bennett
I’ve been arguing for nine years now that we should be spreading the word about Valuation-Informed Indexing. This strategy would permit middle-class investors to obtain far higher returns at dramatically diminished risk, according to 30 years of academic research (based on 140 years of historical stock-return data). That’s investor heaven! Who could possibly object?
Buy-and-Holders, that’s who!
Buy-and-Holders have been arguing for those 30 years that it is their investing strategy that is rooted in the academic research and the historical return data. They’re written thousands of books and developed hundreds of calculators promoting this approach.
Now they are to acknowledge that it wasn’t such a good approach all along? Or even that it was the relentless promotion of Buy-and-Hold strategies that was the primary cause of today’s economic crisis? For the confirmed Buy-and-Holder, it’s hard to go there.
The obvious answer is –
Compromise!
Continue reading Buy-and-Hold Is Either The Best Strategy of All Time or the Worst →
Beyond Buy-and-Hold #49
By Rob Bennett
Yale Economics Professor Robert Shiller published a book in March 2000 titled Irrational Exuberance. It’s a great book that sold lots of copies and won lots of praise from lots of important people.
There’s only one problem. It does not appear that too many people read the book carefully enough to appreciate its many far-reaching implications. We need to change that. This is an important book. We need to read it and debate it in civil and serious discussions. We need to have a national debate on what this book tells us about how we all should be investing our retirement money.
The penalty for marching to the beat of a different drummer
Continue reading The “Inflammatory” Stock Investing Realities →
Beyond Buy-and-Hold #48
By Rob Bennett
We are headed into the second great depression.
I don’t say that to upset you. I of course wish it were not so. And of course I cannot say with certainty that it is so. Anything can happen in this crazy, mixed-up world of ours.
Still, I believe that we all should be using the academic research and the historical stock return data to guide our investing decisions. And the reality is that the research of the past 30 years and the data of the past 140 years both indicate strongly that we are headed into the Second Great Depression. Given that that’s so, we should be talking about it. Given that that’s so, we should be making preparations and thinking through what we will need to do once we are in the Second Great Depression to get out of it.
The Buy-and-Holders will say that it is not possible to predict future economic events. Everyone is entitled to an opinion Perhaps they are right. We certainly should all be saying a prayer that the Buy-and-Holders are proven right re this one. A Second Great Depression is going to cause huge amounts of human suffering. It is serious and scary and sobering stuff that we are pondering in this column.
Continue reading The Second Great Depression Cometh →
Beyond Buy-and-Hold #47
By Rob Bennett
Stocks are a wonderful but nasty investment class.
Stocks are wonderful because they offer returns that cannot be reliably matched by any other asset class. Stocks are nasty because they provide that return in a manner which makes fools of all of us.
Over and over and over again.
Think of how it is that you come to excel in just about any life endeavor other than stock investing. What makes you good at driving or cooking or raising children or in your career?
Practice.
We all become better over time at most things we do by developing skills over time that we did not possess starting out.
It doesn’t work that way with stocks—not at all
Continue reading The Stock Market Makes Fools of Us Over and Over Again →
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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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Why Near Zero Interest Rates Are Hurting Economic Recovery
By Jessica Wagner
It seems that the FED isn’t planning to raise the interest rates for the foreseeable future and the near zero figure is likely to stay in place for another two years. This has many in the private and public sector seriously concerned as it’s widely seen to be a major factor in sustaining such poor economic results. Keeping the rate low was seen as a way to inspire investment growth, but it appears to have had the opposite effect and seems to be hurting the economy’s ability to recover.
What the Fed HOPED low interest rates would accomplish
Continue reading Why Near Zero Interest Rates Are Hurting Economic Recovery →