Anyway, it’s interesting to note how common it is to take on the simplistic worldview of “us vs them” and not taking into consideration what the underlying meaning and value of a post is.

We all got a fair bit of “grey matter” in our noggins’ that can critically analyze the million shades of grey in terms of understanding context… it’s amazing how many people don’t take the time to step back a bit and take a look at the bigger picture.

Yes. There have been four times in U.S. history when the idea that price doesn’t matter when buying stocks was promoted so heavily that a large percentage of the investing population came to believe it for a time. On each of these four occasions we not only saw a price crash but also an economic crisis (from 1900 forward, there has never been an economic crisis in the U.S. that was not preceded by heavy promotion of the Passive Investing “idea”).

When the entire economy crashes, everyone is hurt in serious ways. Businesses fail. Retirements go bust. Marriages fail. Political instability reigns. There are no winners, only losers. If we could go back in a time machine and ask those who were invested in some fund that just happened to get okay returns despite Passive Investing (Wellington would obviously have performed better had the managers been willing to take valuations into consideration when setting the stock allocations for the fund) whether they were glad to live through a Depression or a serious recession caused by Passive Investing, I am confident that they would say that it would have been just fine with them if investors of the day has been informed about Rational Investing principles.

There is no benefit to buying stocks without taking into consideration the price you pay for them, Carlyle. It’s not even possible for the human mind to imagine how there ever could be one. I’m absolutely sure. (That last part is a joke.)

Rob

I signed up for it. But on the day of the first test I determined that the entire thing was an elaborate Candid Camera episode. Everyone except me was pretending that they understood the questions and writing down answers and all that sort of thing. I decided that the joke wasn’t funny enough to justify me getting an “F.” So I dropped the class.

Rob

Rob B said “I don’t agree that there are no absolutes. Two plus two equals four. That’s absolutely true.”

Obviously you never taken much calculus because you would know that actually there are cases where is doesn’t. There is no such thing of as an absolute.

Mr Cheap – I’ve enjoyed seeing your shades of grey. Thanks for the post.

Tim

Oh? Are you saying the historical record shows that investing in Vanguard’s Wellington or Wellesley Income funds resulted in financial disaster for the investor? Or investing in the Coffeehouse Portfolio resulted in financial disaster for the investor? It does not appear to me that those who invested passively via any of those vehicles were caused much “human misery” by their choices. I guess it depends on just how you choose to interpret (or misinterpret) the historical record.

I DO however find most absolutes tend to break up into subjective beliefs if you look at them too closely. But I agree with you and wouldn’t rule them out entirely. They certainly aren’t as common as is commonly believed however.

Thanks for commenting!

I feel the need to p0int out the irony of your statement. “There are no absolutes (in investing or in life)…” is an absolute statement.

Not trying to be cheeky, I do agree that many of the statements & ideas that are held up as absolutes are quite subjective, but in life I believe that there are absolutes, truth & lies, reality & fantasy. Learning not to decieve myself (in all sorts of areas) is probably one of the biggest challanges I’ve been realizing lately.

Just my 2 bits for thought.