Vanguard was trying to show the superiority of Buy & Hold versus “emotional investing.” I have many issues with their argument.
First, I have to challenge the use of that term — emotional investing — to describe what is a fixed mathematical exit and entry strategy. In fact, that is the exact OPPOSITE of emotional investing: Using predetermined risk management system that operates without any human intervention — a quant black box — is not emotional investing.
Paul used the default settings — something guaranteed to never beat the market. That approach makes Buy & Hold look like the superior strategy. Vanguard shows B&H performance of $63,791 versus in/out performance of $33,628:
Oh, Mr. Bogle, please tell me more about Buy & Hold!
Vanguard did not count on clever market participants engaging in na little clever slide play . . . just a tweak here, down 20% to get you out, up 23% to get you back in — voila! Massive out performance form-fitted to recent history: B&H performance of $63,791 versus risk managed performance of $88,095:
Risk Management vs Buy & Hold
And, you have not only out-performed over the past decade, you are actually up since 10 years ago — versus still negative for Vanguard.
Thanks Paul, Bruce, Scott F.
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.