Of course, I will be asked to "prove" these statements, as if quoting venerable market players like Ritholtz, Soros, and Buffett is simply insufficient evidence.
Yes, you will be asked to support your argument. Yes, it is insufficient.
Appeal to authority is a logical fallacy. Moreover, of your links, not one has any meaningful support. The Bloomberg post about Soros is all of three sentences long, and that quote is the only one about the EMH, and it lacks substantiation or any form of support; the rest of the blurb deals with the Lehman brothers collapse. The Shiller/Ritholtz post states that the EMH is wrong and that it has been wrong, but doesn't support that with any actual evidence-- if it had really been "thoroughly discredited", don't you think that the author would have posted some of that damning information instead of just telling us that it was discredited? And finally, Buffett's piece is not a challenge to EMH but a self-serving pat on the back to nine of his value-investing buddies who have done well, despite the fact that he certainly knows more than nine people who practice the technique. Even if your appeal to authority weren't fallacious, your authorities either 1) aren't saying what you've said they are, or 2) are spouting unsupported opinions just like you. If I told you the markets had to be efficient because Jack Bogle said they were, and then linked Jack Bogle sharing his unsupported opinion, you wouldn't call that proof of the EMH. Why should we do the same?
My intention is to simply create a thread in which to discuss the presuppositions and inalienable truths held by some posters who cling to the discredited idea that markets are always efficient and rational.
The straw man argument is a logical fallacy. Inalienable does not mean what you think it means. Presuppositions are only implicit assumptions; further, my support of the EMH is not an assumption but a logical extension of economic data. Lastly, you mischaracterize my argument, and the idea has only been discredited by opinions, by your own admission in your feeble, fallacious appeal to authority above. I argued that there are no significant and systematically exploitable inefficiencies based on publicly known information in the market which do not quickly correct themselves, which is weak EMH, different than the strong EMH that you consistently choose to attribute to me because it's an easy argument to attack.
But that's because I think most investors are lazy about their finances. I don't see how somebody who busts their ass to save a few bucks can turn around and entrust a total stranger with their net worth without bothering to educate themselves on the nuances, complexities, and extreme risk which comes with equity investing.
A core tenet of YMOYL, the FI movement as a whole, and Mustachianism in specific, is that reasoned consumption and care with money don't make life any worse than mindless consumption. I think 'ass-busting to save a few bucks' is an unfair characterization of the movement. You are also repeating but never substantiating that equity investing carries an extreme risk (Look
here for your most recent sidestep of the discussion with an ad hominem. For the record,
Argumentum ad hominem is a logical fallacy.) For the record, it's also a mischaracterization of my position that being informed about the actions of the market is a bad thing, an unnecessary thing, or even a trivial thing. Finally, index funds are not managed by people, and investing in an index fund does not rely on trust or strangers. I'll echo other posters in wondering if you truly understand what an index fund
is, since you've misrepresented them over and over again now.
but we can't replicate what some Harvard hack with a newly minted MBA is doing just a few years removed from grad school with our precious retirement dollars? ... Winston Chase III, MBA fund boy with several billion IRA dollars at his disposal at Superfund Index Corporation?
You continue to make a logically unsupported attack against mutual fund managers. I repeat: "If the very best managers in the business, charging 3% expense ratios, can't consistently produce results better than the market movements as a whole, which you're arguing by calling them hacks, then why the hell do you think you can?" If the market has inefficiences that can be exploited based on intuition, investor skill, any financial methodology, your relationship with your God, or the color of tie that the fund manager is wearing, why aren't there mutual funds that consistently outperform their indices? If you can have enough skill to exploit these inefficiencies, why can't genius financial professionals with access to incredible software and hardware systems, stunning quantities of data, and decades of experience? Because they didn't read
Phil Town's Rule #1 like Joe Daytrader? Either the mutual fund managers aren't hacks, or there are no significant and systematically exploitable inefficiencies based on publicly known information in the market which do not quickly correct themselves. Sound familiar?
I thought Skyrefuge was saying that
such high fees don't really exist. I was trying to show they do.
That fund has a net expense ratio of .76%. If there's another .5% management fee added to that, it's for the account. You only add the redemption fee when you go to sell the fund. You'd have to hold the fund for no longer than 15 months for the fee to be 3%, like you claimed, and much of that is unrelated to the fund itself. Moreover, that's an exceptionally expensive mutual fund. Crucially, it's
not even an index fund. From
the same link: "Our fundamental belief is that long-term, market-beating performance can be achieved through strict adherence to quantitative stock selection".
What if your asset allocation is all wrong?
The asset allocation can be mathematically evaluated with the set of tools falling under the broad umbrella of modern portfolio theory. Let me guess, you don't believe in it either. Moreover, how could an asset allocation be wrong? Are you arguing that in ten years we could look back and find a higher-yielding allocation strategy? Of course we could. That proves nothing. Even considering it in tandem with risk illustrates little in hindsight.
What if the age of the long decline of index funds is upon us -- a situation created by (a) a heavily indebted youth with scant job prospects and thus no income to invest, and (b) an aged and retired baby boomer generation looking to cash out their IRA money?
Characterizing youth as heavily indebted is inaccurate, as I've demonstrated all of a dozen times now. Job prospects are really not bad among college graduates, who I would say are more heavily into investing than high-school graduates, college dropouts, and high school dropouts. If they were, I'm sure you would have provided data to support your assertion. For example, in Ohio, all people aged 20-to-24 had an 11.9 percent unemployment rate
according to Ohio Department of Job and Family Services. Even among college graduates the
average debt was about $15k, and I've already demonstrated elsewhere that that value is totally manageable. Meanwhile, the average boomer has only $78k between all their 401ks and IRAs, according to a
Center for Retirement Research study; likely, much of that money is in bonds and boomers heed the traditional advice of becoming more conservative as they approach retirement. Somehow, I don't see $40k of retirement-earmarked equities per boomer and $15k of student loans per college grad as a problem so colossal it'll sink the equities markets. More to the point, though, you've got these gloomy arguments that bear no relation to the actual economic facts of the nation.
I have repeatedly emphasized that one should only invest money one is prepared to lose.
You've repeatedly not substantiated this statement. I've repeatedly challenged it, and you've repeatedly run from the discussion to hide behind the observance that I'm younger than you. For the tenth time, there is no reason you can't have most of your net worth in equities if you are diversified. And there is no reason you should be convincing people to run and hide. Yes, you can have a losing year, and you could even have a losing five-year period. But it's not like your entire savings could just plummet to nothing because they're equities. That argument is inane and bears no relation to the actual reality of the economy, which is why you've repeatedly declined to double down on it by supporting it with evidence.
