You seem like a nice guy with young credentials who likes to help people save a little money. I appreciate and respect that.

RESOURCES: Journal of Indexes April 2009. Rob Arnott wrote an article on why bonds beat stocks with plenty of additional resources he sites for the case. He also is a well respected advisor to many funds including Claymore, Schwab, PowerShares and over a dozen more. He has influence on investment strategy to tens of billions of dollars.

I will go one step further and suggest that the stock market as a way of passive investing is for lazy people. The simple philosophy of handing over your money for some person or organization to “manage it” for a fraction of 1% is ridiculous. To make your money grow you have to actively manage it. Know what you are investing in and when the leadership of the company is not doing their job, find another investment.

The one problem that I see is that most investment advisors/stockbrokers/financial gurus suggest that you invest your long term money in the market. As we all saw last year, every major asset class lost money. Investments should also include income producing real estate, small business ownership, notes, etc. The reason your typical financial advisor doesn’t recommend this type of investment is that they don’t get paid to do so. The investment world is bigger than stocks and bonds.

I am checking your book out from the library and will give it a review. Even with our differences, I think you are on the right track and people can learn from some of your ideas.

Chris: There are so many things wrong with that comment I don’t even know where to begin. In short: If you vary time periods, you can get the result you want. I notice you didn’t link to any data supporting your assertion that bonds have outperformed. Can you link to those so we can see some data, not just opinions? And then can you adjust it two years backward and two years forward (run a basic simulation for good/bad future results)? Watch what happens — I can easily use that data to prove whatever I want, so you want to pick a reliable data set and be very conscious about your time-period selection.

Second, DCA is explicitly acknowledging that you can’t time the market. And asset allocation is why you pick multiple asset classes — so you don’t get stuck in something bad in the short term (like real estate) but also so you don’t let today’s anguished cries cover up tomorrow’s opportunities. Again, this is covered in my book, which takes about 2 hours to read.

I haven’t read the book, but the “traditional wisdom” you subscribe to has not worked and will not work in the future (Dollar Cost Averaging, Modern Portfolio Theory, Asset Allocation – from Wall Street’s point of view).

Let’s stop and think about it…DCA is trying to time the market. It is just a type of diversification strategy. However, you can time the market and make/ protect your money.

When we all saw real estate at its peak (or close to it), someone that prescribed to the Modern Portfolio Theory (along with DCA) they MUST put a portion of their portfolio into real estate. The same with financials…as Bear Sterns, Merril, Lehman all were about to fail, who DCA’d into them?

That is why the old models of “DCA, Buy and Hold, MPT” are all out the window. You can get stable returns with little to no risk without exposing you entire portfolio to the whims of Wall Street…as the models of old require!

http://thepopfix.com/2009/08/03/bowen/