A reader writes:
Hey Mike. Davie [name] Here. You know Mike, there is something that I keep hearing from two of the most prominent financial advisers in the country and it drives me crazy every time I hear it. I can’t understand how two men who are obvious very intelligent and gifted can be so ignorant of the truth. The two men are Dave Ramsey, and Rick Edelman. I have heard them both on more than one occasion in which they were promoting their buy and hold philosophies that there are no “market timers in the forbes 400 wealthiest list”. Then they go on they point out that “however, the number 2 guy on the list, Warren Buffet is a long term buy and hold guy”. This just drives me crazy Mike because it simply isn’t true and two men who are “experts” in money ought to know better. Sure there is one guy who claims to be a buy and holder on the list named Warren Buffet though as you have pointed out, he really may not have built the bulk of that wealth through classic buy and hold strategies. But that’s beside the point. The point is that of course there are many many more than that one guy who are on that same list who are indeed market timers which is just a fancy word for trader. What is it with Ramsey and Edelman Mike? Have they not heard of George Soros, or Ray Dalio, or T Boone Pickens, Stevie Cohen, James Simons, Paul Tudor Jones, Stephen Feinberg, Bruce Kovner, Eddie Lampert, David Shaw, Louis Bacon, Jeffrey Gendell, Stephen Mandel, Israel Englander, Richard Perry, David Tepper, Stanley Drunkenmiller, William Von Mueffling, John Arnold, John Paulson, or Julian Robertson??? I could go on. All of these guys to my knowledge are billionaires whose net worth is high enough to be qualify for the Forbes 400 list. And that’s not to mention the hoards of “market timers” who may not be wealthy enough to be on the list but certainly are among the top one tenth of one percent of the world wealthiest individuals. Men such as Boaz Weinstein, or Bill Dunn. You know Mike, I can name a heck of a lot more super wealthy “market timers” than I can long term buy and holders. The only super wealthy buy and holders I can name are Warren Buffet and Peter Lynch. It really annoys me that Dave Ramsey and Rick Edelman continue to claim that no one can make any money by trading. It simply isn’t true. I was the guy who sent you the article from yahoo news about the guy who lost in faith in the market. If you read that article, you would have noticed that near the end of the article, they pointed out that the man they highlighted in the article had lost about 90% of his money and only had $800K left. Unbelievable Mike! You talk about taking a 50% draw down with buy and hold! This guy was a multimillionaire with about $8 million in his retirement account, and his buy and hold strategy combined with obvious additional poor choices resulted in him losing about $7.2 million dollars! Meanwhile, these “market timers” I mentioned above had their net worths rise and rise and rise through the past few years. I know this because, I remember reading about many of them in trader monthly magazine back in 2006 and many of them had not even accumulated a billion dollar net worth by then and now most of them are multi billionaires. I really wish Ramsey and Edelman would educate themselves more on this issue before they speak. There! I’m done ranting! I love ya man!
Thanks Davie, but Ramsey and Edelman do what they do on purpose. Very much on purpose. It’s up to everyone out there to figure out their motivations for misleading. Hints for their “why” can be found here: Dave Ramsey 5 foundations.