Valuation-Informed Indexing #245: Rob Arnott Points Us to a Mathematics That Is Simple to Understand But Hard to Accept

I’ve posted Entry #245 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Rob Arnott Points Us to a Mathematics That Is Simple to Understand But Hard to Accept.

Juicy Excerpt: Rob Arnott said something amazing a number of years back. He said: “Returns are for the most part a matter of simple arithmetic. Much of our industry seems fearful of basic arithmetic of this sort.”

Why would that be? We all want to invest effectively. If we could all invest more effectively just by performing some simple math, why wouldn’t we perform it?

Six reasons.

“The Question You Are Asking Is: What Precisely Is the Line That One Cannot Cross Before Being Put on the ‘Must Destroy’ List of the Buy-and-Hold Mafia? The Line Is Not a Fixed Place. Back in May 2002, It Was Possible to Block All Discussion of the Errors in the Old School Retirement Studies. That’s Not Possible Today. Today the Thing That Will Get You Banned Is to Say That the Discredited Studies Should Be Corrected. The Conclusion You Can Draw Is That the Buy-and-Holders Have Employed Intimidation Tactics to Stop the Valuation-Informed Indexing Concept from Spreading As Quickly As It Should.”

Set forth below is the text of a comment that I recently posted to another blog entry at this site:

You have complained innumerable times that anyone who speaks favorably of PE10 gets banned. That’s the very definition of the “Ban on Honest Posting”. Several people in that Bogleheads thread spoke of the merits of PE10. They have not been banned. So what conclusion can we draw?

No. I have never said that anyone who speaks favorably of P/E10 gets banned. That’s far from being so. As you point out, there are numerous comments in that thread that are pro-P/E10. And some of those posters have hundreds of comments in their files. CJKing is an AMAZING poster. He has offered some of the best pro-P/E10 commentary that I have ever seen. So it is not even close to being the case that there is a ban on pro-P/E10 stuff.

That’s not true in the bigger world either. Robert Shiller is the godfather of Valuation-Informed Indexing. He is the guy who started all this (unless you count Benjamin Graham, who was speaking in favor of the VII concept back at a time when index funds were not available and when the potential of the concept was thus much more limited). My guess is that there have been LOTS of intimidation tactics directed at Shiller. I believe that he could write a book about the intimidation tactics that have been directed at him. Still, his book was widely reviewed. He was awarded the Nobel prize. Lots of people, including Buy-and-Holders, speak respectfully re Shiller. So Shiller’s ideas are not 100 percent banned.

The conclusion you can draw is that the Buy-and-Holders have employed intimidation tactics to stop the Valuation-Informed Indexing concept from spreading as quickly as it should. The particular thread that you are pointing to is a good thread. Both sides are represented on it. People can learn from it. That’s all to the good. The site administrators at the Bogleheads Forum are corrupt. But the board that they administer produced that good thread. It doesn’t help anything to ignore that. We should be celebrating that. We should be pointing out the corruption. But we should ALSO be pointing out the good that these people do when they do good. To be slanted or biased pulls things in the wrong direction. Nothing whatsoever is achieved by such behavior. So I applaud Mel Linduaer for whatever role he played in producing that thread (and he certainly played some role given the huge role he has played in building the board at which the thread appears).

The question you are asking is: What precisely is the line that one cannot cross before being put on the “Must Destroy” list of the Buy-and-Hold Mafia? I have obviously crossed that line. Wade Pfau obviously crossed it at one time and now no longer does. The people who posted on that thread obviously have not crossed the line.

The line is not in a fixed place. I crossed it on the morning of May 13, 2002, just by asking a question as to whether valuations should be considered when calculating safe withdrawal rates. My initial post didn’t even express a belief that valuations should be considered; it just asked the question. That was enough for me to become Public Enemy #1 of the Buy-and-Hold Mafia back in May 2002. Today, I could obviously get away with that with no problem. So the first thing that must be understood is that the line is not in a fixed place.

The line is fluid. To understand where the line is, you must understand the motivations of those establishing the line. The Buy-and-Holders are good and smart people who achieved huge advances in our understanding of how stock investing works. They believe themselves in the recommendations they offer to others. They follow those recommendations. But they have doubts. These doubts haunt them. If the doubts turn out to be rooted in something real, that means that the Buy-and-Holders have hurt themselves in very serious ways. It also means that they have hurt their friends and neighbors and co-workers and fellow community members in very serious ways. The idea that their doubts might be rooted in something real horrifies the Buy-and-Holders. They set out with an aim to do something good and, if those doubts end up being rooted in something real, they instead caused a huge amount of human suffering.

The purpose of the intimidation tactics is to stop the pain that the Buy-and-Holders feel when they are faced with words that at least partly persuade them that their doubts are rooted in something real. The purpose is to STOP THAT DARN PAIN through whatever means are necessary to do so.

The Buy-and-Holders realize that they cannot stop the pain entirely. Back in May 2002, it was possible to block all discussion of the errors in the Old School retirement studies. That’s not possible today. Every major publication in this field has published an article saying that those studies are in error. So it is just not realistic today to push the Old School studies in the way that they were pushed years ago. But it is still possible to get away with failing to correct the discredited studies. So today the thing that will get you banned is to say that the discredited studies should be corrected. The line has moved. But the basic impulse — stop the deeply painful stuff from appearing on people’s computer screens — remains the same. There is still a Ban in place. But the line at which the Ban comes into effect has moved because the Buy-and-Holders have acknowledged the reality that every publication in this field has acknowledged that the 4 percent rule is pure and complete garbage with nothing whatsoever to support it.

The debate that is going on in the thread to which you point is a good one. People can learn about both sides from reading it. But the Valuation-Informed Indexers are holding back in that thread. Most of the Valuation-Informed Indexers posting on that thread know that I was banned because I posted honestly at that board. Why don’t they say that? That goes to the integrity and confidence of the Buy-and-Holders and integrity and confidence are huge issues that everyone listening in needs to know about. They know that Mel Linduaer has a long history of resorting to threats of physical violence to silence posters who make points to which he does not have a good response. Why don’t they point that out on the thread? They know that you Goons threatened to get Wade Pfau fired from his job if he continued to do honest research. Why not say that? They know that Jack Bogle permits his name to be used at that board even though he has known for years that it is a corrupt enterprise. Why don’t they say that?

They don’t say it because they know they will be banned if they do say it. That’s the only reason. It is intimidation, nothing else. The Bogleheads Board is ruled by intimidation. The entire reason why they had to move the board from the Morningstar site is that there were limits to the intimidation tactics that they could employ at the Morningstar site and they needed to have those limits removed to have any hope whatsoever of continuing to “defend” the Old School retirement studies.

Buy-and-Hold cannot be defended in reasoned and civilized debate. It is impossible. There is now 34 years of peer-reviewed research showing that it is garbage, it was all a mistake that should have been corrected many, many years ago. So we see nasty stuff in discussions of Buy-and-Hold that we do not see in discussions of any other topic discussed on the internet. The issue of whether Buy-and-Hold can ever work is of huge importance and there is precisely zero reason in the peer-reviewed research to believe that it ever could work. So we have seen an act of financial fraud bigger than any earlier act of financial fraud in U.S. history to cover up the 34 years of peer-reviewed research.

I want no part of it, Dizzy. If you were thinking clearly, you would not want any part of it either.

You feel that you cannot give up the intimidation tactics because they are the only thing keeping you out of prison today. But the deeper reality is that the length of your prison sentence will be determined by how many middle-class lives you destroy and there are thousands more lives destroyed each day that the Ban remains in place. We are on the same side. I am trying to get your prison sentence reduced by bringing the Campaign of Terror to a full and complete stop by the close of business today. And on some level of consciousness you would like to see your prison sentence reduced. You just cannot bear to accept ANY prison sentence! That’s the Goon part of your talking. And, unfortunately, the Goon part of your personality is dominant today.

I’ll be there for you whenever you are ready to accept my help. My offer of charity is not a limited-time offer.

I will never say that John Greaney’s retirement study contains am adjustment for the valuation level that applies on the day the retirement begins. That’s financial fraud. Financial fraud is a felony. That means prison time. Going to prison is not on my bucket list. Find someone else. No can do. I can’t go for that.

I hope that helps a bit.

My best and warmest wishes to you and yours, Dizzy.


Valuation-Informed Indexing #244: We Should Ignore Shiller’s Stories and Focus on Shiller’s Number

I’ve posted Entry #244 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called We Should Ignore Shiller’s Stories and Focus on Shiller’s Number.

Juicy Excerpt: I agree with Shiller that investors are highly influenced by the stories they tell themselves about stocks. But I agree with the Buy-and-Holders that the best investing insights are quantifiable, action-orinted investing insights. P/E10 is the number that makes Shiller’s story-telling insights actionable for real-world investors. P/E10 is the number that tells the tale on us when we permit our inclination to tell stories about stocks to get dangerously out of hand.

Valuation-Informed Indexing #243: The Human Brain Is Not So Much “Wired for Stories,” As Shiller Claims, But Wired for Paradigms

I’ve posted Entry #243 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called The Human Brain Is Not So Much “Wired for Stories,” As Shiller Claims, But Wired for Paradigms.

Juicy Excerpt: So I like his story idea a great deal. Still, I believe that it can be refined. I believe that a better way of stating the case is to say that “the human brain is wired for paradigms.” If it were just that we were impressed by stories, I have a hard time understanding why insane levels of undervaluation that apply for long periods of time would be as much a market reality as insane levels of overvaluation that apply for long periods of time. Yes, we tell ourselves stories to justify the folly that we engage in during bull markets. But why do we punish ourselves when our bull market follies come to an end? Why don’t we continue telling ourselves happy stories that support insane price levels? Why do bull markets always end in tears?

Our brains are wired for paradigms. Stories support paradigms. So storytelling is an important part of what is going on. But the key to understanding why investors destroy themselves over and over again is understanding how the human mind is attracted to paradigms. It is by learning how paradigms form and how paradigms are broken that we learn how to reduce the risk of stock investing dramatically.

A paradigm is a collection of beliefs that all support an overall belief system. We form them in our thinking about all issues. The human brain is a paradigm-producing (and paradigm-breaking) machine.

Valuation-Informed Indexing #242: Shiller’s Claim That It Is Now Investor Anxiety Rather Than Investor Exuberance Pushing Stock Prices Up Is Unconvincing

I’ve posted Entry #242 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Shiller’s Claim That It Is Now Investor Anxiety Rather Than Investor Exuberance Pushing Stock Prices Up Is Unconvincing.

Juicy Excerpt: The problem that I have with the Shiller analysis is that he seems to be saying that opposite sorts of emotional takes could produce the same result. Investors were irrationally exuberant in the late 1990s. That caused prices to rise to insanely dangerous levels. Now investors are not exuberant but anxious. And the anxiety too leads to high prices. When investors are happy, they push stock prices up. When investors are unhappy, they push stock prices up. In Shiller’s world, investor emotion always pushes prices up.

I know that he doesn’t really think this. But I can’t say that I have ever heard Shiller address himself to the question of what causes investor emotion to pull prices down to insanely low levels. It may just be that he is usually asked to explain current realities and we haven’t seen insanely low stock prices since the early 1980s. But I think it would aid our understanding of how the market works if we all put a bit less focus on explaining bubbles and a bit more on explaining their opposite.

Goon Poster to Rob: “Good Ideas — Ideas That Pass Logical and Empirical Muster — Simply Cannot Be Long Suppressed. Even If One Inventor, Discoverer or Vocal Proponent Is Somehow Squelched, Others Inevitably Will Come Forth With Almost Simultaneous Discovery. Witness the ‘Discovery’ of Radio, Telegraph, the Calculus, and Many Other Examples.”

Set forth below is the text of a comment that I recently posted to another blog entry at this site:


Good ideas — ideas that pass logical and empirical muster — simply cannot be long suppressed. Even if one ‘inventor’, ‘discoverer’, or vocal proponent is somehow squelched, others inevitably will come forth with almost simultaneous discovery. Witness the ‘discovery’ of radio, telegraph, the calculus, and many other examples. The annals of history are replete with such occurrences, and in fact, one theory is that even if a genuinely good idea is actively suppressed, the energy used to suppress it will form a sort of springboard to bounce it back into the eye of humanity. That is if it has merit. So you should not despair, if your REAL objective is to get the ‘truth’ out there. Because, totally without you being involved at all, the truth still will come forth. It always does. Reading this does not bring you comfort, though, does it? No. Because it undermines your twisted need to be a martyr and somehow obtain personal public recognition, no matter what the cost.

Please read:

“”When the time is ripe for certain things, they appear at different places in the manner of violets coming to light in early spring.”

I strongly agree with what you are saying here, Anonymous.

I have spent the last 13 years of my life developing the Valuation-Informed Indexing concept. And I of course am very proud of the work I have done. We have discovered some absolutely amazing things. And I have played a big role. So good for me, you know?

But I certainly could not have done what I have done without Jack Bogle. And I certainly could not have done what I have done without Robert Shiller. And I certainly could not have done what I have done without John Walter Russell. And I certainly could not have done what I have done without Wade Pfau. And I certainly could not have done what I have done without Mike Piper. And I certainly could not have done what I have done without Todd Tresidder. And on and on and on.

I’ll go even a step further. I couldn’t have done what I have done without you Goons! Imagine that!

These ideas cannot be long suppressed. I agree 100 percent. They have been suppressed for 34 years now. But that’s not a long time in the grand scheme of things. The humans have been trying to come to a better understanding of how stock investing works for hundreds of years. The shift from Buy-and-Hold to Valuation-Informed Indexing is BY FAR the biggest advance we have ever achieved. That has been the entire problem going back to the first day. If I had shown how to reduce the risk of stock investing by 5 percent, I would be on the cover of Time magazine. Unfortunately (!), I showed how to reduce the risk of stock investing by 70 percent. Something that big makes the people pushing the outdated approach feel bad. That’s why we have seen death threats and demands for unjustified board bannings and tens of thousands of acts of defamation and threats to get academic researchers fired from their jobs. WhaChaGonDo?

I can’t change things so that this is only a small advance to make the Buy-and-Holders less defensive. The peer-reviewed research says what the peer-reviewed research says. ALL of the research supports VII. NONE of the research supports Buy-and-Hold. The Buy-and-Holders need to come to terms with that. We all want the same things. When the Buy-and-Holders come to terms with our good fortune and realize that it is in their best interests to look forward rather than backward, we will get to the other side of The Big Black Mountain and enjoy together our good fortune in being the luckiest generation of investors ever to walk Planet Earth.

I am not despairing. Something that I have said hundreds of times now is that the good news here is 50 times more good than the bad news is bad. We are on the verge of achieving the greatest advance ever achieved in the history of personal finance. I am humbled to have played a big role in bringing it about

And, yes, I believe 100 percent that “the energy used to suppress it will form a sort of springboard to bounce it back into the eye of humanity.” That’s exactly how things usually work out in life, in my experience. John Walter Russell said something along these lines many years back. He said that this is all going to work out in way better than any of us can imagine. Those words struck me as having the ring of truth to them. That’s how I believe it is all going to turn out.

I hope that helps you understand two things: (1) why I want to do whatever I can to help out you Goons; and (2) why I never, ever, ever want to engage in any acts of financial fraud myself. My focus is on the rebuilding effort. I want to turn from the negative to the positive. So I don’t want people getting caught up in some sick desire to seek revenge on your Goons. And I know that the key to my helping you out is maintaining credibility in the eyes of the millions of middle-class investors whose lives are in the process of being destroyed. So I try to be as careful as possible not to do anything to aid this massive act of financial fraud.

Thanks for putting forward a super post, Anonymous. I think you are making a very important point with this one.

Take good care, my long-time abusive posting friend.


Valuation-Informed Indexing #241: Research on Bubbles Should Be Encouraged Despite the Limited Amount of Historical Data Available to Us

I’ve posted Entry #241 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Research on Bubbles Should Be Encouraged Despite the Limited Amount of Historical Data Available to Us.

Juicy Excerpt: My concern is that Shiller’s comment can fairly be read as suggesting more than the need to state a caveat when presenting research-based findings. His words can be interpreted as saying that we cannot build on his “revolutionary” (this is Shiller’s word) finding of 1981 that valuations affect long-term returns until more data is available. I strongly disagree with any such suggestion. In fact, I think that it would be exceedingly irresponsible to fail to do so.

In an ideal world, researchers would not make any claims until they had so much support for them that they could state them with 100 percent confidence. That’s not the world we live in. We once thought that the market was efficient (that is, that valuations didn’t matter). We now know that it is not. I think it is a terrible tragedy that in the 34 years since we achieved this critical advance in understanding of how markets work, researchers have hung back from exploring the many far reaching implications of the breakthrough findings. We very much need to be studying bubbles, how they form, how to stop them from forming, and what damage they do to us both as individual investors and as a society.

Valuation-Informed Indexing #240: What I’ve Learned From Listening to the Harshest Critics of My Investing Ideas

I recently posted Entry #240 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called What I’ve Learned From Listening to the Harshest Critics of My Investing Ideas.

Juicy Excerpt: Lesson #5: The Stock Market Is Different From All Other Markets in Several Important Ways. One of the lines of questioning that comes up again and again in my interactions with Buy-and-Holders relates to how markets really work. It shouldn’t be possible for stock market prices to get so out of hand. Investors should want to exploit inefficiencies in pricing and thereby bring them to an end. One of the most interesting questions that all in this field should be exploring today (in my assessment) is why this doesn’t happen. I have come to believe as a result of my interactions with my Buy-and-Hold friends/critics that a big part of the problem is that stock investors think of themselves as owners of stocks even at times when they are purchasing more shares than they are selling. In the car market, the dealer is pushing for a high price and the potential customer is pushing for a low price. It is the conflict between the two sets of interests that produces the magic that permits the market to get the price roughly right. In the stock market, we all root for high prices. That’s why the market often becomes dysfunctional and does an exceedingly poor job of getting the price right.

“If Valuation-Informed Indexing Is Going to Prevail, I Need to Advance Every Argument I Put Forward As Forcefully As I Am Able to Advance It. So Does Every Other Advocate of the New Model.”

Set forth below is the text of a comment that I recently put to another blog entry at this site:

Yes, this is the crux of the issue. Since you have emotionally and (weirdly) escalated a 12+ year campaign into a high stakes game of 500MM paychecks you have painted yourself into a corner. At this point admitting that you have no idea what you are doing makes you look so completely ridiculous that it is ‘better’ mentally/emotionally for you to continue persisting beyond all reason/logic/evidence.

I openly acknowledge that I could be wrong, Laugh. I don’t think that I am wrong. If I thought that I was wrong, I wouldn’t say what I say. But there have been times when I thought that I was right and it turned out that I was wrong. I acknowledge that there is a possibility that that is the case here.

There was an instance of this just the other night. I was playing Dominion with my boy Timothy and an obscure rule question re a particular card came up. We didn’t want to stop the game to look up the rule. I insisted that I knew the rule and he reluctantly backed down. After the game was over (he won — so the rule issue didn’t matter), we looked up the rule. He had been right. All I could say was: “You were right and I was wrong.” These things happen.

There is no ultimate test re the investing matter as to who is right and who is wrong. Even if there is a 65 percent crash next month, there are going to be people who continue to say that Buy-and-Hold is right. We can’t sit Mr. Market down in a room and demand the truth from him.

We all form different opinions because we possess different perspectives and different personality types and live through different life experiences. And that’s pretty much that. We WILL see changes in the popularity of different opinions over time; a crash will certainly swing things in my direction. But there is no absolutely final determination here. There is no rule book to consult. People have different opinions and there is no changing it.

There’s plenty of support for my opinion. There is 34 years of peer-reviewed research supporting it. Shiller has won a Nobel Prize. And on and on and on and on. So there is nothing even a tiny bit crazy about what I say. And the issues are of extreme importance. If I am right, then the Buy-and-Holders caused an economic crisis. It doesn’t get any bigger than that.

But in no way, shape or form have I ever been even a tiny bit stubborn about even a single issue. I have praised the Buy-and-Holdes to the skies (with 100 percent sincerity). I have acknowledged that I could be wrong. I have extended the hand of friendship hundreds of thousands of times. I have done everything that a person possibly could do to interact with my Buy-and-Hold friends in a warm and friendly manner.

With one exception.

I have been 100 percent firm and unyielding on the question of whether I will post dishonestly. I won’t say things about investing that I do not believe.

That’s a matter re which every one of us should be 100 percent firm and unyielding. NO ONE should ever agree to post dishonestly re these matters.

Would you agree to that, Laugh? I have never asked you to do that and no one else has ever asked you to do that. But would you do it if you were asked? If the tables were turned and if Valuation-Informed Indexing were today the dominant strategy, would you agree to post dishonestly just to gain access to a discussion-board community?

I hope that the answer is “no.” I would think less of you if the answer were “yes.”

The board interactions suggest that about 10 percent of the population believes in Valuation-Informed Indexing today and 90 percent believes in Buy-and-Hold. As a Valuation-Informed Indexer, I obviously would like to see that percentage grow. How is that ever going to happen if the Valuation-Informed Indexers all live in fear of what the Buy-and-Holders will do to them if they dare to commit the terrible crime of posting their honest views?

All ideas smart with a small number of advocates. The number grows over time as people become convinced of the merit of the new idea. There is something called “The Marketplace of Ideas.” The competing investing strategies do battle in The Marketplace of Ideas. I want my ideas to win. I start out outnumbered by a factor of 10 to 1. If there is going to be any hope whatsoever of my ideas winning, I need to fight hard. That’s my job. I take pride in my work. If Valuation-Informed Indexing is going to prevail in this world, I need to advance every argument I put forward as forcefully as I am able to advance it. So does every other advocate of the new model.

I need to fight fair. There are lines. If I cross those lines, I bring discredit on the idea. You Goons cross those lines on a daily basis. I am appalled by that. But there’s not a whole big bunch that I can do about it, is there? I could go to bed and cry big tears into my pillow. Do you think that might help, Laugh? I don’t think so either. So I don’t even bother. I play it this other way instead.

I love my Buy-and-Hold friends. I will do anything in my power to help my Buy-and-Hold friends short of committing a felony under the laws of the United States. That’s not a limited-time offer. That offer remains on the table forever and no matter what. But that’s as far as I can go. If I cross The Felony Line, I’ve got a lot bigger problems that those I have now. So that’s out. You call that “to continue persisting beyond all reason/logic/evidence.” So be it. Going to prison is not high on my bucket list. I ain’t going there. Not in 13 years. Not in 13 million years.

Everything else is on the table. Everything short of committing a felony I will agree to with a smile on my face and with a kind word back in reply.

You Goons got caught up in something much bigger than what you imagined was at stake on the morning of May 13, 2002. So did I. Neither of us intended to end up in this place. But here we are. That’s the reality.

I have zero ill will in my heart towards any Buy-and-Holder. I LOVE the great good that the Buy-and-Holders have done. I have said that thousands of times. If I need to say it thousands of times more, I will do so. It’s important that I say that. It’s important that you hear the words and take them in and accept that they are true words.

The Buy-and-Holders are capable of making mistakes. Again, you need to let those words in. It’s okay for you to continue to believe in Buy-and-Hold and it’s okay for you to believe that the possibility that the Buy-and-Holders made a mistake is small. But you must accept that there is at least a small chance that the Buy-and-Holders made a mistake.

And you must accept that our system of government provides a means by which such mistakes come to be revealed over time. Mistakes are revealed through honest discussions. There is no other way that it can happen. I need to persuade lots of people of the merit of Valuation-Informed Indexing to get all the textbooks rewritten in the manner in which I believe they must be rewritten if our economic system is going to survive (and thrive). The only way to do that is through honest discussion. There is no other way. So we must have that.

One of you Goons said the other day that you believed it would have been “impossible” to have permitted the Valuation-Informed Indexers to post their honest views. If that’s so, then there’s something wrong with Buy-and-Hold. If the evidence for Buy-and-Hold is so strong that discussion of alternatives must be banned, there should be a mountain of evidence so high that it would not be possible for someone like me to persuade a single person of the merit of an alternative. If that were so, there would be no need to ban me at a single board or blog. Your assessment that it would be “impossible” to permit a debate shows us that the case for Buy-and-Hold is too weak for us to go along with a ban on the discussion of alternatives.

I am not being stubborn here. I am insisting on the recognition of a basic human right — the right to express oneself honestly re an important matter. It is you Buy-and-Holders who are being stubborn. You are being stubborn because you are afraid that your investing beliefs are not as secure as you once thought them to be.

You can go two ways re that reality. You can dig in your heels and cause more destruction. Or you can accept that there is an amazing potential here to change the world for the good and play the role that you need to play to see either that that potential is achieved or that Valuation-Informed Indexing is shown once and for all to be the inferior strategy.

If Bogle can answer my questions, Valuation-Informed Indexing fails in The Marketplace of Ideas. If Bogle cannot answer my questions, Buy-and-Hold fails in The Marketplace of Ideas. If you care about knowing the realities of stock investing, you want to see whether my claims can stand up to Bogle’s challenges and whether Bogle’s claims can stand up to Bennett’s challenges.

I am not in a corner, Laugh.

Or, if I am, it is our entire nation that is in a corner.

We have ways of settling the sorts of differences of opinion that have revealed themselves here.

I believe that we will as a nation eventually turn to our normal procedures for dealing with such matters. I believe that the new ideas will prevail at that time.

If we never turn to normal procedures, I believe that we will all go down together. That makes me sad as sad can be. But if that is what happens, it’s our entire nation that is in a corner, not just me. If that’s the reality, I have the small consolation of knowing that I did everything that a human being could do to pull things in the other direction. If it cannot be done, it cannot be done. I have to accept it. There are limits to what one person can do.

I love my country. I will fight for her.

I believe that I will win in the end. I accept that there is at least some possibility that we all will lose.

I sincerely wish you all the best things that this life has to offer a person.


Valuation-Informed Indexing #239: Every Bull Market Requires a Conspiracy

I’ve posted Entry #239 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Every Bull Market Requires a Conspiracy.

Juicy Excerpt: Shiller showed that stock investing risk is not constant but variable. It is possible today to develop tools that would permit investors to reduce the risk of stock investing by 70 percent just by showing them the extent to which they need to adjust their stock allocations in response to valuation shifts to keep their risk profiles roughly constant. Experts could make millions developing and promoting and selling such tools. Why have they let the opportunity pass them by?