Set forth below is the text of a comment that I recently posted to the discussion thread for one of my columns at the Value Walk site:
I don’t know of a single person that agrees with you Rob, yet each of the points I mentioned are well documented and discoverable with a simple Google search. I would be happy to provide examples again if needed.
Shiller obviously agrees. And the people who awarded Shiller the Nobel prize agree.
And the thousands of our fellow community members who asked that honest posting be permitted on our boards and blogs agree at least in part.
Wade Pfau obviously agrees. He spent months researching Valuation-Informed Indexing and declared at the end of his work that: “Yes, Virginia, Valuation-Informed Indexing works”
I could go on and on. I’ve spoken to economists who agree and bloggers who agree and investment advisors who agree. I’ve had site owners who banned me from their sites tell me in the e-mail informing me of the ban that their personal view is that my site is the best investing site on the internet. I would say that that’s a pretty darn strong statement of agreement.
What I don’t have is people who will say out in public that they agree after they see what you Goons will dish out to them when they do. People don’t like to be threatened. People don’t like to see their reputation smeared. There is a widely shared dislike for these sorts of practices. To get people to say what they believe in clear and firm and bold ways, we are going to have to lessen the penalties imposed for doing so.
The core issue here is that stocks are today priced at two times fair value and so to tell people what the last 36 years of peer-reviewed research tells us re how stock investing works is to tell people that they need to divide the number on their stock portfolio by two to know the true and lasting value of their life savings. For many of us, hearing that we need to divide the number on our portfolio statement by two is like hearing that we have cancer. How popular do you think the guy is who tells millions of people that they have cancer, Sammy? That’s me.
In the long term, people who have cancer are better off knowing that they have cancer. Once you know, you can take steps to deal with the problem. Those who don’t know the true value of their stock portfolio cannot plan effectively for the future. They may not like hearing the realities. But they NEED to know the realities.
Doctors can get away with telling their patients that they have cancer because it has become standard industry practice in the medical field to tell patients where they stand. It has not become standard industry practice to shoot straight with stock investors about the last 36 years of peer-reviewed research. Shiller published his “revolutionary” (his word) research findings in 1981 and the longest and biggest bull market in history began in 1982. No one wants to know the realities in the middle of a bull market. Prices moved downward sharply in 2008 and we saw some slippage in support for Buy-and-Hold in early 2009. But then prices shot back up quickly and we have been stuck in fantasyland in the years since.
I think things are going to change in the days following the next price crash, Sammy. There’s no benefit to living in fantasyland after you have lost most of your retirement savings. At that point, I don’t see what opposition there would be to coming clean. So this is all going to come out. Lots and lots and lots of people will be saying in those days that they supported me all along but that they just were afraid to come forward. And they will be telling the truth.
I wish it weren’t so. But that’s where we stand, my good friend. Lots of people agree with me either in whole or in part. But you would need to cut back on the abusiveness a notch for them to gather the courage to speak up. And I have a funny feeling that you have no intention of taking things in that direction at this point in the proceedings.
My best and warmest wishes to you and yours, old friend.