VII #2 — What If Everything You Thought You Knew About Stock Investing Turned Out to Be Wrong?

I’ve post Entry #2 to the Valuation-Informed Indexing column at the Value Walk site. It’s called What If Everything You Thought You Knew About Stock Investing Turned Out to Be Wrong?

Juicy Excerpt: Web sites and radio shows and newspapers report the Dow and S&P numbers every day. How often do you hear the numbers reported adjusted for the effect of overvaluation? At the time when stocks were priced at three times fair value, the Dow was at about 12,000. Shouldn’t the news reports have been saying that the Dow was temporarily priced at 12,000 but that the true value was 4,000? Wouldn’t that have been the more accurate statement given the level of overvaluation?


  1. Evidence Based Investing says

    On the 8th of August you posted the contents of a quite technical email that you received from Adam Butler. You didn’t add any of your own comments nor indicate if you replied to him or whether you would discuss the matter any further.

    Did you enter into any correspondence with him, and if so, should we expect to see any blogs on that correspondence in the future.

  2. Rob says

    It’s always (usually?) nice to hear from you, Evidence.

    I hadn’t been planning to post any more of my correspondence with Adam. But since you have an interest, I am happy to do so. I will try to get one up this weekend.

    I responded to that initial e-mail with a long one that contained a good number of links to materials at John Walter Russell’s site. Adam suggested that we have a telephone conversation. In preparation for the call, I sent him links to about 20 threads at the SWR Research Group board. Then we had a telephone call that lasted about two hours.

    I think it would be fair to describe us today as “friends.” His wife is due to have a baby and my family has said a rosary that all goes well! I told him that I would be happy to help him out in any way that I could and he told me that he would be happy to help me out in any way that he could.

    Adam and I agree on all the big picture issues and we agree that the Old School SWR studies are in error. I don’t think we are in precise agreement as to the better way to handle SWRs. As you know, the technical details are not my strong point, so we did not focus on those aspects of the question in our call. He was very interested in the work John did and my sense is that he is going to explore it in more depth. We were both of course saddened that John was not able to participate on the call. Adam would obviously have learned more and John would of course loved to have had an opportunity to help out in that way. Adam has a very strong technical background.

    I have no major objection to what Adam does and Adam has no major objection to what I do. We both agree that the big problem is that there is not enough forward movement being achieved here because marketing considerations are the dominant influence today on what is said re retirement planning by The Stock-Selling Industry.


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