“People Are Social Animals. They Need to Hear Others Endorse an Idea to Have Confidence in It. It Would Make a Huge Difference If There Were a Place Where People Could Go to Find Out That Lots of Knowledgeable Folks Believe in These Ideas. There Is Huge Power in Community.”

I have been sending numerous e-mails to people, letting them know about my article reporting on The Silencing of Academic Researcher Wade Pfau by The Buy-and-Hold Mafia.

Yesterday’s blog entry reported on my correspondence with Joachim Klement, Chief Investment Officer at Wellerchoff & Partners, Inc. Set forth below is the text of the e-mail that I sent to Joachim in response to the e-mail from him described in the earlier blog entry:

Joachim:

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I love your comment re “The Structure of Scientific Revolutions.” I have not read the book but I have heard descriptions of the premise and I believe that the concept explored in the book precisely describes what is going on in investing today. I had a fellow at a discussion board tell me that he liked my ideas but that I went “too far.” The problem we have is that people cannot imagine people as smart as the experts in this field being wildly wrong and, if valuations matter, they are a very big factor. Since there is no way to turn this into a small thing, it is ignored altogether (outside of lip service). We need a paradigm shift and the humans accept paradigm shifts only with great reluctance.

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The encouraging side of the story is that, once a paradigm shift is achieved, lots of change is accepted quickly. I believe that we have another price crash coming (every secular bear in history has brought us to a P/E10 value of 7 or 8 and that is 65 percent down from where we are today) and that the next crash will bring about the paradigm shift. I do all of my work on the internet. So I have had a front-row seat to shifts in investor attitudes over the past 10 years. I was blacklisted at every investing blog of any consequence prior to the 2008 crash. That’s not so today. Lots of people are still skeptical of my ideas. But the level of hostility is much less. There has been a definite change in the water temperature.

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I very much agree with your “we need to keep on arguing” statement as well. I agree with you that it makes sense to target Mauldin and Zweig. I have not been able to get an e-mail address for Maudin (I have had some correspondence with Ed Easterling, who worked with Mauldin on one of his books). I have contacted Zweig but not heard back from him. My guess (this is pure speculation) is that Zweig does not want to be too far ahead of the trend (I say this because he has said things that suggest to me that he knows or at least suspects more than he is saying in public). An even more promising target in my view is Brett Arends at the Wall Street Journal. He has said things VERY plainly. He did not respond to an e-mail I sent. Again, my guess is that he is holding back for the time being. He didn’t hold back in one article that I saw. But the article deserved to go viral and did not generate any reaction. So my guess is that he may have concluded that the time is not ripe for sticking his neck out too much. Another guy who is super is Michael Kitces, a Maryland financial planner. Michael writes a blog where he offers some pretty darn frank assessments. He’s also a very warm fellow.

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The thing that I believe is most desperately needed is an internet discussion board where those who believe in Shiller’s ideas meet each day. It amazed me when I looked around for such a place and was not able to find one. There is a board for every topic on the internet. Yet there is nothing that I know of for Shiller’s investing ideas, even though the guy has written a best-selling book. This is a BIG probem. As my comments above suggest, people worry about being too far ahead of the crowd re this topic. People are social animals. They need to hear others endorse an idea to have confidence in it. I have had people tell me that everything I say about investing makes perfect sense but that they cannot buy in until they hear the “experts” endorse the ideas. It would make a huge difference if there were a place where people could go to find out that lots of knowledgeable folks believe in these ideas and where the people spreading the word about the ideas could trade stories and talk about trends and all this sort of thing. All of the people who do this do it on a one-by-one basis and that makes the job 10 times harder. There is a huge power in community.

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I want to get such a place off the ground. It’s hard to be the first, though. If such a place existed, you could recruit members for a second such place just by going to the first place. But it is difficult to get the ball rolling the first time. I don’t know of any good mailing lists for those who believe that P/E10 matters. There obviously are people who tell clients about it but I do not know of a professional group for those who follow this approach to investing analysis. It drives me crazy! I am mostly just venting here. I don’t at all expect you to solve the problem and I am grateful for the suggestions you have made. But please keep me in mind if at any time now or in the future you hear of things that might help me get such a project off the ground. I think the need is great.

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I am NOT trying to form a bear board. There of course is ITulip and Zero Hedge and things like that. I do not view Shiller as a bear. I view him as someone who has a better understanding of how stock investing works and who used research to inform his investing views. Research is objective (or should be), so I don’t feel that terms like “bull” or “bear should apply.

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Thanks much for sending some great thoughts my way and for giving me an opportunity to form some of my own and to bounce them off of someone knowledgeable about the issues.

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Take care, man.

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Rob

Comments

  1. Rob is a big douche says

    The thing that I believe is most desperately needed is an internet discussion board where those who believe that Rob is just a big douchebag. It amazed me when I looked around for such a place and was not able to find one. There is a board for every topic on the internet. Yet there is nothing that I know of that talks about Rob acting like a douche, even though the guy post like a big douche 7 days a week. This is a BIG probem.

  2. Rob says

    That’s what you need emotionally, Rob Is.

    It’s not even a tiny bit what you need to learn how to invest successfully for the long term.

    That’s my sincere take re this important question, in any event.

    My warmest and best wishes to you and yours.

    Rob the Douchebag (In the Eyes of Those Following Buy-and-Hold “Strategies”)

  3. The Pink Unicorn says

    Rob,

    Why would any one us want to take investment advice from you when we have done MUCH better in comparison. I would have to lose over 3/4ths of my net worth to even be close to your level.

  4. Rob says

    i know how to invest for the long term. should i tell you and others?

    We’re happy to hear your thoughts, Canyon.

    Rob the Happy

  5. Rob says

    Why would any one us want to take investment advice from you

    The three biggest reasons that people give for liking my stuff are:

    1) I put forward a common-sense approach;

    2) I am honest; and

    3) My stuff is all backed by the last 32 years of peer-reviewed academic research.

    Please take care, man.

    Rob the Humble

  6. Rob says

    when we have done MUCH better in comparison.

    If you’re a Buy-and-Holder, you are counting money that is not real, money that is nothing more than cotton-candy nothingness fated soon to be blown away in the wind.

    Pretend Money is the mark of a Get Rich Quick scheme, Pink.

    That sort of thing is not my particular cup of tea.

    I wish you all good things.

    Rob, the Critic of GRQ Investing Strategies

  7. Rob says

    I would have to lose over 3/4ths of my net worth to even be close to your level.

    You’d have to lose at least 3/4ths of your phony arrogance, I think that much would be more than fair to say, Pink.

    My best wishes to you and yours.

    Rob the Non-Arrogant

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