Set forth below is the text of a comment that I recently put to a blog entry at this site:
Was Cooly (and the other Trinity contributors) ‘addicted’ to buy-n-hold when they undertook their original research? Really?
Thank you for asking an intelligent question, Banned.
At the time Cooley did his SWR study, Shiller’s revolutionary finding that valuations affect long-term returns had already been public knowledge for a good number of years. So, yes, the fact that Cooley did not appreciate the need to include a valuation adjustment shows that he was at the bare minimum emotionally resistant to the new model even at that time.
Did Cooley include in his research a discussion of WHY he did not include a valuation adjustment? If he had some intellectual problem with Shiller’s findings, he would have discussed why he did not see a need to design a methodology that reflected those findings. He didn’t even discuss the issue. He was in denial. He was in emotional pain. He was suffering from cognitive dissonance.
All that I am saying is that he was HUMAN.
Just like Bogle. Just like Bernstein. Just like Swedroe. Just like Burns. Just like Pfau. Just like Bennett. Just like Russell. Just like Shiller. Heaven help us all, just like Lindauer and Greaney.
Down here on Planet Earth, it’s just us humans, Banned. We are going to need to find a way to work together and make the best of it. We WISH we would wake up one morning and know it all. Morning after morning after morning, it never happens. You accept that or you end up paying a big price for not accepting it.
Here’s a woman who gets it exactly right:
Carol Osler tells me:
“I certainly have seen the academic profession in action squelching unfashionable ideas and have often been on the wrong side of it. While there’s no magic solution, especially in the short run for individuals with jobs at stake, I sometimes find it calming to see that both philosophy and science are on our side about academics sometimes being profoundly unreasonable. For philosophy, Kuhn was a good start for me. He shows how most pathbreaking scientific ideas are rejected at first, usually for decades. Popper was also helpful. He has very harsh words for scientists who worship math, for example. For science, I am just now reading Jonathan Haist’s book on the psychological basis of morality, The Righteous Mind (2011). He shows, for example, why most ‘scientists’ behave like Kuhn documented, and support the group’s big ideas even in the face of strong evidence to the contrary.”
That’s the story here, Banned. We are living through a revolution in our understanding of how stock investing works. It’s not a bad thing. It is a good thing. We are on the threshold of the greatest economic boom in our history. But to get there we have to survive all the bullets that fly during a revolution. I didn’t ask to be fated to live through a revolution. Neither did you. But here we are. We can make the best of it or we can destroy ourselves.
We will get to the other side of The Big Black Wall or we will all perish in the Second Great Depression. Those are the options available to us. I know which path I prefer.
Getting to the other side of The Big Black Wall means prison sentences for some of us for things that have happened during the bloodiest part of the revolution. That breaks my heart. That makes me want to cry. You sure are not going to be seeing me doing anything to cause those prison sentences to be extended. I want to see the prison sentences shortened. That goal is foremost in my mind every time I push the “Send” button on a post. If I remain true to myself, it always will be from this point forward.
We are the luckiest generation of investors who ever walked the face of Planet Earth because we are the first generation of investors born at a time where we can take advantage of The Shiller Revolution. Some of us have elected to destroy ourselves in a vain effort to keep The History Train from moving forward. That is a foolish idea. I have tried to persuade my friends that it is a mistake to get one’s self tied up in such foolishness.
I am sure.
Rob
#slanegirl says
Rob screeched:
” “Did Cooley Include In His Research a Discussion of WHY He Did Not Include a Valuation Adjustment? If He Had Some Intellectual Problem With Shiller’s Findings, He Would Have Discussed It. He Was in Denial. He Was in Emotional Pain. He Was Suffering From Cognitive Dissonance.” ”
I will answer in one word.
Scope.
Rob says
Um…
Thanks for helping out with that one, Slanegirl.
Rob
Darrell says
Rob Bennett,
Is there anyone in 100% agreement with you? I have read a large number of your comment sections and links, but I can’t find anyone. Have anyone (link please)?
Rob says
Yes, lots of people agree with me, Darrell. Some of the biggest names in the field agree with me. Shiller, obviously. Arnott, obviously. Grantham, obviously.
That said, there are two things that make me different.
One, I explore the implications of Shiller’s “revolutionary” (his word) findings to a far greater extent than anyone else, Shiller included. It seems stupid to me for me or anyone else to spend his or her time exploring a discredited model. Shiller’s model REPLACED Buy-and-Hold. We all should have abandoned Buy-and-Hold when that happened and started spending our time exploring the implications of Valuation-Informed Indexing. That’s all I do. Because that’s all I do, I have been able to go a lot deeper than anyone else.
Two, I focus on forms of evidence that others avoid. Lots of people don’t like to talk about the abusive posting we see so often from Buy-and-Holders. I agree that that stuff is distasteful. But I see that as a reason why we should look at. It tells us that Buy-and-Hold does not inspire confidence in those who follow it. That means that Buy-and-Hold doesn’t work. True research-based strategies inspire confidence. The Buy-and-Holders themselves don’t really believe in Buy-and-Hold on a deep level.
Rob
Anonymous says
Rob,
You remind me of Alex Jones. You would fit right in with him. Maybe you could be the financial writer for his Prison Planet website.
Rob says
Robert Shiller teaches economics at Yale, Anonymous.
The only reason why Shiller’s findings have not gone mainstream is that there is so much money in this field.
When people started saying that smoking may not be good for you, the tobacco companies said they were nuts. It wasn’t that they were nuts. It was that the tobacco companies were greedy.
What the Buy-and-Holders have done is 20 times worse than anything the tobacco companies ever did. The tobacco companies made false claims. They never tried to destroy the people who told the truth. The Buy-and-Holders use death threats and board bannings and tens of thousands of acts of defamation and threats to get academic researchers fired from their jobs to stop people who report on true research-based strategies.
If there were any validity to Buy-and-Hold, there never would have been a single death threat when I reported on the errors in the Old School safe withdrawal rate studies.
I am going to continue posting honestly, Anonymous. I am not going to let your intimidation tactics stop me.
I believe that following the next price crash we are going to see millions of middle-class people showing an interest in hearing HONEST reports on what the peer-reviewed academic research in this field says.
We’ll see.
Rob
Anonymous says
Yes, Rob, you would fit right in with the Prison Planet crowd.
Rob says
I’m not able to say.
I’ve heard the name “Alex Jones” but I am not familiar with his stuff.
If an opportunity to write for this “Prison Planet” thing opens up, I would be happy to help people out to the extent that I am able. I am always happy to share the word about what the research in this field really says.
The suggestion you are making is that there is something “far out” about Valuation-Informed Indexing. There is not. Yale University is about as establishment as it gets. VII is 100 percent mainstream stuff.
The Buy-and-Holders try to make it LOOK like there is something outlandish about what the last 30 years of peer-reviewed research says. I’ll give you that one. That’s a money thing. Buy-and-Hold has caused the biggest transfer of wealth from millions of middle-class people to a small number of Wall Street Con Men ever achieved in history. They couldn’t pull that off without engaging in a lot of very, very nasty tactics.
The Wall Street Con Men are not our friends, Anonymous. If they were, they would not be threatening academic researchers. Those who publish honest academic research ARE our friends, in my assessment. It is the peer-reviewed academic research that shows us who is telling the story straight and who is working a con for their own benefit. I think it would be fair to say after witnessing eleven years of intimidation tactics that the Buy-and-Holders are working a con for their own benefit.
Wade Pfau is right. There is not a single study in the literature supporting Buy-and-Hold. There never has been one and there never will be one. That’s why Jack Bogle had nothing to say when Wade went to the Bogleheads Forum and asked if anyone there knew of even a single study supporting the key Buy-and-Hold claim (that it is not necessary for investors to consider price when setting their stock allocations).
Those who work cons find themselves in prison cells when the cons fall though. The Buy-and-Hold con is BY FAR the biggest con ever pulled off in the history of the United Stated. I think it is fair to say that those who have put forward posts in “defense” of Mel Lindauer and John Greaney will be finding themselves in prison cells following the next price crash. That means you, Anonymous.
I wish you well.
Rob