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.