Set forth below is the text of a comment recently put to another blog entry at this site:
The same thing that happened after the last two price crashes.
That probably is what you really do believe. I can give you that much.
I do not believe that.
If you believe that the price of stocks matters (there is now 32 years of peer-reviewed academic research showing this to be so), then the worst possible thing that could happen is that large numbers of investors could come to believe that price doesn’t matter. That’s what has happened. We did not have Shiller’s research when the Buy-and-Hold idea was developed. And the people who promoted Buy-and-Hold were too proud to acknowledge their mistake when it was uncovered. So we pushed stock prices to levels never seen before in U.S. history.
Every time we have seen a P/E10 of 25, we have seen an economic crisis. The one time we touched 33, we saw a Great Depression. This time we hit 44. We are looking at a Great Depression of twice the length and twice the depth of the one that began in 1929.
It’s going to be written up in all the papers!
The reason why everyone is not working to avert it today is that most think as you do, that stock price changes just sort of happen and that you deal with them the best you can and move on. Shiller’s research (confirmed by 32 years of follow-up research) shows that that is not how it works. It is the Buy-and-Hold “idea” (that investors don’t need to consider price when setting their allocations) that causes price crashes and economic crises. We would all know this today given the 32 years of peer-reviewed academic research showing it to be so but for the brutal and criminal acts employed by the Buy-and-Hold Mafia to keep millions of middle-class investors from learning what the research really says.
You “believe” what you say above in one sense. You have convinced yourself that there is a chance that you will not go to prison for your many acts of financial fraud (a felony). I can give you that much.
But you lack confidence in this belief. You show this with every post you put forward. If you had confidence, you would not favor the use of death threats and you would not favor the use of board bannings and you would not favor the use of tens of thousands of acts of defamation and you would not favor the use of threats to get academic researchers fired from their jobs. You are worried. Actions speak louder than words.
I wish you well. That’s about all that I can think of to say to someone in your position. If there ever comes a time when we can work together to get your prison sentence shortened a bit, I hope you will contact me. I would be happy to do what I can do.
Take care, man.
Rob the Confident (Or So He Tells Himself!)