Set forth below is the text of a comment that I recently put to another blog entry at this site:
Have goons gotten to Shiller? Afterall, he has 50% of his money in the market.
Shiller certainly possesses an Inner Goon. We all do. I possess an Inner Goon, Anonymous.
I recorded a RobCast way back in 2009 titled “Shiller Pulls His Punches.” Why do you think he pulls his punches? It is because he is afraid of the negative feedback he knows he will hear if he speaks with 100 percent honestly re what he knows about how stock investing works. I have written numerous columns at the Value Walk site re things Shiller has gotten wrong. I believe that I have as much of a responsibility to call Shiller out on his b.s. as I have to call out Jack Bogle and the other Buy-and-Holders on their nonsense.
And I of course have a responsibility to call Rob Bennett out on HIS nonsense too. It was b.s. for me to fail to speak up about the errors in Greaney’s retirement study prior to the morning of May 13, 2002. It was b.s. for me to apologize for doing so a few days later. It was b.s. for me to continue to think that Buy-and-Hold could work until the night of August 27, 2002, when Greaney threatened to kill my wife and children and 200 of my fellow community members endorsed his post. It was b.s. for me to hold off on saying that the Old School SWR studies are “analytically invalid” until May 2003. It was b.s. for me to try so hard and for so long to avoid calling Lindauer out on his abusive posting practices when I started posting at the Vanguard Diehards board.
I have a Goon within me, Anonymous. I want people to like me. I want to tell people fairy tales and to be praised for it. I want to be rich. I want to be popular.
And Shiller faces the same demons. And everyone else does too.
I don’t think that the fact that Shiller is going with a 50 percent stock allocation today is a sign of goonishness on his part. The research says that the typical investor should be going with an allocation of about 30 percent stocks. Shiller is more knowledgeable than the typical investor. He may be able to pick stocks or segments that are less overvalued than the market as a whole and that therefore will do better than the market as a whole. So I could see a 50 percent stock allocation working out well for Shiller. I would’t advise him to go higher than that. But I wouldn’t call it goonish for him to go with a 50 percent stock allocation today.
I do think it was a bit goonish for Shiller to say that other investors who are less knowledgeable than him could go with a 50 percent stock allocation or even something a bit higher. That’s dangerous advice, in my assessment. Most investors are not as skilled as Shiller is. The numbers don’t support a 50 percent stock allocation today. And Shiller has predicted a crash. I have a very hard time seeing how you can predict a crash and also say that it is okay for ordinary investors to be going with stock allocations in excess of 50 percent.
There are judgment calls that come into play. People can have different opinions without one of them being guilty of goonishness. But I saw that statement about it being okay for ordinary investors to go with stock allocations in excess of 50 percent as being pretty darn far out there. I don’t think I would be doing my job if I didn’t say that I am not able to figure out a way to justify that statement, given what the peer-reviewed academic research of the past 33 years shows us about how stock investing works.
Perhaps Shiller can justify it. Perhaps Shiller sees something that I do not see. If that’s the case, then I would like to see him spell out his reasoning process re that particular statement. I am of course willing to hear his case. But going by what I know today, I feel compelled to say that I see that particular statement as being an irresponsible statement coming from a guy who is a giant in this field and who has done more to help us all understand how stock investing works than anyone else alive. Perhaps that’s why it bothers me so much to hear my hero give voice to those particular words. I expect more of my good friend Bob.
Yes, the Goons have “gotten to” Shiller to a point. But Shiller has also overcome goonishness to an extent that no one else alive on the planet today has managed. Both things are so. We need to take the good with the bad and to praise the good while criticizing the bad in a spirit of charity when we see it appear before us on our computer screens.
I hope that helps a bit, Anonymous.