Set forth below is the text of a comment that I recently posted to another blog entry at the site:
|Rob, Shiller never called it a Ponzi scheme.|
You’re wrong, Anonymous. You need to read the book. And lots of others need to start talking more frankly about the difference between the model rooted in Fama’s research (Buy-and-Hold) and the model rooted in Shiller’s research (Valuation-Informed Indexing). Both Fama and Shiller were awared the Nobel prize. They teach opposite things. So they can’t possibly both be right.The most important economic and political issue before us today is the question of whether Fama or Shiller is right. We should be discussing that at every board and blog on the internet every day. We all need to know the answer to this one. The only possible way to figure it out is to talk it over.
Say that Bogle truly believes in Buy-and-Hold (I believe he does). He should get up on stage, talk about the arguments that Shiller and I make as to why Buy-and-Hold is a Ponzi scheme and then respond to them. Then all the people listening in get to decide who is right and how to invest their retirement money. That’s how our system works.
Shiller identifies his findings as “revolutionary.” Please tell me one way in which Buy-and-Hold has changed as a result of these revolutionary findings. There is not one. Buy-and-Hold today is the same thing as it was before Shiller published his research or wrote his book. Going by how you Buy-and-Holders act, one would think that nothing has happened. Your claim that Shiller has not identified Buy-and-Hold as a Ponzi scheme lacks credibility because you cannot identify any way that anything that Shiller has said has had any effect on anything. So far as the Buy-and-Holders are concerned, Shiller has never said anything that wasn’t known to the Buy-and-Holders long before Shiller published his research.
I say otherwise. I say that Shiller is right that his findings are “revolutionary.” I say that Shiller’s research has changed everything we know about how stock investing works in a fundamental way. I say that Buy-and-Hold needs to be entirely redone to reflect the last 33 years of peer-reviewed research in this field.
And I say that I have every right to talk about the implications of Shiller’s findings on every discussion board and blog on the internet. The continued promotion of investing strategies that have been entirely discredited by the academic research for three decades now is killing us. We need to move on. There are millions of people whose lives have been ruined by the Buy-and-Hold Crisis and we all need to start pulling together to help them. If we don’t, we will be getting a taste of what it is like to be in their circumstances when the continued promotion of Buy-and-Hold brings on the next price crash.
Do you ever stop to think that maybe you are wrong, Anonymous?