Set forth below is the text of a comment that I recently posted to the SiteSell.com discussion forum:
I finished reading the research article you shared and your follow up post and…
…what can I say…
Wow. Wow and wow!
What you’ve shared here really seems to offer some important missing pieces of the puzzle for me in terms of building a long term investment strategy that makes PERFECT sense
Thanks again for your kind words, Eli.
The words of yours that I have quoted above do a nice job of summarizing where we stand today AS A SOCIETY re our understanding of how stock investing works, in my assessment. My post caused you to experience an epiphany moment. I have had my own epiphany moments re this stuff over the years and I have been in the room when lots of others have experienced those moments. My life project is to help millions of middle-class people experience those epiphany moments. Please understand that I do not come up with this stuff because I am some sort of investing genius. I am not. I am a journalist and all of the work I do is done with the skills set of a journalist. I look for weak points in the cases that are put forward for the various strategies and, when I find them, I puzzle over them until I figure out how those weak points got there. Then I try to figure out what should be there instead. When I come up with something that seems to make sense, I go to a blog or discussion board and see what other people think. I learn from the reactions I get and I refine the ideas until I have confidence that I am really onto something.
My point here is that I am gratified and humbled by your praise. Please understand that I have been working this for 12 years and that the ideas that I put forward today are the product of the feedback and contributions of THOUSANDS of fine and good and smart and hard-working and generous people. If you knew how much some people have helped me out, you would be amazed. There was one fellow (John Walter Russell) who spent EIGHT YEARS OF HIS LIFE doing research on the Valuation-Informed Indexing concept. He created an entire SiteSell web site exploring these ideas. At one time, he was posting fresh research on almost a daily basis. John died a few years back. I wish that he could hear your words. John was an amazing human being and his friendship was one of the greatest rewards I have seen from all this (I haven’t earned a dime in financial compensation yet although I sure hope to earn a mountain of dimes somewhere down the road a piece). There were lots of others, some big names in the field and some just ordinary investors. We’re all involved in a project aimed at enriching the lives of millions and it is an encouraging event when we see things click for someone like you.
Please understand also that I include my many Buy-and-Hold friends in that statement. The Buy-and-Holders missed out on an important part of the puzzle. But they also advanced our understanding of how stock investing works in many important ways. It’s so important that people understand this. I am a controversial figure in the personal finance blogosphere. There are people who love me to death. And there are people who hate me with a burning passion. The fellow who wrote the Pop Economics blog once told me that I need to figure out a way to tell the truth about stock investing while also permitting the Buy-and-Holders to save face. That is 100 percent true. These ideas have been met with a great deal of resistance and only a small bit of it has been rooted in intellectual skepticism (which is of course justified and appropriate whenever a new idea is put forth). Most of the resistance has been from people who experience emotional pain when they hear that the investing strategies that they have been following for years and that they have recommended to friends have been discredited by 33 years of peer-reviewed research.
I care about these people and I want to present things in a soft way. But the realities are what the realities are. I cannot make stuff up. The Buy-and-Holders got one piece of the puzzle terribly wrong. Long-term timing is price discipline. Price discipline is 100 percent required for any market to work. It’s impossible to exaggerate how far-reaching are Shiller’s findings. His research changed our understanding of how stock investing works in a fundamental way. It’s very positive and liberating and life-affirming stuff. But the move forward greatly threatens the thousands of “experts” (I use scare quotes because there is no such thing as an expert in the field of investing analysis today — our knowledge is at too primitive a level today for anyone to rightfully claim to be an expert) who built their careers promoting Buy-and-Hold. We all need to figure out a way to reach these people and to calm them down and to help them do what deep in their hearts they very much want to do — join in the effort to advance the ball and thereby to help their clients and readers to live better lives.
I have a recommendation if you want to pursue this stuff to the next step, Eli. At the top of every page of my site I have a slider that presents comments that people (both big names and ordinary investors) have offered on my work. There are over 200 of them. If you take the time to go through those comments (the slider advances by itself or you can use the forward button on your keyboard to move at a quicker pace), you will obtain a nice summary of all that I have learned over 12 years of exploration of Shiller’s ideas. I am very proud of those comments. As I noted above, they are the result not only of my own work product but of the contributions of thousands of fine people. Here’s a link to the home page of the blog (the slider is at the top right-hand corner of the page):
Thank again for your interest in the ideas.