Set forth below is the text of a comment that I recently posted to another blog entry at this site:
Rob, why not reach out to Shiller and form some kind of partnership with him? I mean, he’s not operating at your level, but maybe you could teach him something.
I understand that you are being sarcastic with this comment, Anonymous. But the point you are making is entirely legitimate.
There are certainly many things that I can teach Shiller, just as there are many things that I can teach Bogle (and of course just as there are many things that Bogle and Shiller have taught me). We humans learn by talking things over amongst ourselves. Shiller is like everybody else. When he fails to take opportunities presented him to talk things over with interested parties, he misses out on learning experiences that would otherwise be available to him.
Shiller has indicated that he believes in short-term timing. He has said that there are “indicators” that he will be looking at to know when to get out of stocks before the price crash that he has predicted for this year takes place. I don’t believe that short-term timing works. If Shiller would engage in a discussion of that question with me, I would put forward my best effort to persuade him not to place so much trust in his “indicators.”
It is of course possible that it would be Shiller who would be persuading me rather than me persuading Shiller. I don’t say that that couldn’t happen. But even that would be a learning experience for him. If I did the best to persuade him that short-term timing doesn’t work and he got the better of the argument, that would increase his confidence in short-term timing a bit. And for good reason.
So Shiller should be putting himself out there and engaging in discussions of all sorts of questions relating to his belief in the Valuation-Informed Indexing model. That would be a win/win/win/win/win.
I would like to trade stories with Shiller about the tactics of you Goons. My sense from a number of things he has said is that he has had many vicious attacks directed at him since he published his revolutionary 1981 findings. I would encourage him to report on those attacks in a new book. Many hold back from talking about the ugly stuff. It is viewed as “unprofessional.” What people are missing is that Shiller and others in the Behavioral Finance School must know about how the human mind deceives itself to do their best work. For 12 years now we have been generating thousands upon thousands of illustrations of the self-deception phenomenon. I could add to Shiller’s knowledge A GREAT DEAL by pointing him to materials in our Post Archives. And he could add to mine by telling me stories about how other academics have attacked him and his ideas through underhanded and nasty means.
This stuff needs to get out. When we fail to publicize the attacks, we create an environment in which we see more of them. I absolutely believe that I could add to Shiller’s understanding of the issues by talking these matters over with him in great depth.
And I could add to his knowledge of the how-to side of things a great deal by talking over with him what I have learned from the five calculators. That is Shiller’s great weakness. It is an amazing reality that he wrote the most important book ever published on investing theory and included only two paragraphs addressing the how-to aspects of the investing experience. That’s the aspect of the question that people care about the most. I believe that Shiller knows a lot more about the how-to aspect than he lets on. But I believe that he would deepen his knowledge considerably by talking things over with other interested parties.
Most importantly of all, I would like to talk over with him the role that Buy-and-Hold played in bringing on the economic crisis. Shiller predicted the crisis in his book. But when the crisis came, he kept it zipped about the role played by the relentless and reckless and ruthless promotion of Buy-and-Hold strategies for decades after the peer-reviewed research in this field showed that there is precisely zero chance that a Buy-and-Hold strategy could ever work for even a single long-term investor. I would very much like to ask him why. It could be that Shiller himself is suffering from cognitive dissonance, at least on this particular question. The best way to find out is to talk things over.
I have reached out to Shiller, Anonymous. I sent him an e-mail a good bit of time back. I’ll send him another one following the next crash (as I will send Bogle another one following the next crash).
Why doesn’t Shiller respond?
Why doesn’t every responsible person alive on Planet Earth respond when they learn about what we have done to ourselves as a society by failing to teach every investor what we have learned about how the stock market works over the past 33 years?
He is ashamed, Anonymous.
He has done more than anyone else but he is still ashamed that he has not done more.
I hope that that changes following the next crash and that Shiller and I will be working together for many years to come after the crisis is brought to an end (just as I hope that my good friend Jack Bogle and I will be working together for many years to come following the end of the crisis).
The full truth here is that your sarcasm holds you back. You should want to see me and Shiller (and me and Bogle) working together. The more we work together, the more we learn and the more you learn. You fear the idea. Because you fear what you would learn. That’s sad.
That’s something that I very much want to change. Not just for you but for millions.
And I believe strongly that my good friend Robert Shiller very much wants to change that too.
I believe that someday we will be working to make it all happen.
I sure hope so.
Please take good care, Goon friend.