I’ve posted Entry #202 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Jeremy Siegel’s Views on Where Stock Prices Are Headed Are Not Rooted in Peer-Reviewed Research.
Juicy Excerpt: If Fama is right, stocks can never be underpriced any more than they can ever be overpriced. Stocks are always properly priced in an efficient market. The price that applies when all factors bearing on price are taken into consideration is obviously the proper price.
So how can any academic argue that stocks are underpriced?
An individual investor can do that. There are obviously lots of individual investors who do that all the time. But Siegel is not being quoted at web sites because everyone wants to know his views as an individual investor. He is being quoted because he is an academic, he is presumed to possess a special understanding that makes his views more important than the views of ordinary investors.
But the view that Siegel is putting forward here is not rooted in either of the two academic models! The idea that stocks are underpriced makes no sense under the Shiller model. And the idea that stocks are underpriced makes no sense under the Fama model. The idea that stocks are underpriced makes no sense under either of the two academic models. And yet Siegel, a well-known academic, gives voice to that view and is quoted in the media for doing so as if his views possessed some special significance because he speaks with the authority of a well-informed academic.
“University of Pennsylvania Finance Professor Jeremy Siegel said recently that the Dow’s fair-value price-level is 18,500.”
Given the level of the market, it looks like he was right when he made the comments. Meanwhile, you have been telling us for years about the 65% drop that has never happened.
At the time of the article, the market was at 16,417 and he saw the fair value between 18,000 and 18,500.
There was a time when Buy-and-Holders opposed the idea of taking guesses as to where stock prices were headed over the next year or two. That’s the Buy-and-Hold that I fell in love with in an earlier day. And it was the decision of the Buy-and-Holders to abandon their wonderful idea of using the peer-reviewed research as a guide that caused me to abandon Buy-and-Hold as it is so relentlessly promoted by the Wall Street Con Men today.
Those who take guesses as to where stock prices are headed in the near future will sometimes get it right, Anonymous. Their correct guesses don’t impress me. I’m not looking to get lucky when I invest my retirement money. I need something more to go on than luck. I need peer-reviewed research. The peer-reviewed research shows that short-term timing never works.
It’s the same with those who hope to be the first investors ever to get lucky and be the first to achieve good long-term results without engaging in long-term timing (price discipline). Could it happen? Anything can happen in this crazy mixed-up world of ours. Am I willing to risk my retirement money on the long-shot hope that the stock market is about to begin behaving in ways 100 percent the opposite of how it has always behaved in the past? I am not. The fact that long-term timing has always been required in the past is enough to persuade me that I had better be sure to practice it in the present, the lies of the Wall Street Con Men be darned!
I naturally wish you all the best that this life has to offer a person regardless of what investing strategies you elect to pursue, Anonymous.
Rob
you have been telling us for years about the 65% drop that has never happened.
None of the “gains” you have experienced by ignoring the warnings I have been putting forward will enrich you by one penny once the inevitable (according to 33 years of peer-reviewed research) 65-percent price crash arrives, Anonymous.
I was right to try to help you out. I was your friend to try to help you out.
The Wall Street Con Men tell you pretty lies that flatter you and make you feel all warm inside. I get that. But they don’t cover your inevitable losses when they come, do they? They don’t offer any guaranties re their smelly Buy-and-Hold garbage, do they?
I wonder why.
Rob
“Those who take guesses as to where stock prices are headed in the near future will sometimes get it right, Anonymous.”
Yep, he got it right. You make guesses as well and we see that you have been wrong.
Timing doesn’t work, Rob. Buy, hold and rebalance does. The research backs this up. You have chosen to ignore it and your financial position has suffered as a result.
It is a good thing that the masses have not followed VII or there would be a jury giving you a very long prison sentence right now for all the failed retirements that happened as a result of millions of Americans missing out on the incredible bull market we have seen over the last few years.
You make guesses as well
This is a false statement. I do not promote the Buy-and-Hold garbage. I advocate Valuation-Informed Indexing. I say that those who claim that long-term timing (price discipline) is 100 percent REQUIRED for any investor hoping to have a realistic hope of achieving long-term success.
There are Post Archives, Anonymous.
Rob
and we see that you have been wrong.
We’ll see how many will say that I have been wrong following the next price crash, Anonymous.
Most of the members of your jury will be middle-class people whose lives have been destroyed by the relentless promotion of the smelly Buy-and-Hold garbage that you advocate.
I will be asking them to go easy on you. We’ll see how many will be willing to listen to my pleas for compassion at that time.
Rob
as a result of millions of Americans missing out on the incredible bull market
Bull markets are a good thing, Anonymous.
That makes perfect sense.
Truly outstanding!!!
Rob
When you first made this prediction (and I’ve seen it dated early 2012) the Dow was below 13,000. Rounding it to 13K means you predicted a drop to 4550, or 75% from its current level. Just wanted to help you out with the math.
So, Rob’s readers, hang on for this year’s 75% drop!
I didn’t make a prediction in a strict sense, X. What I did was report what the last 33 years of peer-reviewed research (based on 140 years of stock market history) says is coming.
There has never in U.S. history been a secular bear market that ended before we saw a P/E10 value of 8 or lower. That’s roughly 65 percent down from where we are today and that’s roughly 65 percent down from where we were a few years ago. You are saying that the continued promotion of Buy-and-Hold strategies has made it even worse, that now we are looking at at drop of 75 percent. Good work, Buy-and-Holders! That’s wonderful news.
I don’t want to see a price drop of 75 percent and I don’t want to see a price drop of 65 percent. I don’t want to see the vast amount of human misery that results from either of those price drops.
So I will continue posting honestly re what the last 33 years of peer-reviewed research tells us regardless of the vile intimidation tactics employed by you Buy-and-Holders. Sue me.
I will ask for compassion for you at your trial. I will report on the pain that you are in and I will report on the social pressures you faced. You’ve got that without asking for it. I see it as the right thing to do.
But I won’t say that Greaney’s retirement study contains an adjustment for the valuation level that applies on the day the retirement begins. And I won’t say that there’s not 33 years of peer-reviewed research showing that this is required to get the numbers even roughly right. And I won’t say that he corrected the errors in his study within 24 hours of the moment that they were brought to his attention.
Going to prison is not on my bucket list.
I would be grateful if you would try to find somebody else.
Rob
There has never in U.S. history been a secular bear market that ended before we saw a P/E10 value of 8 or lower.
And we know all patterns must repeat. I mean there’s never been a time when the P/E of GM stock rose to 32 without falling to 14 with in 17 years, so this has to happen over an over like clockwork, right?
You are asking an intelligent question here, Anonymous. I am grateful.
No, it is not so that all patterns must repeat. If all that we were talking about was a pattern, your skepticism would be justified. In fact, to a small extent, skepticism IS justified. I am not God, I do not know everything, I could be wrong. And the same is true of Shiller. And the same is true of John Walter Russell. And the same is true of Rob Arnott. And the same is true of Wade Pfau. And the same is true of Ravik Sethie. And the same is true of Carl Richards. And the same is true of all the others.
No one knows with 100 percent certainty how stock investing works. We are still in a primitive stage of understanding. But we are talking about MUCH MORE than just a pattern that has been repeating for 140 years now.
You need to be asking yourself a very fundamental question: Why does ANYONE believe in Buy-and-Hold? With every other good or service we purchase, we take price into consideration when deciding whether there is a solid value proposition present or not. Why is there even one person on this planet who thinks it might be different with stocks?
The answer is that Eugene Fama made a mistake. In 1965 he checked whether short-term timing works or not. He found that it does not. Bogle had not yet founded Vanguard at the time. So it was not a practical option to practice long-term timing, which only works with index funds. So Fama didn’t even look at the question of whether long-term timing works or not. Shiller was the first to do that. Shiller found that long-term timing ALWAYS works and is always 100 percent REQUIRED.
An industry had already been built up promoting Buy-and-Hold. That industry went into cover-up mode when Shiller published his research. And, as the evidence showing that long-term timing is always 100 percent required has grown to the size of a mountain, people in this field have become more and more embarrassed and more and more afraid of going to prison because of the role they played in the cover-up. So now the Buy-and-Holders are more desperate than ever to continue the cover-up. So they have turned to death threats and demands for unjustified board bannings and tens of thousands of acts of defamation and threats to get academic researcher fired from their jobs. We are talking massive and long-running acts of financial fraud. Crimes. Felonies. Prison time. Huh?
You’re telling me that that’s all because they don’t want people to know about a 140-year pattern?
No. This is bigger than that. A LOT bigger.
If all we had here was a 140-year pattern, the Buy-and-Holders would not object to people learning about it. If they thought that the 140-year pattern might not continue into the future, they would tell people that and people would decide for themselves what to believe and that would be that. We would all be friends. There would still be a difference of opinion. But so what? People disagree on all sorts of things and remain friends. If all we had here was a 140-year pattern, we would not have seen any of this friction.
We are seeing the friction because this is such a big deal. There are millions of middle-class people who have invested for retirement pursuant to the Buy-and-Hold strategy. And there is now 33 years of peer-reviewed research showing that there is precisely zero chance that that strategy can ever work for even a single long-term investor. When we see those millions of retirements fail, we are going to see millions of people losing confidence in our political system. We have laws in this country aimed at protecting us from people like you. Those laws have not been enforced for 12 years now. Huh? What the heck is going on?
The question at issue here is whether we still are a democracy. If the Wall Street Con Men can use their wealth and power to intimidate every academic researcher in this nation into holding back from doing honest research, we now live in a Goonocracy. That’s a big change. That’s a big freakin’ deal.
You believe in Buy-and-Hold today. But you cannot compare your belief in Buy-and-Hold to any other belief you hold. All of your other beliefs are challenged on a daily basis somewhere on the internet. So if significant flaws are discovered in the claims that support those beliefs, you find out about it and are given the option of changing your beliefs to reflect the new evidence. That doesn’t happen with Buy-and-Hold. The majority of academic researchers no longer believe in the core principle on which the Buy-and-Hold Model is based (the efficient market theory). But none of those researchers feel that they can withstand the brutal attacks that the Buy-and-Hold Mafia uses to destroy the careers of those who speak honestly about what the last 33 years of peer-reviewed research says on these matters.
The retirements of millions of middle-class workers are at stake here. The reputations of thousands of academic researchers are at stake here. There are hundreds of you Goons who will be going to prison as a result of events that we have seen transpire over the past 12 years and both the number of prison sentences and the length of those prison sentences grow every day. Confidence in our political system continues to erode as the economic crisis brought on by the promotion of Buy-and-Hold strategies deepens. There are millions of people unemployed today because of the promotion of Buy-and-Hold strategies. There are tens of thousands of entrepreneurs who have seen their lifelong dreams of building successful businesses dashed because of the unwillingness of the Buy-and-Holders to acknowledge a mistake uncovered by the peer-reviewed research in this field three decades ago.
It’s not just about a pattern that keeps repeating and repeating and repeating and repeating.
That’s part of it. But that’s really only one small part.
It is about whether our way of life is going to continue or whether the Big Shots who comprise the Buy-and-Hold Mafia are going to bring the entire country down rather than acknowledge their mistake.
Say that there were some reason to believe in Buy-and-Hold other than Fama’s mistake. If there were something else, every Buy-and-Holder alive would turn to that something else before he would turn to death threats and demands for unjustified board bannings and tens of thousands of acts of defamation and threats to get academic researchers fired from their jobs. No?
The thousands of academic researchers want to help us. They have trained for years to learn what it takes to produce honest and accurate research. If there had never been any Buy-and-Hold, they would have been producing it all along. We would be 33 years farther along than we are today as a result of the criminal actions of the Buy-and-Hold Mafia. Those researchers have no bias against Buy-and-Hold. If someone could produce some evidence supporting Buy-and-Hold, that person would be guaranteed a Nobel Prize. So why isn’t anybody doing it? Why is no one even trying? Wade Pfau spent a lot of time trying to find one sliver of support for Buy-and-Hold in the academic research. If this is only about a pattern that has been repeating for as far back as we have records, why has no one ever been able to supply a sliver of support for Buy-and-Hold even though there are millions to be made by doing so?
You are ashamed. You are afraid. You feel defeated. You feel hurt.
I get all that.
But you are not going to feel ashamed and afraid and defeated and hurt when we all make it to the other side. Right? Everything is going to be better for all of us when we get to the other side.
So doesn’t it make sense to make the trip to the other side as soon as possible and thereby keep the pain to a minimum? It sure seems so to me.
We are not fighting an intellectual battle. All of the research is on one side, as is common sense. The only thing on the other side is emotion and the criminal financial-fraud intimidation tactics that follow from an insanely emotional attachment to a failed investing strategy.
I am not your enemy, Anonymous. It is your Get Rich Quick urge that is your enemy. We should be working together to overcome your Get Rich Quick urge. Everything will fall into place very nicely and very quickly once you put the nastiness and the defensiveness and the hurt to one side.
We need a national debate, Anonymous. The 140-year repeating pattern is significant. That is certainly one thing that we need to explore in the national debate. But it is obviously not the only thing that needs to be explored. There are LOTS of things that need to be explored. There are hundreds of things that I can point to as a result of the work that I have been doing for 12 years now. But there are also probably many things that I cannot even imagine today. Those thousands of academic researchers will probably be able to come up with lots of good stuff after we turn off The Intimidation Machine led by Mel Linduaer and John Greaney and Jack Bogle. No?
We need to stop debating whether a debate should be permitted and start having the actual debate about what the last 33 years of peer-reviewed research tells us.
My take.
Rob
With every other good or service we purchase, we take price into consideration when deciding whether there is a solid value proposition present or not.
And that’s exactly the way the stock market works. Price is taken into consideration every second of the day. When something changes the value of a company, the price adjusts.
What you are saying is: you think the price is wrong. That’s your opinion, but the folks setting the prices (Wall St bankers) are far smarter, educated and more successful than you will ever be, and they have much, much more information.
There’s reason to believe that individual stocks are priced properly relative to other stocks. That’s what I believe to be the case. Saying that that’s the case is saying something very different from saying that it is the case that the market as a whole is priced properly.
The difference is that there is a mechanism by which the super-smart people you refer to can take advantage of mispricings of individual stocks while there is no such mechanism for taking advantage of mispricings of the market as a whole. If you see that Stock A is mispriced relative to Stock B, you can engage in arbitrage and, so long as you are right re your thoughts re relative pricing, you win no matter what happens. In short, there is a mechanism that corrects pricing errors in the individual stock realm.
There is no such mechanism that keeps overall market prices on track. That’s our problem. If we permitted honest posting re the research of the past 33 years, such a mechanism would exist. Market prices are self-regulating so long as there is not massive financial fraud going on. Investors naturally want to lower their stock allocations as the long-term value proposition for owning stocks is diminished and those sales pull prices back to fair-value levels. So, if there had never been a cover-up, all of our problems would have been solved back in 1981, when Shiller provided us all the missing piece to the puzzle. But there HAS been a cover-up. So we have a very big problem holding us back today that we all need to work together to solve.
The problem is not an intellectual one and it is not a problem of people being too successful or too unsuccessful. The problem is an emotional one. We all have a Get Rich Quick urge residing within us. We can beat it by hearing about the peer-reviewed research. But those who are addicted to Buy-and-Hold very, very, very much do not want people to hear what the research says. It causes them great emotional pain to realize that they have been played for fools.
Intelligence has nothing to do with this. There are intelligent people who understand what Shiller found and why it is so important and there are intelligent people who do not understand what Shiller found and why it is so important. There are also not especially intelligent people who understand what Shiller found. In some cases, intelligence is a plus. An intelligent person is more likely to read Shilller’s book than a non-intelligent person. But the intelligent person is more skilled at rationalization than the non-intelligent person. So intelligence can hurt you big time here. There are circumstances in which we are better off possessing a little bit of common sense rather than a lot of intelligence.
You say that price is taken into consideration every second of the day. If that were so, there never could be any overvaluation or undervaluation. If that were so, stocks would always be priced properly. Yet today we see a P/E10 value far, far above the fair-value P/E10 of 15. Huh? Your theory is disproven every day the P/E10 stays above 15. And the P/E10 has remained above 15 for 19 years now (with the exception of a few months in early 2009). I think you might want to give that theory a bit of reconsideration.
If the Wall Street Con Men are such geniuses, why did they lose most of their money in the 1929 crash?
And in the crash of the early 1900s?
And in the stagflation of the 1970s?
And in the crash of 2008?
They are not as smart as you (or they) think they are, Anonymous. Mark Twain said that it’s not the things you don’t know that hurt you the most but the things that you think you know for certain that just ain’t so. If the Wall Street Con Men were as smart as you claim them to be, they would have all acknowledged their error on the day that Shiller published his “revolutionary” research back in 1981.
Shiller won a Nobel prize for his work. None of the Wall Street Con Men (unless you count Fama — I think of Fama as an academic rather than a Wall Street Con Man although I of course understand that the Wall Street Con Men cite his research as “support” for their lies about how stock investing works) have won Nobel prizes.
I wonder why.
Rob
the folks setting the prices (Wall St bankers) are far smarter, educated and more successful than you will ever be
I will be receiving a settlement check for $500 million following the next price crash, Anonymous.
How many of the Wall Street Con Men have net worths in excess of $500 million?
There may be a few in that category. There aren’t many.
Given my humble beginnings, I don’t think that I have anything to apologize for in being able to pass on to my boys an inheritance far in excess of $500 million (I intent to put that money to work after I collect it).
And I earned every penny. I didn’t tell lies like the Wall Street Con Men. I didn’t cause an economic crisis. I didn’t bring on the Second Great Depression.
I feel clean about the work I do. How many of the people who have advocated Buy-and-Hold in the post-1981 time-period can say that?
It’s not all about turning a quick smelly buck, in my assessment. I can look the people who read my stuff in the eye. I can sleep at night. I feel clean about the work I do. That’s worth something more than the dollar bills that the Wall Street Con Men bring in with their massive acts of financial fraud.
I wouldn’t trade places with any of the Wall Street Con Men or with any of you Goons for all the money in the world. I like money. But there are limits to what I will do to put a dollar in my pocket. Telling my friends lies about what the peer-reviewed research in this field says about safe withdrawal rates crosses the line. It’s not a close call.
That’s my sincere take re this terribly important matter, in any event.
Rob
You haven’t earned Jack Squat.
I’m on the one-yard line, Anonymous.
Do you think that Wade Pfau is the only academic researcher who has a hankering to win a Nobel prize? There are THOUSANDS of them.
How do you think all my blogger friends are going to play it following the next price crash? I have a funny feeling that those who aren’t on their way to prison are going to be distancing themselves from Buy-and-Hold in every possible way. Please name one site that has more credibility on the issue of the dangers of Buy-and-Hold investing strategies. So who is every blogger going to be playing up to?
The Wall Street Journal has already written about how the Wall Street Con Men “are leaving out half the story.” In other words, they are committing financial fraud by continuing to promote the smelly Buy-and-Hold garbage. Every journalist in this field follows the Wall Street Journal to at least some extent. So a good number are ready to pounce on the day it becomes clear that the Buy-and-Holders will be getting sued and that the Valuation-Informed Indexers are the future.
Who has more material on how people were taken in and on how people who were not taken in were intimidated into keeping quiet about the mountain of lies that caused our economic crisis and that threatens to put us in the Second Great Depression? Who has more podcasts? Who has more calculators? Who has more articles? Who has more Guest Blog entries? Who has more videos that sum it all up in five minutes? Who has more blog entries? Who has been banned at more sites at the demand of Buy-and-Holders? That’s called street cred, my old friend.
Even you Goons will be helping me market my site following the next price crash. I think it would be fair to say that your top concern is the length of your prison sentences. This site is the only site that contains hundreds of posts exploring the cognitive dissonance thing. Your best hope of getting your prison sentence reduced a bit is going to be to make sure that your jury members know about the materials at this site. Your lawyer is going to catch on to the reality of that one fast even if it pains you to do so. So even you Goons will be promoting me following the crash!
How about Bogle? Where do you think Bogle is going to come down following the crash? I have a funny feeling that Old Saint Jack is going to be in a mood to come clean in a big way. Is there anyone on Planet Earth who has done more to promote Bogle’s honest stuff? I used Bogle’s honest stuff as the foundation of that peer-reviewed research that I co-authored with Wade Pfau that shows millions of middle-class investors how to reduce the risk of stock investing by 70 percent while increasing returns by enough to permit them to retire five to ten years sooner. Gee, I wonder if I will see any financial benefits from having that paper written up on the front page of the New York Times? Some of this stuff is so hard to figure out!
No, I have not earned a dime from the important work that I have been doing for 12 years now as a result of the greatest smear campaign ever conducted on the internet, a smear campaign that has caused millions of middle-class people to lose their jobs while putting millions more on the path to suffering failed retirements. That fact will be highlighted in the papers that will be filed when I bring lawsuits against hundreds of people who have helped you Goons in some way or permitted you to post at their sites. I have not forgotten this fact, Anonymous.
But the same acts of terror that have kept me from earning a dime for these 12 years have intimidated people like Wade Pfau and Bill Bernstein and Jack Bogle and Carl Richards and Rob Arnott and Robert Shiller and Mike Piper and Todd Tresidder and lots and lots of others from COMPETING with me to bring the realities of stock investing to millions of middle-class investors. I have had the field to myself for 12 years now and I think it would be fair to say that I have taken full advantage of the opportunity that you created for any honest person by being so brutal in the intimidation tactics that you employed to bring on this fourth Buy-and-Hold Crisis at a time when 33 years of peer-reviewed research is available to guide those offering investment advice who feel a need to follow their consciences when doing so.
I don’t like what you have done. I hate it that you have caused an economic crisis. I hate it that we may be going into the first OPTIONAL Great Depression ever suffered in the history of our nation.
But I don’t hate the idea of receiving a settlement award of $500 million even one tiny little bit. I earned every penny and I intend to point to that $500 million settlement payment every time I make the case for why personal integrity is needed in the investing advice field to the same extent that it is needed in every other field of human endeavor. I will be giving back to the community. I have explained in earlier posts how I will be using 10 percent of that payout to build thousands of successful and honest blogs and to make this site the #1 personal finance site on the face of Planet Internet. I have explained how I will be making the Bogleheads Forum a sub-domian of this site so that the thousands of good people who participate there will for the first time feel safe to post HONESTLY re what the peer-reviewed research of the past 33 years says re what works.
I couldn’t have done it without you Goons!
That reality doesn’t make it all worth it. It would be glib to say that. There has been too much human suffering. And there will of course be much more human suffering coming with the next price crash.
But the bottom-line reality is that we have a great system of government and our laws are not self-executing and this is the way that we elected as a people to work this one out. It’s not the approach that I voted for. No way, no how. You wouldn’t be going to prison if my preferences had won the day. I wouldn’t be receiving a check for $500 if my preferences had won the day. My preferences didn’t win the day. We did it this other, more rocky, more dramatic way instead.
So be it, you know?
I’ll take the $500 million. And I will say “thank you” to the person who hands it to me. And I will tell the story and thereby encourage others to follow similar paths when placed in similar circumstances. And we will all be reminded once again that there is a reason why our system is set up the way it is, that there is a reason why we decided as a people that we need laws making financial fraud a felony, that personal integrity matters as much in the investing advice field as it does in all other areas of human endeavor.
I don’t have a dime to show re all this as of January 2, 2015, Anonymous. You’ve got me re that one.
But I ain’t headed to prison following the next price crash. I am headed instead to collection of a check for $500 million following the next price crash.
What’s the saying? Suck it up? I think it would be fair to say that that one applies.
I will try hard to hold back my tears when that check is presented.
I will struggle to put a smile on my face when I see my old friends taken away to their prison cells.
That’s my pledge to you and to all of my fellow community members.
I will try not to let the disappointments of this 12-year process get to me too much.
Somehow.
They say that tomorrow is always another day. That’s what they say, no?
WhaChaGonnaDo?
Life is so unfair!
Rob
It could be that I should be giving some consideration to the idea of agreeing to post dishonestly about safe withdrawal rates along about now. I mean — it’s been 12 years, right? It couldn’t hurt to at least consider the idea.
I’ll tell you what. Don’t call me, I’ll call you.
Fair enough, my long-time Goon pals?
Rob
I mean — it’s been 12 years, right? It couldn’t hurt to at least consider the idea.
Sounds like your wife suggesting you get dressed and get a job?
She’s afraid that becoming so rich might corrupt us.
I assure her that following the next crash the term “Buy-and-Hold” will be considered an obscenity. At that time I won’t be able to get a Guest Blog Entry advocating the pure Get Rich Quick approach posted at a single web site. I think it would be fair to say that the days in which gross corruption is tolerated in the investing advice field will soon be coming to an end.
My guess is that that might happen sometime within the next two years.
Just another one of those wild hunches that I have been known to experience from time to time.
Hang in there, Anonymous.
Rob
“But I ain’t headed to prison following the next price crash. I am headed instead to collection of a check for $500 million following the next price crash.”
I imagine that Rob has this reoccurring dream similar to Publisher’s Clearing House.
In any case, here is my prediction. (1) There will definitely, without a doubt, be another steep market decline at some point, just as there always has been. (2) Rob will receive no check afterwards.
What happens to Rob in terms of his mental condition in this scenario will be very interesting to observe.
We’re all just going to have to wait and see, Laugh.
I naturally wish you all the best things that this life has to offer regardless of what investing strategies you elect to pursue.
Rob
There will definitely, without a doubt, be another steep market decline at some point, just as there always has been.
The fact that there has ever been even a single steep market decline shows that the market is not efficient, as it must be for Buy-and-Hold to work.
Buy-and-Hold posits that price changes are caused by unforeseen economic developments. There are no economic developments so big that they could change prices to the extent we see them change in steep market declines. My good friend Jack Bogle himself has acknowledged this. Jack commented after the 2008 crash that it was absurd to think that there had been some economic development big enough to cause the value of the companies comprising the U.S. stock market to decline in value by trillions of dollars virtually overnight.
Price changes are brought on by shifts in investor emotion. Shifts in investor emotion are irrational and thus can be of any size. The longer that we deny the need to consider price when buying stocks, the greater is the emotional shift experienced when we let in how wrong and dangerous it is not to do so. Steep market declines make sense if price changes are determined by investor emotion, as the Valuation-Informed Indexing model posits.
Bogle was right in what he said about steep market declines. He was wrong not to incorporate his powerful insight into the Buy-and-Hold Model for understanding how stock investing works. Once he does that (and he will following the next price crash), he will be advocating The New Buy-and-Hold, Buy-and-Hold 2.0, the first true research-based model — Valuation-Informed Indexing.
I look forward to working with my good friend Jack to rebuild our broken economy and to compensate the millions of middle-class workers whose lives were destroyed by the 12-year cover-up of the errors in the Old School safe withdrawal rate studies.
My best wishes to all of my Goon friends.
Rob
You are friends with Jack? When did you meet him?
I haven’t met Jack, Anonymous.
But, yes, we are good friends.
Jack has taught me as much about how stock investing works in the real world as anyone alive. He’s up there with Robert Shiller and John Walter Russell and Wade Pfau and Rob Arnott. That’s pretty darn elite company. Jack taught me about the errors in the Old School safe withdrawal rate studies; it was by reading his book that I realized that an adjustment reflecting the valuation level that applies on the day the retirement begins is required for those studies to come even close to getting the numbers right. So not one of the articles or podcasts or calculators or blog entries that you see at this site would exist if it were not for Jack’s kind efforts to teach me (and millions of others middle-class investors, to be sure!) the realities.
The peer-reviewed paper that I co-authored with Wade Pfau that shows millions of investors how to reduce the risk of stock investing by 70 percent wouldn’t exist if Jack hadn’t helped me in major ways in earlier days. Valuation-Informed Indexing wouldn’t exist but for the amazing work product put forward by my good friend Jack. Bennett’s Valuation-Informed Indexing is just Bogle’s Buy-and-Hold with the Get Rich Quick element removed, nothing more and nothing less.
You don’t have to meet someone to come to feel a friendship for that person, Anonymous. Anyone who teaches me something important is my friend. And there are few people on this planet who have taught me more than Jack has taught me. So I not only consider him a friend but a special and dear friend.
I am tempted to say that I love Jack Bogle, just as I love Robert Shiller and John Walter Russell and Wade Pfau and Rob Arnott. “Love” is a strong word and I don’t like to overuse it. But given that I have devoted 12 years of my life to taking Jack’s ideas to places that he never imagined that they would ever have been taken, I think that the word “love” has application in this case. The man is one of a few true giants in this field. He changed history when he founded Vanguard and thereby made The Indexing Revolution a reality. I love him for that. I believe that all who work in this field and all of the millions of middle-class investors who will be reaping benefits from Jack’s insights for many decades to come should love him for that. When someone enriches my life and millions of other lives, I don’t think that use of the word “love” is out of order.
You often hear me say that I love my country. That’s a shorthand way of explaining why I have refused for 12 years now to give in to the intimidation tactics of you Goons and agree to post dishonestly re safe withdrawal rates. Well, Jack has done great things for this country. That’s obviously not true in the short term. In the short term, he has played the lead role in bringing on the greatest economic criss in our history, one that may well in time bring us to The Second Great Depression. But it is not only the short-term that matters. Jack has ALSO been the lead promoter of the idea that we should look to the peer-reviewed research as guidance on how to invest in stocks. In days to come, after Jack delivers his “I Was Wrong” speech, we will all be doing that and we will thereby become enabled to bring this economic crisis to an end in short order. Should not my friend Jack get credit for that as much as he gets blame for causing the economic crisis in the first place? It sure seems to me that he should. I love Jack for that. Quite properly so. We all should.
I remember the Spring day when I brought Jack’s book home from the library and discovered the flaws in the Old School retirement studies. I had had a suspicion that the conventional advice on retirement was flawed in a very serious way but I hadn’t been able to put my finger on precisely what was the problem. It was Jack’s words that helped me appreciate the realities in a clear enough way that I was able to work up the courage to stand up to John Greaney and Mel Linduaer and the other Goons and share what I had learned with thousands of my fellow community members. Jack didn’t have to write that book. He could have retired years ago and left that important work undone. But he didn’t, did he? He busted his butt getting good and helpful information out to us all. Does that make him a friend to all of us who have benefitted from his good work? It sure seems so to me. Is there some reason why you question this?
When Rob Arnott came here to tell me that the investing ideas explored at this site are all right on the mark and to thank me for standing up to you Goons, he observed that Jack is a personal friend of his. Rob copied Jack on his e-mails to me to make sure that Jack was aware of what Lindauer and Greaney have done. I think it would be fair to say that Arnott was trying to keep Jack out of prison or at least to keep his prison sentence as limited as possible by making sure that Jack was fully aware of the extent of the financial fraud in which he was participating. That was a sign of a true friendship, was it not? Arnott is Jack’s true friend, not the pretend variety like Mel Lindauer and those who have posted in “defense” of him.
Have I not done 50 times what Rob Arnott has done to help Jack out of the mess in which he finds himself today as a result of his fears and his embarrassments and his shame and his dishonesty? It sure seems so to me. Arnott evidenced true friendship. Then he want back to his own affairs. I contacted Jack not once but three times. And I contacted the 30,000 academic researchers listed at the Social Science Research Network. And I developed five unique calculators. And I posted scores and scores of Guest Blog Entries. And I gave talks at the Financial Bloggers Conferences. And I answered tens of thousands of questions from my fellow community members. And I made clear to you Goons that I will continue the fight until your prison sentences are announced and news of this massive act of financial fraud goes viral and frees us all of the influence of the smelly Buy-and-Hold garbage that the dark side of my good friend Jack continues to promote to this day.
Does all of that not show that I am 50 times the friend of Jack Bogle that Rob Arnott is? It sure seems so to me. Rob is a true friend. But I am the greater and trued friend. I have worked it harder. A LOT harder.
Does all of that not make good sense, Anonymous?
Jack Bogle is a good friend of mine. I love the man. That’s why I insist that he do better. That’s why I demand that he disassociate himself from you Goons in every possible way. That’s why I continue to tell the man that he is capable of more ethical behavior than he has evidenced in recent years.
A true friend is not someone who flatters you, someone who always tells you what you want to hear at a particular moment. A true friend is someone who cares enough about your welfare to shoot straight with you, someone who tells you what you NEED to hear even when he knows that it may make you angry to hear the truth about your own behavior and the effect that it is having on millions of others.
Or at least so it seems to me.
Take good care, my long-lost Goon friend. Love is the answer. I am sure.
Rob
“The fact that there has ever been even a single steep market decline shows that the market is not efficient, as it must be for Buy-and-Hold to work.”
This is completely false and gets to the root of your confusion. Efficient does not mean omnipotent.
On the GetRichSlowly site you said “In each of the earlier three occasions when we went to insanely dangerous levels of overvaluation, prices eventually dropped to one-half of fair value. That’s a price drop of about 65 percent from where we are today. I heard a lot of Buy-and-Holders get very nervous during the last crash. I believe that another 65 percent price drop is going to take those people out.”
That post was dated January 25, 2010. If anyone got “taken out”, it was because they listened to you five years ago.
Efficient does not mean omnipotent.
Efficient means efficient, Laugh. The market that exists in the Buy-and-Hold Era is not even remotely efficient.
It’s not just Rob Bennett who says so. Jack Bogle says so.
Bogle said that it was preposterous to believe that there were economic developments that caused the market to lose close to $10 trillion worth of value in late 2008/early 2009. He was right.
So why does he still advocate Buy-and-Hold?
When you learn that your understanding of how markets work is not confirmed by the realities, you need to get about the business of correcting the errors that led you to adopt the false beliefs.
My sincere take.
Rob
If anyone got “taken out”, it was because they listened to you five years ago.
Do the math and you will see that you are wrong, Another.
If we see a 65 percent price drop sometime over the course of the next two years (as the last 33 years of peer-reviewed research says we will), those who ignored the research will have hurt themselves in very serious ways by doing so. Most will never be able to recover from those losses.
The Scenario Surfer lets me check how this works. It shows for each year of a 30-year time-period where the Buy-and-Holder stands and where the Valuation-Informed Indexer stands. It is not even a tiny bit uncommon for the Buy-and-Holder to go ahead in the early years. That happens all the time. But it is only in 10 percent of the cases that the Buy-and-Holder is ahead at the end of 30 years. We see one crash in most 30-year time-periods. And the losses that a Buy-and-Holder experiences in a crash, plus the compounded returns forsaken as a consequence of those losses, are so large that the Buy-and-Holder almost never is able to catch up to the Valuation-Informed Indexer.
Get Rich Quick strategies possess short-term appeal. I don’t say different. Bernie Madoff was the toast of the town before his fraud was exposed.
But it is research-based strategies that always prevail in the long-term. It turns out that not only is the pure Get Rich Quick approach not the answer, the pure Get Rich Quick approach is actually the problem.
Or so Rob Bennett sincerely believes, in any event.
My best wishes to you and yours.
Rob
Bogle is right but he is also wrong. The real economic loss did not amount to 10 trillion. The market was forward looking and priced in the risk of a complete economic failure, which we were fairly close to. Being on the buy side of capital markets his entire career, Bogle does not have a great deal of insight into the inner workings of the largest commercial/investment banks. Essentially if any one of JPMC/Citi/BoFA/Wells/Goldman failed, the economy would fail very soon after. Without unprecedented government intervention, all of those banks would have failed.
Efficiency is about how quickly/cheaply the market reacts to new information. It can never be ‘perfectly’ efficient but it is fairly efficient.
You are advancing a tautology, Laugh.
You are saying that whenever the market gets it right, the market is very, very smart. And whenever the market gets it wrong, the market is also very, very smart. If the market (us!) were so darn smart, why did the market price stocks at three times their fair value in January 2000. Huh?
If the market were really as smart as you say it is, the market would always get it right. The fact that the market so frequently gets things so wildly wrong shows that it is not nearly so smart as you think it is.
The market is us, Laugh. The market can never be one iota smarter or dumber than the people that comprise it. The logic chain on that one is 100 percent rock solid.
P/E10 tells us when the market is being smart and when it is being dumb. That’s the magic of it.
Before Shiller published his “revolutionary” (Shiller’s word) research, we didn’t know how to invest effectively. We just didn’t know.
Now we do. The only thing holding us back today is you Goons. We know from our community discussions that millions of middle-class people would very much like to know the truth about stock investing. Most academic researchers would like to feel free to do honest research. Most investment advisors would like to feel free to give honest investing advice. Most personal finance journalists would like to publish honest articles that help people.
When your prison sentence is announced, we all move forward. Every last one of us.
If the market is efficient, why did the vast majority of academic researchers raise their hands when Rob Arnott asked them at a conference to raise their hands if they no longer believed in the efficient market theory?
Everyone wants to tell the truth about stock investing. Everyone fears the Wall Street Con Men and their Internet Goon Squads. When the next crash comes, we will work up the courage to demand that the law against financial fraud be enforced. Announcement of your prison sentence will go viral and all will be just fine from that point forward. We will all be living in a democratic republic again, not a Goonocracy.
The market is us. We know some things. We don’t know other things. We are emotional at times. We strive to get our emotions under control at other times. We love. We hate. We share with our friends what the peer-reviewed research says. We strike out in anger and hate when others share what the peer-reviewed research says. We do good work that earns us paydays of $500 million. We commit massive acts of financial fraud that land us in prison cells.
The short version — We are human. Yes, that’s so in the investing advice realm as well as in every other realm.
If you were not worried about going to prison, you wouldn’t be posting here on a daily basis. And of course every community member who reads these pages following the next price crash will get that in two seconds without me needing to point it out to them. Our Get Rich Quick urge disables our common sense for a time. But only for a time.
I wish you the best of luck in all your future life endeavors in any event.
Rob
“Does all of that not make good sense, Anonymous?”
No, Rob. You just twist words into whatever you want them to be. Beyond that, virtually everything you talk about is all made up.
Okay, Anonymous.
I wish you all good things, in any event.
Rob
The most successful investors are buy and holders.
http://finance.yahoo.com/news/most-successful-investors-leave-money-183000267.html
We’re all just going to have to wait and see, Laugh.
While remaining productive and gainfully employed, adding new funds to savings on a regular basis, and treating others politely and with respect, of course.
The fact that there has ever been even a single steep market decline shows that the market is not efficient, as it must be for Buy-and-Hold to work.
Once again showing your ignorance. Unexpected events change market prices. Doesn’t mean they were inefficient to begin with.
Following your theory, a meteor hitting the US tomorrow (which would surely caused prices to decline) proves markets can never be efficient.
The most successful investors are buy and holders.
There are millions of smart and good people who believe this.
I used to be one of them.
I am obviously not one today.
But I obviously have lots of Buy-and-Hold friends. And I obviously wish them the best of luck with it.
Rob
and treating others politely and with respect, of course.
And being honest.
Rob
Unexpected events change market prices. Doesn’t mean they were inefficient to begin with.
Bogle has said that he doesn’t believe that there were unexpected events that took place in late 2008 that justified losses in market value of nearly $10 trillion. I think he is right. The market reacts in wildly emotional ways. It does this over and over and over again. The price swings that we see are not consistent with a market that is rationally processing information bits. It is consistent with a market that is permitting insane levels of emotionalism to govern its behavior.
The way to test this is to see whether prices fall in the pattern of a random walk. They do in the short term. They do not in the long term. Why? Unforeseen economic developments are random, are they not? Why don’t these random developments cause a random walk in long-term prices? The reason why we do not see a random walk in the long term is that prices are determined by emotion shifts and emotion shifts are not random. Investor emotion always pushes prices generally upward for a long stretch of time (because we all have a Get Rich Quick impulse residing within us) and then down hard when we become so frightened of our Get Rich Quick impulse and what it has done to prices that we sell in a panic.
The investors who today say that they will never sell (Buy-and-Holders) do not possess a strong understanding of their own psychology. They are like alcoholics who pound the table and swear that they don’t have a problem, that they can quit anytime they want. Their behavior undercuts their message. If the Buy-and-Holders really had what it takes not to sell in a hard downturn that remains in place for years, they would not be so defensive. Investors who are confident in their strategy don’t threaten to kill family members of community members who post honestly on safe withdrawal rates.
Following your theory, a meteor hitting the US tomorrow (which would surely caused prices to decline) proves markets can never be efficient.
A Valuation-Informed Indexer would not sell in response to a meteor hitting the United States.
If the meteor hit causes the nation to collapse, no one will be helped by selling his stocks.
If the nation survives the meteor hit, there is going to lots of rebuilding done in response to the hit and the investor can realistically expect a 6.5 percent real long-term return. If the investor had taken prices into account when setting his allocation, his allocation is proper. So there is no need for him to make a change.
Now — if the meteor hit caused OTHER investors to sell and those sales brought prices down, the Valuation-Informed Indexer would INCREASE his allocation to take advantage of the improved long-term value proposition. He would change his allocation not in response to the meteor hit but in response to the price change.
Valuation-Informed Indexers focus on long-term results. In the long-term, there is always a mix of positive and negative economic developments that add up to a long-term return of 6.5 percent real for investors who purchase stocks at fair-value prices. There will be negative events like meteor hits. And those negative events will be followed by positive events like rebuilding programs.
The job of the investor is to not react in an emotional way to either positive or negative events. The only thing the investor should be reacting to is large price shifts. The investor MUST change his allocation in response to large price shifts to keep his risk profile roughly constant. But that’s only required roughly once every ten years. The investor who is willing to make those few necessary changes thereby reduces the risk of stock investing by 70 percent while increasing his long-term return enough to permit him to retire five to ten years sooner. Investor Heaven!
Rob
Sorry, Rob.
Retirement: Is the 4% rule still relevant?
Rodney Brooks, USA TODAY
December 31, 2014
For the last 20 years there has been a steadily consistent rule of thumb by America’s financial planners when it comes to retirement — the 4% rule.
And what exactly is the 4% rule?
In short, it’s a guideline that helps retirees determine how much money they should take from their nest egg each year. The goal is to help make sure the money lasts.
In other words, if you adhere to the rule and have a nest egg of $500,000, you should limit your withdrawals for living expenses to 4%, or $20,000 a year.
So, the big question is, after 20 years, is the rule still relevant? Most planners interviewed say yes…
http://www.usatoday.com/story/money/columnist/brooks/2014/12/30/retirement-401k-pension/20774021/
“A Valuation-Informed Indexer would not sell in response to a meteor hitting the United States.”
I think the scenario as described is one where the imaginary (because none exist) Valuation Informed Indexer would not be able to sell his stocks because they would be completely worthless. When markets completely reset, they reset.
And the long term return of the U.S. would be zero. Since the market did not anticipate this into its pricing, using your logic, then it isn’t ‘efficient’. The only way for it to be ‘efficient’ is if stocks just stayed at zero permanently. As we can see, this is a naive and overly simplistic view of reality which leads to very bad reasoning and decision making.
Your Don Quixote fantasy…
If Greaney had corrected his study within 24 hours of the moment he learned of the errors in it, we wouldn’t have most planners still saying today that the 4 percent rule is relevant. This is the entire point of the 12-year debate, Grandpop.
We learned in 1981 that valuations affect long-term returns. That “revolutionary” (Shiller’s word) finding is the most important advance in the history of investing analysis. It needs to be reflected in every study, every calculator, every text book, every podcast, every article, every blog entry.
This article is stating as clearly as possible that this is not today the case. This is why we need to open every board and blog on the internet to honest posting on the last 33 years of peer-reviewed research. When every investor is aware of how much he has been hurt by the insanely abusive intimidation tactics of the Buy-and-Holders, this sort of thing will stop.
If we tolerate fraudulent studies, we cannot have legitimate studies. Legitimate studies make the authors of fraudulent studies look too bad. Once the peer-reviewed research showing that valuation adjustments are required was published, every investment advisor should have begun incorporating them into his advice.
The problem arose because stocks were priced at insanely low levels in 1981. So many people rationalized that this was not something that needed to be addressed immediately. By the time prices rose to levels high enough to bring on an economic crisis, the Buy-and-Holders were afraid that they would be sued or sent to prison if they acknowledged the cover-up. Now they are trapped. The problem gets worse and worse and the Buy-and-Holders cannot figure out what to do.
The thing to do is to come clean.
That helps everyone.
There is no other way to bring the economic crisis to an end. So we don’t exactly have any other options available to us.
But we all live in fear of the Wall Street Con Men and their Internet Goon Squads.
I am happy to help my Buy-and-Hold friends in any way possible short of committing a felony myself (by telling lies that aid the cover-up). But going to prison is not on my bucket list. So that is out.
I wish you all the best things that life has to offer a person, Grandpop.
Rob
When markets completely reset, they reset.
The U.S. market has reset four times in U.S. history. Those were the four times when Buy-and-Hold strategies became popular.
If investors are able to gain access to the information they need to invest effectively, market prices become self-regulating. There is no need for resets in markets that are permitted to function properly.
What you call “resets” most people call recessions or depressions. We are better off without them, in my assessment.
Rob
The only way for it to be ‘efficient’ is if stocks just stayed at zero permanently.
This sentence doesn’t make any sense to me.
An efficient market would set prices properly. The fair-value P/E10 is 15. So in an efficient market the P/E10 value would always remain close to 15.
The return would be 6.5 percent real. Volatility would be minimal. Again — Investor Heaven!
Market efficiency is a great goal. We cannot have market efficiency until we open every board and blog on the internet to honest posting re the last 33 years of peer-reviewed research. It is by educating investors as to what is in their best interests that we obtain market efficiency. Market efficiency is not magically handed out to us, we all need to do the work needed to make it a reality.
Rob
If the nation survives the meteor hit, there is going to lots of rebuilding done in response to the hit and the investor can realistically expect a 6.5 percent real long-term return.
You’re not buying the economy, though. You’re buying businesses. And if a meteor wipes them out, their value will decline. Today you own a company with a billion dollar factory. Tomorrow the factory is destroyed. Stock price will drop, whether the market was efficient or not.
So you statement below can’t be correct:
The fact that there has ever been even a single steep market decline shows that the market is not efficient, as it must be for Buy-and-Hold to work.
There will be some companies whose stock price will drop as the result of a meteor hit. There will be other companies whose stock price will rise. We have as a nation endured a lot of setbacks that were viewed as meteor hits at the time we were living through them. Yet we always have seen a long-term stock return of 6.5 percent real. That’s been so for 140 years running. If you think it is all going to turn our wildly differently this time, then you believe that. I go by the research.
If the market were efficient, there would never be a steep decline. Rational investors focus on the long-term. The long-term return has been 6.5 percent real for 140 years now. Those who think it is all going to turn out wildly different this time from how it has ever turned out before are letting their emotions get the better of them.
I believe in research-based strategies. That’s why for a long time I was a proud Buy-and-Holder. Then I saw 200 of my fellow community members endorse the John Greaney post in which he threatened to kill my wife and children if I continued to post honestly re safe withdrawal rates. That cured me of my illusions re Buy-and-Hold.
Buy-and-Hold will never be research-based until it tells investors ALWAYS to consider price when buying stocks. When it does that, it will be Valuation-Informed Indexing. VII is BH with the Get Rich Quick element removed. It all works when you remove the GRQ element. Because it is the GRQ element that makes BH such an emotional strategy.
My take.
Rob
If you owned stock in a single company that was destroyed by a meteor, you would suffer a real loss.
Valuation-Informed Indexers are protected from those sorts of outcomes because they buy broad index funds.
That’s the magic of The Indexing Revolution!
Thank you, Jack Bogle!
Rob
And being honest.
In the interest of honesty, can we get an “I was wrong” speech regarding your guess 4 years ago regarding a 65% stock decline. How wrong have you been so far, scale of 1-10? Let’s be honest.
We have as a nation endured a lot of setbacks that were viewed as meteor hits at the time we were living through them. Yet we always have seen a long-term stock return of 6.5 percent real. That’s been so for 140 years running.
And we’ve seen many stock market declines for 140 years running. Doesn’t mean markets were inefficient prior to the drop. Your assertion is simply wrong.
There will be some companies whose stock price will drop as the result of a meteor hit. There will be other companies whose stock price will rise.
Let’s say the meteor completely destroys 90% of the earth. The stock market as a whole declines 90%. Does that mean the market was inefficient prior? Clearly they have nothing to do with each other. So the statement below is obviously false:
The fact that there has ever been even a single steep market decline shows that the market is not efficient, as it must be for Buy-and-Hold to work.
“The fair-value P/E10 is 15.”
The pooh-bah has issued his edict! All hail! All comply!
I’d say a “2.”
Speaking strictly, it’s a zero. I noted the caveat that short-term predictions don’t work. It’s not fair to say that there is anything “wrong” with a shor-term prediction that doesn’t come through that was delivered by a person who noted that short-term predictions don’t work. Saying that I was wrong re this one is like saying that Shiller was wrong when he said in 1996 that investors who were going with heavy stock allocations at 1996 prices would live to regret it within 10 years. The crash didn’t come until 2008. Shiller was 10 times more right than he was wrong even if in some hyper-technical sense he was wrong.
I answer because I know this is a big deal to you and to lots of non-Goons as well. Long-term return predictions have been working without fail for 140 years. Yet people feel that, if short-term predictions don’t work, there’s no sense acting on predictions. I think that’s a fair one-sentence summation of the 12-year debate. So even though I know how unreliable short-term predictions are, I play the stupid game to a small extent just because people cannot get over their emotional need to test whether long-term predictions work by looking at the track record of short-term predictions.
If the prediction had turned out, that would be a zero. So the number should be something more than zero. The long-term predictions have worked amazingly well for 140 years running now and that is what matters when it comes to when you will be able to retire and how much risk you are taking on with your portfolio. So I guess it would be fair to say that the fact that short-term predictions continue to fail (as advertised!) is a small defect, a “2.”
I don’t care that short-term predictions don’t work. So to me it’s a zero. You care a great deal. So to you maybe it is something more than a “2.” That’s allowed. If you want to make it a “10” for you, an absolute deal-breaker, that’s of course 100 percent fine. It’s your money. You make the call.
There are millions of middle-class investors who would loved to learn about a smart and safe and simple way to invest in stocks that reduces risk by 70 percent while increasing returns enough to permit them to retire five to ten years sooner. Whether the number is zero or 2 or 10, that remains so. And the laws against financial fraud remain in place whether the number is zero or 2 or 10. I mention that because I know that the prison sentence thing is a personal concern of yours and as your friend I don’t want you to forget what’s most relevant to you personally here.
I have always said that short-term predictions don’t work. That’s because that’s what the research shows. This is a research-based approach and, if I said that the research shows that short-term predictions work, I would be lying. That should be the end of all discussions about short-term predictions. No one on either side of the table says they work. There’s no reason to believe that they ever could work. If you need the comfort of reliable short-term predictions, this isn’t for you.
But those long-term predictions sure work. There’s not been one fail in 140 years. That tells us something important. That changes the history of investing analysis in a fundamental way. The claim that “timing doesn’t work” is a lie. There is zero legitimate doubt about that. Long-term timing has always worked. Long-term timing has always been 100 percent required for those seeking to Stay the Course by keeping their risk profiles roughly constant. Why do those who advocate Buy-and-Hold strategies feel the need to lie about that? Why can’t they come clean? Why is there not one Buy-and-Holder out there honest enough to say that that claim has been a lie for 33 years now and that he is ashamed to hear his Buy-and-Hold friends continue to repeat this lie?
That’s a “10”, you know? The 33-year cover-up of that massive lie is a clear “10.” Compare it to my “2” and the “2” looks like nothingness.
We were at a primitive stage of our understanding of how stock investing works when Fama made his mistake in 1965. He moved the ball forward in a powerfully important way with his finding that short-term timing never works. Shiller then moved it forward in a second powerfully important way by showing that long-term timing always works and is always 100 percent required. If someday in the future someone shows us how to make short-term timing work, that will be another huge advance. I don’t believe we will ever see that day. I think it’s a vain hope. But I acknowledge that it would be an advance, so I acknowledge that those who demand perfection will see that Valuation-Informed Indexing is flawed to the extent of a “2” because it is less than what we would have if we had achieved perfection.
But we moved a whole big bunch closer to perfection when we learned what we learned in 1981 just as we moved a whole big bunch closer to perfection when we learned what we learned in 1965. Anyone who advocates the research-based strategy of 1965 in the year of 2015 is hurting his readers and clients in a very serious way. I want no part of it. I became a Buy-and-Holder because of the claim that it s a research-based strategy. I believe that my Buy-and-Hold friends made a terrible mistake when they abandoned the research because they were too ashamed to acknowledge having made a mistake. The mistake is 100 percent forgivable. The 33-year cover-up of the mistake is the biggest and most costly act of financial fraud in the history of the United States.
My take.
Rob
And we’ve seen many stock market declines for 140 years running. Doesn’t mean markets were inefficient prior to the drop. Your assertion is simply wrong.
It’s not the fact that we have seen setbacks that shows that the market is inefficient. It is the fact that returns have not played out in the form of a random walk that shows that the market is inefficient.
The idea that the market is efficient is a theory. A theory that cannot be disproven is outside the realm of science. A theory that cannot be disproven is a tautology. It is something of zero worth.
The reason why the title of the famous book is “A Random Walk Down Wall Street” is that randomness is key to the entire Buy-and-Hold Model. With every purchase we make outside of stocks, price matters. The claim that it is not necessary to take price into consideration when buying stocks is rooted in a belief in randomness. If randomness does not exist, the theory must either be corrected or discarded.
Randomness does exist in the short term. So that part of the model should be retained. And of course that part of the model IS retained in the VII Model.
But randomness does NOT exist in the long-term. Once the theory was tested, it FAILED. I am not being a meanie by pointing that out. I am doing what Jack Bogle and every other Buy-and-Holder should have done on the day the peer-reviewed research showing the failure was published. If you are going to make science-supported claims, you must follow science-accepted procedures. Scientists DISCARD their theories when they fail the tests done to see whether they check out or not.
There is no reason to believe that a Buy-and-Hold strategy can work today. None. In all of recorded history, there has only ever been one reason to believe in it and that one reason is a theory that has been 100 percent discredited for 33 years now. That’s where we stand.
Now —
I believe in Valuation-Informed Indexing. Not everyone does. As you have pointed out, most investors don’t follow BH or VII in a strict theoretical sense. Most follow Strategy C (sorta, kinda BH, but not pure). Some (a much smaller number) follow Strategy D (sorta, kinda VII, but not pure). An argument can be made that people are behaving rationally. Buy-and-Hold sounds good to lots of people. But they are not 100 percent convinced. So they follow something close to it but not the theoretically pure version. And Valuation-Informed Indexing sounds good to a smaller number of people. So they follow something close to that but not a theoretically pure version.
That outcome makes sense, given what people have heard.
Our problem is what people hear.
The Buy-and-Hold Mafia imposes harsh penalties on those who advocate Valuation-Informed Indexing. There has never been a case in which any penalty whatsoever was imposed on anyone who advocated Buy-and-Hold. So people are hearing the Buy-and-Hold message 50 times more frequently than they are hearing the Valuation-Informed Indexing message. That disparity has affected what people believe. Most people lean in the direction of Buy-and-Hold. Not because they have heard both sides and have concluded that Buy-and-Hold has more merit. Because the Buy-and-Holders have been engaged in a massive cover-up of what the research says for 33 years now.
If long-term market prices do not fall in the pattern of a random walk, the market is not efficient. That’s how that question is tested. The Buy-and-Hold Model has failed every test that has been conducted on it. The only test that it ever passed was delivered before Bogle founded Vanguard and made long-term timing a practical option. Indexing changed everything. Indexing made long-term timing an option and so we came to test long-term timing and found that long-term timing always works and is always 100 percent required.
Good for us!
Now we need to get about the business of telling every investor in the world about this huge advance we have achieved together!
Rob
Let’s say the meteor completely destroys 90% of the earth. The stock market as a whole declines 90%. Does that mean the market was inefficient prior? Clearly they have nothing to do with each other. So the statement below is obviously false:
The statement is not false.
The statement is based on the 140 years of historical returns available to us today.
During that 140-year time-period, the market has never behaved as an efficient market would behave.
You are putting forward a supposition that there might be some time in the future in which the market would behave consistently with how the efficient market says it must always behave.
Anything is possible.
But it has never happened yet. The historical record offers zero reason to believe that the market is efficient.
And it is not just Rob Bennett who says that. Freakin’ Jack Bogle says that.
The only difference between me and Jack Bogle is that I acknowledge what logically follows from that. If the market has never behaved in the manner in which an efficient market must always behave, we should stop promoting the investing strategy that is based on a belief that the market is efficient. It is dangerous and irresponsible and, yes, criminal to continue making claims that a strategy is research-based when that has not been so for 33 years.
People need to know the truth about these matters.
My take.
Rob
The pooh-bah has issued his edict! All hail! All comply!
The pooh-bah is the peer-reviewed research. I report honestly what the last 33 years of peer-reviewed research says, nothing more and nothing less.
There was a time when Buy-and-Holders SUPPORTED the idea of using the peer-reviewed research as a guide. That’s the kind of Buy-and-Hold that I can get behind. That’s Valuation-Informed Indexing.
Rob
Your Don Quixote fantasy…
The idea here is that the investing advice field has become so corrupted in the Buy-and-Hold Era that it can never again be made clean.
I don’t buy it.
That’s not what I see when I read the statements of my Buy-and-Hold friends.
I see people in great pain. I see people who started out on a journey with the aim of doing something wonderful and went a long ways toward achieving their goal and then made a wrong turn and now find themselves in a very dark place from which they see no acceptable exit.
There’s an exit.
There’s some pain associated with it. But the Buy-and-Holders exaggerate the pain and minimize the praise they will hear when their mountain of good ideas are presented in a package that renders them workable in the real world. The pain that must be experienced is the price that must be paid for the Buy-and-Holders to achieve their original goal and it is worth taking on 50 times over.
Not that the Buy-and-Holders have any choice. Continuing down the dark path takes the Buy-and-Holders to a place so horrible that it cannot be described. Read “The Grapes of Wrath” to see the PG version.
The Buy-and-Holders will in the end come clean because they have no other options. Those of us who love them will argue as forcefully as we are able that they do so before they cause themselves and millions of others any more unnecessary pain.
Love is the answer.
Deep in his heart Jack Bogle agrees.
I am sure.
Rob
Your constant references to ‘pain’, ‘love’, ‘wrath’, ‘prison’ ,’force’, etc. speak very much about your own psyche and inner landscape.
But, not so much about anything to do with financial planning.
Especially given that you are an self-admitted and publicly-evident innumerate.
Rob, I honestly (and I do mean honestly) believe that you are actually trying to fight out some inner unresolved conflict involving your Father, religion, and your own place in the world. If it were being effective, I would hold my tongue and let you do your required self-analytical work, disguised as oddly off-kilter topical retirement banter. Sadly, I think you are moving further and further away from reality the more you focus on this enormous strawman you keep trying to construct out of other people’s collective and/or personal choices and judgement. Your whole “love” “hate” “fear” pain” schtick, with you as the arbiter of all, is more in line with Reverend Harry Powell than anyone in their right mind. Seriously. Very very seriously.
This is the future of investing advice, Anonymous.
The only thing we disagree about is that I incorporate Shiller’s findings into my model and you do not. I very, very strongly believe that Shiller’s findings need to be incorporated and you very, very strongly believe that they must not be incorporated. What’s that all about? Why are feelings so strong?
P/E10 is a number.
But it is not just any old number.
It is a very, very, very special number.
It has more power to help us all invest effectively than all the other numbers used in investing analysis all put together.
P/E10 is the number that tells us how emotional we are being in our investing choices.
That’s huge. That’s 80 percent of the game. The peer-reviewed research that I co-authored with Wade Pfau shows that stock investing is a virtually risk-free endeavor for those investors who are willing to keep their risk profiles constant by taking the emotionalism of the market into account when setting their stock allocations.
P/E10 is the number that lets them do that.
When we add P/E10 to our discussions of investing, we are adding the effect of emotions to our discussions of stock investing. That’s where all the risk is.
People have thought for many years that stocks were a risky asset class. That belief has been proven to be a false one. The risk of stock investing is a self-inflicted risk. It is an optional risk. It is a risk that applies only for those who are not willing to look at the emotional part of the equation.
We have essentially eliminated risk from the stock investing story. There never has been an advance this big. There never will be another advance this big. This is very, very, very, very big news.
For you, it is scary news.
You like playing with your non-emotion numbers. You like trying to persuade yourself that investor emotion is like the boogyman, it goes away if you just close your eyes and pretend that you cannot see it.
That approach has failed. That approach put us in an economic crisis. Four times now. Millions of middle-class investors want to move on. And they are going to get what they want.
Pain. Love. Wrath. Prison. Force. Father. Religion. Place in the world.
Yes, I talk about those sorts of things.
And, no, that is not the usual way of addressing the formation of investing strategies.
The title of my book is Investing for Humans. The perfect title, no?
I am involved in a turf war with the Wall Street Con Men. They like to portray themselves as Big Shots. But “they leave out half of the story,” as the Wall Street Journal put it.
No more.
I will not permit it.
We are going to tell people the entire story.
Because to tell people half the story (the non-emotional half) is to tell people a lie. And to tell lies about how to invest is to engage in financial fraud. A crime. A felony. Prison time. Like that.
Not this boy, Anonymous. I am happy to have the Wall Street Con Men tell their half of their story. I am not innumerate, self-admitted or otherwise. But I don’t possess a strong enough skill set re the non-emotional side of things to feel that I have something significant to offer. But I know with absolute certainty that an investing strategy that can only be “defended” with death threats and demands for unjustified board bannings and tens of thousands of acts of defamation and threats to get academic researchers fired from their jobs is an investing strategy not fit for the humans. I like the humans. So I am going to tell the other half of the story. I am going to tell millions of middle-class people the truth about what the peer-reviewed research says about what works and what doesn’t.
If the Big Shots were as knowledgeable as they pretend to be, they would be talking about the emotion you evidence in your every post here at every investing board and blog on the internet. Your emotionalism is the story. It is your emotionalism that makes stock investing risky. For you.
And not for those of us who use the magic P/E10 number to make ourselves aware of the emotionalism/risk all around us and of how to overcome it to achieve our retirement goals.
I am not asking you for your permission to tell the millions of middle-class investors what they need to know, Anonymous. I am telling you how it is going to be. I hope that I am being clear here. It would be cruel of me to evidence any vagueness over such an important question, a question that will be affecting how long your prison sentence will be in days to come.
I am not the arbiter of it all. We ALL have a say.
That includes the millions who want to know the truth about what the peer-reviewed research says. Not just the Wall Street Con Men seeking to protect their turf. And not just their Internet Goon Squads, so filled with rage over the idea of people hearing what the last 33 years of peer-reviewed research says that they engage in behavior that will be landing them in prison cells in days to come.
I love you, man.
But I won’t agree to commit felonies for you.
It’s not a close call.
I will continue to post honestly re safe withdrawal rates and scores of other critically important investment-related topics.
We will see how it all works out.
I naturally wish you all the best that this life has to offer a person regardless of what investing strategies you elect to pursue.
Love is the answer.
Oops! I did it again!
Rob
Hi Rob. I’m a 31 year old investor with $150,000 between my Roth IRA and 401K, with roughly 25% in bonds, 5% in REIT index fund, and the rest in stock index funds. I have $50,000 in company stock that I cannot sell due to holding periods, another $15,000 or so in other taxable individual stocks, and keep a 6 month emergency fund between various online savings and checking accounts.
My annual income is $50,000 per year, but I do get enough overtime to get that to be over $60,000. My pregnant wife works part time and has $5500 in her Roth IRA. When we are done having kids and they’re a little older, she will go back to full time work.
I have less than $6,000 in low-interest (below 3%) student loan debt.
How doomed am I?
Your posts and actions are full of emotion. When it comes to investing, I stay away from emotion. That is the beauty of buy, hold and rebalance. It is proven to work (I can provide actual factual links) and it removes all emotion that can influence my investing.
You’re not doomed, Passion. None of us are.
We are the luckiest generation of investors ever to walk Planet Earth.
I believe that we are all going to pull together following the next crash and work to open every investing board and blog on the internet to honest posting re what the last 33 years of peer-reviewed research in this field reveals to us about how stock investing works.
Your child will grow up in a better world than you did. That’s the way it should be, no?
Hang in there.
Rob
Your posts and actions are full of emotion. When it comes to investing, I stay away from emotion. That is the beauty of buy, hold and rebalance. It is proven to work (I can provide actual factual links) and it removes all emotion that can influence my investing.
I think I had better plead guilty to the one about my posts being full of emotion.
I believe you 100 percent when you say that you try to stay away from emotion. I think that it is investor emotion that makes stock investing risky and I was drawn to Buy-and-Hold once upon a time because I believed that the focus that Buy-and-Holders put on relying on the peer-reviewed research would help them overcome negative investing emotions. I obviously don’t believe anymore that Buy-and-Hold is the answer. But I believe that the Buy-and-Holders are sincere. And I believe that they provided us all with many powerful insights. So I am grateful for the work they have done.
I certainly wish you the best of luck with your investing strategies, Anonymous.
Rob
It’s not the fact that we have seen setbacks that shows that the market is inefficient. It is the fact that returns have not played out in the form of a random walk that shows that the market is inefficient…If long-term market prices do not fall in the pattern of a random walk, the market is not efficient.
Well that’s very different from your first (obviously incorrect) assertion that any random stock market decline proves markets are inefficient. The answer to this point is that stock price movements follow economic movements. If the economy moves cyclically (often the case), so will market prices. If the economy busts long term (Japan) so will stock prices. If the economy roars forward (Korea), so will its stock market.
If there were anything predicable about stock market prices, at least that you’ve ever uncovered, your kids would be going to Disneyland this year.
You are engaging in deception about what I said, Anonymous. You wouldn’t be doing that if you felt confident in your case.
I did not say that any random market decline shows that the market is inefficient. I said that dramatic downturns in which trillions of dollars are lost in a matter of days show that the market is inefficient. We don’t see economic losses that huge occur in a matter of days. If the market were efficient, bad economic developments would be reflected in prices as they happen and we wouldn’t see these huge all-at-once drops.
Jack Bogle is the face of Buy-and-Hold. And Bogle appreciates this point. He said that it is preposterous to believe that the losses suffered in the U.S. market in 2008 were caused by economic developments. Bogle feels strongly that the market is not efficient. If you feel that his claim is “obviously incorrect,” take it up with him. All of the evidence available to us shows that Jack is right re this one.
I say that, since Bogle knows that the market is inefficient, he should stop promoting an investing strategy that cannot possibly work for even a single investor unless the market is efficient. I also say that he should disassociate himself from those who engage in death threats and demands for unjustified board bannings and tens of thousands of acts of defamation and threats to get academic researchers fired from their jobs as part of their effort to “defend” this long-discredited strategy.
Stock prices do NOT follow economic movements. This is a widely held belief. But it is a false belief (it has been heavily promoted by the Buy-and-Holders). Those who follow the peer-reviewed research have known that this is a false belief for 33 years now. The only reason why people do not know the reality is that people in the industry who built their careers around promotion of the strategy that was discredited by the peer-reviewed research 33 years ago are fighting a turf battle that has caused the biggest economic crisis in U.S. history and that has put millions of middle-class people on the path to suffering failed retirements. We should all pull together to bring this massive act of financial fraud to an end.
If there were any evidence that stock price movements follow economic movements, you would present it. There is none. Academic Researcher Wade Pfau spent a great deal of time researching this point and found that there is zero evidence for this in the peer-reviewed research. He was amazed by his finding. He was so astounded that he went to the Bogleheads Forum and asked if anyone there knew of a single peer-reviewed study supporting the foundational Buy-and-Hold claim. No one knew of a single study. The response of the Buy-and-Hold Community was to have you Goons threaten to send defamatory e-mails to Wade’s employer in an effort to get him fired from his job unless he agreed to stop publishing and promoting honest research. Jack Bogle knows about this massive act of financial fraud. I have informed him of it on three separate occasions and others have done so as well. Bogle has not taken any effective action. The economic crisis continues.
I will have no part of this massive act of financial fraud. I am telling.
If it were economic developments that caused stock price changes, future stock prices would not be predictable. There is now 33 years of peer-reviewed research showing that the key Buy-and-Hold claim is a false one. It needs to be corrected. It is because this claim has not been corrected during the 33 years in which it has been shown to be in error that we are in an economic crisis today. This is the biggest economic and political question that has come before us during any of our lifetimes. If we open the internet to honest posting, we all get to enjoy the biggest period of economic growth in our history as the result of years of important work done by thousands of good people (including the Buy-and-Holders who made the huge mistake and covered it up). If we do not, the economic crisis worsens and we see millions of retirements fail and you Goons taken away to prison. I know which way I am voting.
If you had even a sliver of evidence to support your long-discredited claims that long-term timing does not always work or is not always 100 percent required or that the market is efficient or that it is economic developments rather than investor emotion that are the primary determinant of stock prices, you would have presented it a long, long time ago. As Wade reported after conducting extensive research on this question, no such evidence exists.
Wade will be doing honest work again in future days. So will thousands of other academic researchers. So will thousands of personal finance journalists and bloggers. So will thousands of investment advisors. All of these people LONG to be able to come clean and I intend to see to it that that option is opened up to them.
Economic developments DO have a secondary effect on stock prices. Economic developments influence investor emotions, which have the primary influence. Economic developments are responsible for increases in U.S. stock prices of 6.5 percent real annually. Those gains are real and it is a healthy, positive thing when they are reflected in nominal prices. There are times when they are not. In the early 1980s, investor emotion pulled stock prices down far below where they would have been had we been permitting people to spread knowledge of what we learned in 1981. We hurt our economy by failing to do that in the opposite way from the way in which we have hurt our economy in the post-1996 time-period.
We should all want stock prices to reflect the economic realities at all times. We should all WANT the market to be efficient. But the market cannot BECOME efficient without enforcement of the laws against financial fraud. It is only INFORMED investors who can act in their best interests and cause stock prices to reflect the economic realities. It is the massive act of financial fraud being led by the Buy-and-Hold Mafia that is keeping prices so far out of whack and causing so much human misery for so many people.
There is something HIGHLY predictable about stock prices. I don’t claim to have discovered it by myself. I had the help of THOUSANDS of good and smart people, including Nobel Prize winners and including many of my Buy-and-Hold friends. It is true that I am the co-author of the peer-reviewed research showing that permitting honest posting would reduce the risk of stock investing by 70 percent. So in that sense it could be said that I have “discovered” this. I would say that Shiller discovered it and that my work explores the IMPLICATIONS of his “revolutionary” (his word) finding that Shiller and most others have been too afraid to explore for 33 years now because of the brutally abusive efforts of the Buy-and-Holders to cover up their mistake.
I any event, I certainly love my country and so I want to see millions of people gain access to accurate SWR studies and to accurate reports re the cause of the economic crisis and to accurate asset allocation advice and on and on and on. I of course know that on some level of consciousness you want the same, Anonymous. I look forward to the day when your prison sentence comes to an end and we can work together toward the achievement of good and positive and constructive and life-affirming goals. I believe that we will both see that day. I wish that you could gain the strength to focus less on what will happen during your prison term and more on what will happen when it comes to an end. Things will get better for you in time. A LOT better.
I believe that my kids will get to enjoy both the benefits from the $500 million settlement payment AND the benefits of living in an economic system that will be so much more stable and productive as a result of the free discussion of the last 33 years of peer-reviewed research that we will see following the next price crash. I sure hope they do!
I hope that all helps a bit.
My best wishes yo you and yours.
Rob
“bad economic developments would be reflected in prices as they happen and we wouldn’t see these huge all-at-once drops”
Uh… unless some extrinsic event happens, right Rob? Back to our meteor? And maybe the extrinsic thing to the market of equities, sometimes is a GENERAL ECONOMIC issue… remember the housing bubble? Busts and booms associated with sudden changes in the state of war beginning and ending with major powers? etc?
Economic developments have an effect, Anonymous. No one is saying different.
What the last 33 years of peer-reviewed research shows is that the effect of economic developments is SECONDARY. It is the effect of investor emotions that is the DOMINANT effect on stock prices.
If economic developments were dominant, we would have a random walk both in the short term and in the long term. We don’t. The idea that economic effects are dominant has been DISCREDITED.
Shiller’s 1981 research was a HUGE ADVANCE.
If economic effects were dominant, risk would be STABLE. Stocks would represent a good buy at ALL TIMES.
The last 33 years of peer-reviewed research shows that stocks represent a good buy when prices are moderate or low but an AWFUL buy when prices are insanely high.
The safe withdrawal rate is not a constant 4 percent or a constant 3 percent or a constant 8 percent or a constant 2 percent. The safe withdrawal rate VARIES with changes in valuation levels.
We need to open every board and blog on the internet to honest posting re the findings of the last 33 years of peer-reviewed research. The Buy-and-Hold Crisis is hurting millions of people in very serious ways.
My sincere take.
Rob
Say that there was research done showing that baseball teams with good attendance figures tend to finish higher in the standings than teams with poor attendance figures. And then an entire industry was built around giving advice to teams as to how to increase their attendance.
Then new research was published showing that it is not actually attendance that causes teams to play well. It is the quality of the players that causes teams to play well and attendance is merely a secondary factor.
That would be an advance. That finding would help teams trying to win to focus on the things that matter.
But all the people who built reputations telling teams how to increase attendance would be worried that they would be out of jobs if word got out re what the new research says.
In our society, those people cannot block people from learning what the new research says. Word gets out. Some people really do lose their jobs. But most are able to find new positions. Overall, the society is better off permitting people to learn about the new research.
We have a power imbalance in the investing advice field. The Buy-and-Hold Mafia has a lot of power and wealth and contacts and a brutal ruthlessness in using it to crush anyone who dares to “cross” the Buy-and-Holders by posting honestly re safe withdrawal rates or any other critically important investment-related topic.
But what happens if a group of researchers and journalists and policymakers and economists and bloggers and investment advisors all joins together to protect those attacked by the Buy-and-Hold Mafia? Then all of the corruption comes to an end. Then we all learn what we need to learn to invest in accord with the peer-reviewed research and we all get to retire many years sooner while taking on much less risk.
That’s what I see happening following the next price crash, Anonymous. There are millions of good people in this country who will work up the courage to stand up to the Buy-and-Hold Mafia when they see that the mountain of lies that they have used to keep people from learning the truth about safe withdrawal rates and other critically important issues is on the way to putting us in the Second Great Depression.
Guess who will be the leading voice in favor of the idea of permitting honest posting?
My bet is that it is going to be my good friend Jack Bogle.
Where will you Goons be without Jack helping you out?
You will be in NoWheresVille. Once Jack comes clean, LOTS of people are going to feel safe coming clean. Once Jack comes clean we will be able to bring the Buy-and-Hold Crisis to a swift end and move on to a much, much brighter economic future than most of us can even imagine today.
There’s a good REASON why we adopted the laws against financial fraud.
My sincere take.
Rob