Set forth below is the text of a comment that I recently posted to another blog entry at this site:
Rob,
If I give you a link that backs up Shiller saying not to use CAPE to time the market, will you agree to apologize and admit you were wrong and also admit you are wrong on buy-hold-rebalance? I would also expect you to apologize to those you have called goons on this issue.
I am willing to back up my comment or do you want to just apologize now.
The statement would have to be “don’t use CAPE to engage in long-term timing” for me to do any of those things.
Fama showed in 1965 that short-term timing doesn’t work. The same 140 years of historical return data that shows that all investors who want to have a realistic chance of long-term investing success MUST, MUST, MUST practice long-term timing (price discipline) also shows that short-term timing doesn’t work.
The Big Buy-and-Hold Lie is the suggestion that the finding that short-term timing doesn’t work somehow suggests that long-term timing (price discipline) either might not work in some circumstances or might not be 100 percent required in some circumstances. I am not trying to cover up that lie. I am trying to EXPOSE that lie. I want hundreds of millions of middle-class people to know how their financial futures and our economy have been destroyed by the reckless and relentless and ruthless promotion of that lie by the Wall Street Con Men and their Internet Goon Squads.
It is my thought that we should permit ethical people to work in this field. I see it as a win/win/win/win/win.
Do you see?
Rob
Show us where Shiller says it will work for long term timing.
Show us where Shiller says it will work for long term timing.
That’s his entire life’s work, Anonymous.
The subtitle of his book describes his research findings as “revolutionary.” What do you think it is that makes his work so revolutionary? It is that people once believed that timing doesn’t work or isn’t 100 percent required and Shiller showed that long-term timing always works and is always 100 percent required. Shiller was awarded a Nobel prize for his work.
You want to see Shiller walk to the front of a big room and say in 100 percent plain language: “Long-term timing always works and is always 100 percent required and there is zero chance that a strategy not employing long-term timing would ever work for a single long-term investor.” I would like to see that too. That’s the way I say it. It would obviously be a plus for me if Shiller would say it in precisely that fashion.
He is afraid.
That’s the only thing holding him back.
Read Wade Pfau’s e-mails from the 16 months in which he was working with me. He went from slightly skeptical to 100 percent convinced and jumping around the room like a boy in a candy store when he realized that the research we were writing together was going to win a Nobel prize. Then, when you Goons threatened to destroy his career and Bogle signaled that he would use his considerable power and wealth to help you out, we saw a big change in Wade’s demeanor. All of a sudden he was backing down on everything he said before and asking for understanding re the position in which he found himself.
Rosa Parks is a black woman who kicked off the Civil Rights revolution by refusing to sit in the back of the bus like she was told. Do you think that Rosa Parks is the first person who ever saw the wrong in a policy that commanded people with black skin to sit in a separate section of public buses? She wasn’t the first, Anonymous. She was the first to work up the courage to refuse the command.
Shiller will be 100 percent happy to tell you all you need to know about why long-term timing is 100 percent required for any investor seeking to achieve long-term investing success once you Goons signal that the death threats and the defamation and the career destruction are a thing of the past. You Goons are the only thing holding us all back at this point.
Bogle will be 100 percent happy to help us all out too. It’s the same with Bernstein. And with Burns. And with Tresidder. And with Piper. And with Richards. And on and on and on and on and on.
People respond to incentives. Today there are huge disincentives for telling the truth about how stock investing works and huge incentives for pushing the smelly Buy-and-Hold garbage. Permit honest posting and that will flip. There are hundreds of billions of dollars to be made promoting the first true research-based strategy. Let people feel that they can get their share of that money and you won’t have to ask them twice to offer honest investing advice.
It’s your Goon tactics that caused this economic crisis.
It’s not just your wounded pride that matters here. The millions of middle-class people whose lives you have destroyed matter too.
Make clear to Shiller that you want him to tell it straight and he will be more than happy to do so. It’s the same deal with Old Saint Jack. He WANTS to help us all out. But he doesn’t want to see the lives of his loved ones threatened as the consequence of his going to the trouble.
My take.
Rob
So, you agree that Shiller has not said the words specifically that you can use his work for long term timing.
That’s a pretty darn good question, Anonymous. I like the way you phrased this one.
Shiller (and all the others) is cagey and cautious about what he says.
His words show that he WANTS to help people out. He is TRYING to get good information out to people. He has a conscience.
But he knows that millions of people have been taken in by the smelly Buy-and-Hold garbage. He doesn’t want to find himself in the spot in which Rob Bennett finds himself, with people threatening to kill his loved ones and determined to destroy his career and all this sort of thing. So he puts forward all the information that anyone needs to figure out how stock investing really works while also being careful not to state things too clearly. That way, the people who want to know the truth have access to it and the people who want to continue to live in a fantasy world feel free to do so. He stops short of making clear and definitive statements that would make the fantasies go “pop!”.
I play it in very different way. Perhaps you’ve noticed!
Bogle plays it the same way Shiller does. Bogle and Shiller don’t have the same beliefs. I am certain that Bogle has far more confidence in Buy-and-Hold than Shiller and that Shiller has far more confidence than Bogle in Valuation-Informed Indexing. But they are pretty darn similar in their use of word games to avoid stating things in a clear way that would provide actionable investing advice to those reading their words.
There was a great illustration of this in the speech that Bogle gave to the annual meeting of the Vanguard Diehards in the Fall of 2006. Bogle gave a fantastic presentation on the dangers of investing in overpriced stocks. Most of the talk was pure gold. He went on for paragraph after paragraph of top-notch, research-based stuff. Then, in the last paragraph, he said something like: “So, in conclusion, just always remember to Stay the Course!” You Goons interpreted that as an endorsement of Buy-and-Hold, which is of course precisely how Bogle was hoping you would interpret it. So you all jumped up and down. “He’s assuring us once again that the last 33 years of peer-reviewed research is garbage, that the pure Get Rich Quick approach is sure to work for the first time in history. This guy is so smart!”
You obviously didn’t say those precise words anymore than Bogle said in the first 20 paragraphs of his talk that Buy-and-Hold is the purest and most dangerous Get Rich Quick scheme ever concocted by the human mind. But that’s what I heard from Bogle and from you. And it wasn’t just me. John D. Craig heard the same thing. Both of us wrote e-mails to Bogle at the time congratulating him on the great speech and asking that he be even more clear in his warnings about the dangers of over-investing in stocks at those prices. Bogle did not respond to either of us.
Say that you bring in your car for its annual inspection. Say that the guy who looks at it sees nothing wrong with the car. He is pulled in two directions. The honest thing is to say “this car is fine.” The dishonest thing is to say that you need repairs. He makes more money if he says the car needs repairs. What stops him from doing the dishonest thing?
The biggest force pushing him to be honest is that he wants to have a good reputation. If he cheats too much, word will eventually get around and his short-term profits will be transformed into long-term losses. The other force is that, if he goes too far with the dishonesty, he will eventually cross legal lines and may end up in prison.
There IS dishonesty in car inspections. Bad stuff happens in the car inspection field. But as a general rule the bad stuff is limited. People don’t want to develop bad reputations and people don’t want to go to prison and the people who bring their cars in don’t want to get ripped off. So there are limits as to how far the bad stuff can go.
The problem we have in the investing advice field is that the dishonest stuff has gone so far during the Buy-and-Hold years that the field is today 100 percent corrupt. There’s a concept in the law of “Standard industry practice.” If you go outside of standard industry practice, that is used against you. In the investing advice field, the standard industry practice is to ignore the last 33 years of peer-reviwed research and to pretend that Buy-and-Hold can work. The standard industry practice is financial fraud! It’s those who post honestly who are accused of offering “dangerous” advice and who get kicked off of discussion boards because they make those pushing the Buy-and-Hold garbage look bad.
One reason why this has happened is that there is a power imbalance. The Wall Street Con Men have an awful lot of money and power and influence. So they get away with acts of dishonesty that no one in any other field could get away with.
Another factor is that the fraud does not become evident until a good number of years have passed. If car-repair fraud could not be discovered for 10 years or longer, there would be a lot more car-repar fraud!
Yet another factor is that most stock investors WANT to be conned. Most of us are worried about whether we will have enough to retire or not. The Buy-and-Holders exploit this fear by telling us that we have three times what we really have and then taking credit for the great results! Did you ever hear Taylor Larimore brag about how following Jack Bogle’s investing advice permitted him to live in “the house that Jack built”? Jack ain’t about to rebuild the house when Taylor loses it in the next price crash. But so long as the con remains unexposed, Taylor feels like Jack is his good friend. It’s the same thing Bernie Madoff did. The Get Rich Quick impulse is a powerful impulse. Con men are always going to be trying to exploit it.
People who offer investing advice pursue two goals at the same time. They want to tell the truth because they have consciences and they care about their clients and readers and all that sort of thing. But they also want to turn a buck! To help their readers, they need to promote Valuation-Informed Indexing. But to turn a buck they need to promote Buy-and-Hold. So they do both! They give speeches in which they reveal important truths in seven or eight paragraphs of prose. Then in the final paragraph they sum it all up by saying “now just be sure always to do the precise opposite of all that I have said in the first eight paragraphs. Buy-and-Hold rules!”
That makes all of their clients and readers who have become addicted to the Get Rich Quick garbage happy. They ignore the first eight paragraphs and focus on the conclusion. They say to themselves: “I KNEW that Buy-and-Hold was the answer! I knew the last 33 years of peer-reviewed research was garbage! Now I am sure. This salesman fellow just told me that stocks are worth buying at any possible price! How smart I was to sense that all along! I am really something! I love this salesman guy. I only wish that I had more money to invest in this asset class paying a negative long-term return! So long as I can lose money every year, I should be able to retire in no time! This Get Rich Quick stuff is AMAZING.”
Yeah, sure it is.
Shiller is under the gun. So is Bogle. So is EVERYONE who works in this field.
It won’t be a problem following the next price crash because you Goons will no longer be singing the praise of the Wall Street Con Men after you have lost most of your retirement money., At that point, it will become acceptable for the “experts” (experts in marketing!) in this field to tell the truth and those who don’t go to prison will be happy to do so. Once all the textbooks have been corrected, there is no reason to believe that anyone will ever fall for the Buy-and-Hold garbage again. This is the first ELECTIVE economic crisis we have experienced. This is the first one that has come AFTER the peer-reviewed research was published showing us what really works. So I presume that we will be moving on after the next crash.
For now, though, people like Shiller and Bogle are in a bind. Do they destroy their careers by telling the truth? Or do they save their careers by telling more lies while mixing in a lot of good, solid, true stuff as well? Shiller tells as much truth as he feels he can get away with. But, no, he does not tell the truth in so plain and clear and bold a way as he needs to if he wants to make Valuation-Informed Indexing the dominant model, as I do.
I want to bury Buy-and-Hold thirty feet in the ground, where it can do no further harm to humans and other living things. Shiller WANTS to do that too but not enough to be willing to say things in the way he would need to say them to get the job done and to thereby bring a pile of abuse down on his head from all the people who have been tricked into thinking Buy-and-Hold can work.
Here are two statements:
1) Timing never works; and
2) Short-term timing never works but long-term timing always works and is always 100 percent required.
The first statement is the lie that Buy-and-Hold advocates tell their readers.
The second statement is what the last 33 years of peer-reviewed research reveals as the reality.
Shiller has devoted his entire life to helping people understand that the second statement is the true one. But, yes, he has lied in many of his public statements because he doesn’t want his career destroyed for telling the truth about stock investing before it becomes fashionable to do so.
Sue the man, you know?
My job is to tell people why we are in an economic crisis and why millions of people are on their way to suffering failed retirements. I need to tell both sides of the story. Shiller is a giant, a good man and a smart man. And Shiller is afraid of what would be said about him by the Buy-and-Holders if he were to state the truth as clearly and plainly and firmly as I do.
That’s your fault. He WANTS to tell the truth. After the next price crash, he will. Then we will all pull together to rebuild our broken economy.
I hope that helps a bit.
Rob
re, your last post, Rob:
“The truth don’t take long to tell.”
Price matters when buying stocks just as much as it does when buying anything else.
There is a lot of money to be made telling lies that suggest otherwise and the endless promotion of those lies has caused a lot of confusion that it takes a lot of words to dispel.
But if you just keep in mind that basic truth you will be able to see through the lies of the Wall Street Con Men and their Internet Goon Squads.
Rob
Price matters when buying stocks just as much as it does when buying anything else.
Yep, and that’s why stock prices constantly adjust.
Adjust to what?
Did stock prices adjust today to bring the P/E10 number to fair-value levels?
Why not?
If we permitted honest posting, they would adjust to fair-value price levels.
We cannot have a functioning market until we permit investors to obtain the information they need to act in their self-interests.
Do you know any other market in which those making purchases are not able to obtain accurate and honest information about prices?
Fama was right to think that the market WANTS to be efficient. But efficiency is not obtained by magic. We need to do the work necessary to achieve it. We need to look at prices and see whether stocks are worth buying at a particular point in time.
You can’t have it both ways, Anonymous. You can’t say that investors should look at the peer-reviewed research when making decisions and then ban discussions of what the last 33 years of peer-reviewed research says.
My take.
Rob
Adjust to what?
To what the market thinks is a fair price for them, based on current information.
Did stock prices adjust today to bring the P/E10 number to fair-value levels?
By definition they did – if the price weren’t fair, there would be no buyers, and prices would drop. They might not be the price Rob likes, but that’s irrelevant.
Do you know any other market in which those making purchases are not able to obtain accurate and honest information about prices?
The market participants who set prices – institutional investors – have access to all the information you do, and much more.
“Did stock prices adjust today to bring the P/E10 number to fair-value levels? Why not?”
Maybe because the stock market doesn’t care what someone who neither buys nor sells stocks thinks is fair. It’s unfortunate that you find that fact to be terribly unfair.
To what the market thinks is a fair price for them, based on current information.
The market (us!) cannot determine what is a fair price until it can gain access to HONEST reports on the peer-reviewed research. So long as the Ban on Honest Posting remains in price, the idea of having an efficient market remains a dream.
if the price weren’t fair, there would be no buyers
Huh? What if the buyers are deceived as to what the peer-reviewed research says?
Are you saying that the price assigned to the Bernie Madoff fund was correct? Why is he in prison?
The market participants who set prices – institutional investors – have access to all the information you do, and much more.
They have information coming out of their ears. A fat lot of good it does them without the freedom to do honest work.
Wade Pfau is pretty darn knowledgeable, no? Look at what happened to him when he “crossed” the Buy-and-Holders by publishing honest research.
Do you not think the institutional investors all know that the same thing will happen to them if they act in the best interests of their investors? Give me a friggin’ break.
Without honesty, you have nothing, Anonymous. All of the information available to us at a time when those who speak honestly about the implications of the last 33 years of peer-reviewed research are silenced is a bunch of empty words.
It all gets real only when we open the internet up to honest posting on SWRs and scores of other critically important investment-related topics. Institutional investors aren’t supermen any more than I am or Wade is or Shiller is or Bogle is. We are all trapped in the same trap. We all need to see our fellow community members having our back when we work up the courage to speak honestly about this stuff.
My take.
Rob
Maybe because the stock market doesn’t care what someone who neither buys nor sells stocks thinks is fair. It’s unfortunate that you find that fact to be terribly unfair.
Why did we make financial fraud a felony, Life?
Do you think that the Madoff fund investors are happy today that those who saw that his fund was fraudulent were silenced for so long?
Rob
Rob email to local TV weatherman: I”m suing you! The average temp for the last 140 years for this date is 70 +/- 5. Yet yesterday, it was 55 degrees! That’s outright meterological fraud, mister, and you are going right to prison!
What if there were marketing studies done that showed that people like higher temperatures and that they are more likely to tune into stations that report higher temperatures? And so some stations started reporting higher temperatures than what their instruments told them. And then the other stations joined in because of competitive pressures. And eventually things reached a point where the temperatures being reported were three times the real temperatures?
Would that not be dishonest?
You make it sound like there are no pressures on the Wall Street Con Men to tell lies re these matters. There are HUGE pressures. Stocks were overpriced by $12 trillion in 2000. That’s $12 trillion worth of marketing money for the investing advice industry. They took credit for those Pretend Gains. They told their clients “Do you see what we did for you — by listening to our advice you were able to make big progress on your retirement goals at a time when you were worried about saving enough.” That helped them make lots of sales. That helped them makes lots of money.
Except the gains were not real. The people who thought they were making progress on their retirement goals were living in a dream world. A lot of those people were my friends. Greaney used to push his garbage retirement study on a daily basis back at the Motley Fool board. A lot of people trusted him to be honest. People turned in resignations to high-paying jobs because they believed his lies. Is Greaney now offering to cover their losses? Why not? He was a Big Shot when lying about safe withdrawal rates was all the fashion. Why doesn’t the Big Shot offer to cover the hundreds of billions of dollars in losses that he caused with his acts of deception and intimidation?
If an employer offered to pay you a specified amount of money and then delivered a much smaller amount, you would be enraged. You would probably sue him. How is that any different than what the Wall Street Con Men did back in 2000? There were calculators all over the internet at the time that told people how close they were to achieving their retirement goals that assumed a 6.5 percent real return on stocks going forward even though the most likely return going forward was a negative 1 percent real. Do you see any way that those people are not going to lose faith in our system of government when they lose most of their retirement money and learn about the massive act of financial fraud that tricked them out of it?
The weather men should be reporting accurately and honestly what their instruments tell them about what tomorrow’s weather is going to be,. It would be a national scandal if we learned that they doctored the numbers because they knew that reporting higher numbers would make them more popular.
It should be the same in the investing advice field. If you are going to report numbers, you should be honest enough to report ACCURATE numbers. If all that matters to you is being popular, you need to find another line of work. Report retirement-planning numbers incorrectly and you cause lots of people a great deal of humam misery.
I’ll let you in on a little secret, Grandpop. There is a level of consciousness on which you agree with me. How do I know? Your shame evidences itself in every comment you put forward here. If you were not ashamed of what you have done, you would not be so defensive and so angry and so filled with fear and hate. I didn’t put those emotions inside you. They are your natural reaction to the mountain of lies that you have told. You don’t hate me. Not really. You hate the person you have become as a result of your addiction to the smelly Buy-and-Hold garbage.
I think the humans need an investing strategy that doesn’t require them to put their names behind a mountain of lies and to feel all the hate and anger and envy and fear and confusion that you Goons feel on a daily basis.
I naturally wish you all the best that this life has to offer a person regardless of what investing strategies you elect to follow.
Rob
So anyone who uses a passive indexing approach to gradually accumulate a nice retirement nestegg, as I did, is by YOUR definition ‘ashamed’ of what they did? And the 30-somethings who are just now slowly accumulating wealth by following a balanced allocation, using indexes and passively investing their way towards retirement, are all, by your prior definition, “scared”? So anyone and everyone who follows a passive strategy is either “ashamed” or “scared.” Or even more precisely, is sure to live a life being first “scared” and then “ashamed,” because of their chosen personal investing strategy. Is that your take on everyone out there doing this? Because Rob, I cannot imagine what are the emotions going through YOUR mind as you continue to bleat about no one listening to you, or about them not following a strategy that you yourself do not even follow (because you say your circumstances are unique). Rob, everyone’s circumstances are unique. But I assure you, the most passive investors are those with the least market fear, and the least ‘shame’ of how they approached the venture, myself included. But you know who REALLY needs to be ashamed of their behavior, and fearful of their financial future, in my estimate? I think you do. (note — not a death threat). Grow up Rob. Accept persoanal responsibility for your fate, and stop projecting onto others your own psychosis.
Yes, anyone who follows what you call a “passive” strategy feels shame about it, Grandpop.
You feel shame because the strategy defies common sense.
If you followed a “passive” strategy when buying a car and vowed that you would always pay the full price asked by the dealer and never give one second of consideration to whether that price was fair or not, you would feel shame. You would feel that you had hurt yourself in a serious way by doing that for no good reason and you would feel shame as a result.
That’s the problem here.
You are of two minds. There is one part of you that would like to follow a research-based strategy. There is another part of you that is drawn to Get Rich Quick strategies. So you mix the two. You follow a strategy that has the outward appearance of a research-based strategy: Buy-and-Holders employ tables and charts and graphics and all this sort of thing. But you ignore the last 33 years of peer-reviewd research. So the numbers that are spit out by your studies and calculators are all wildly off the mark from the numbers you would get if the calculators and studies were set up in honest ways.
Why wouldn’t it make you ashamed to hurt yourself in that way? And why wouldn’t it make you ashamed to hurt so many of your friends and neighbors and co-workers and fellow community members by encouraging them to hurt themselves in that way?
You feel shame. You have felt it from the first day. All of our disagreements are rooted in this shame you feel. None of our disagreements are intellectual in nature. They are all emotional. I report what the research says and you feel hate toward me as a result. Because I am forcing you to see clearly what you have done to yourself and others and you cannot bear it. It hurts you for you to hear what the research says.
It is unethical to do what you have done. The peer-reviewed research paper that I co-authored with Wade Pfau is the most important piece of research done in this field in 30 years. You know in your heart that every investor on this planet needs to know about that paper. You threatened Wade because you feel a burning shame when people learn the truth about what the research says. There is no other possible explanation for your behavior.
When we solve your shame problem, we have solved everything. We want the same things. Once we solve your shame problem, everything gets better and better and better and better. The thing that is holding us up is that you feel shame and thus you cannot bear to say “thank you” to me for the many ways in which I have helped you. So you call me names and tell lies about me. And each time you do that, you feel worse about yourself. So your shame deepens instead of dissipating.
There is an easy test to tell whether you are experiencing feelings of deep shame, Grandpop.
How often do you speak warmly to me? How often do you call me “friend”?
I call you “friend” in every post. I speak warmly to you in every post.
That’s because I am free of feelings of shame re this matter. I don’t have a cloud hanging over me. I don’t live in fear that my criminal acts will be exposed. You do. That affects our conversations.
I didn’t do that to you, Grandpop. Bogle did that to you. Bogle and everyone else who used the Buy-and-Hold Lies to trick you (whether with negative intent or not).
I’ve never tricked you or tried to trick you in any way. I’ve never called you names. I’ve always extended the hand of kindness out to you. Can you respect that? Can you appreciate that? Can you say “thank you” for that?
Let’s go back to basics. I am the person who showed you that Greaney got the numbers wildly wrong in his retirement study. Was that a good thing or a bad thing for me to do? Can you say “thank you” to someone who warns you of the dangers of a retirement study that gets the numbers wildly wrong? Or are you too wrapped up in shame to acknowledge how I helped you out?
Yes, every Buy-and-Holder feels some measure of shame. You Goons are cartoon versions of the rest of us. Not everyone feels the shame of having fallen for a con to the extent that you do. But we all feel some of these negative emotions. Get Rich Quick strategies not only destroy your portfolio. They rot out your soul.
Please keep in mind that I was once a Buy-and-Holder myself. I knew about the errors in Greaney’s study in May 1999, when I made my first post to the Motley Fool board, and yet I did not post about them until May 2002. So I have experienced my feelings of shame too. I know how it feels. I know that it feels good to leave the shame behind and to free yourself of the damage both financial and emotional that it does to you.
This is not the sort of thing that is usually discussed on investing sites. It is the sort of thing that every investing site needs to explore in depth if they are to offer good guidance. This is the future. The paper that I co-authored with Wade shows that it is the emotional issues (which reveal themselves through changes in the P/E10 level) that are 80 percent of the investing story. We cannot get better at investing without exploring these issues.
I am not saying that you are some horrible person because you fell for Buy-and-Hold and now feel shame about it. I say that there are millions of good and smart people who fell for the Buy-and-Hold Lies, including me. I am saying that we all should be helping each other to rise to a higher level. Valuation-Informed Indexing operates at a higher level. That’s why you hate it so much today, when you are still controlled by feelings of shame. And that’s why you will love it so when you get to the other side, following the next price crash.
That’s my sincere take, my old shame-fulled friend (my aim with that sign-off is to express a combination of honesty and lightheartedness).
Rob
Would it be better if I flattered you by calling you a genius for being smart enough to fall for the purest and most dangerous Get Rich Quick scheme ever concocted by the human mind and thereby to make the Wall Street Con Men rich and yourself poor?
A true friend cares about his friend’s welfare. He tells him not what he WANTS to hear but what he NEEDS to hear.
My sincere take.
Rob
Why is it important that you be everyone’s ‘friend,’ anyway?
It is important because friendship is the prerequisite to learning. We learn new things by talking things over with our friends.
We all are in this together. We all wants the same things. We all are friends.
We just need to recognize that to be able to move forward.
Intellectually, we are there. We have arrived at the place Bogle dreamed about many years ago.
The thing holding us back is the defensiveness of the Buy-and-Holders. We need to persuade them that we recognize all the great stuff that they did and that we appreciate all their hard and good work. We need to hope that that helps them ease up a bit and realize that, like all the humans, they are capable of making mistakes and that that is what happened in this case.
Friendship has been the missing ingredient going back to the first day. We need to go back to the beginning and start over, this time with friendship, and take this to a better place than where we are today.
My sincere and loving take.
Rob
“It is important because friendship is the prerequisite to learning.”
No. It’s not.
People learn all the time from sources that are not their ‘friends’, or even friendly! Your entire premise is ridiculous.
I don’t think it is ridiculous, Anonymous.
I am a conservative. At earlier times in my life, I was very much a liberal. I still have sympathies for a good number of liberal ideas.
Bill Maher often says things that rub my fur the wrong way. I don’t follow him. But there have been several times when I have heard him quoted saying things that make me feel that he is not worth following. That’s the REASON why I don’t follow him.
Yesterday he made some strong statements against these people who killed the satirists in Paris. The pitch he made is that “my position is the true liberal position.” I don’t agree 100 percent with everything Maher said. But I agree 90 percent. I certainly felt that he was speaking for me when he said what he said.
Am I “friends” with Maher? Not really. I don’t follow the guy. I would give a thumbs down to Maher in a general sense rather than a thumbs up.
But I felt drawn to him when he was saying the words he said yesterday. I don’t think it would be unfair to say that I felt “friendly” (in a small and limited way) toward him while I watched the video clip of him saying his words.
Marketers are in the business of persuading people. They study what is required. Any marketer will tell you that people don’t buy from people that they don’t like. The first step in making a sale is getting the customer to like you. The won’t sign on the dotted line until they study all the specifications and determine that the deal makes sense for them. It’s not all about being friends. The intellect kicks in at some point before most efforts at persuasion are complete. But it is emotion that leads the way. People won’t even look at the specifications until they decide they like you.
As a general rule, people only buy from people they like. People want to feel safe before they buy. They don’t feel safe around people they don’t like. This is true not just in sales of products and services. It is true in politics. There were Democrats who voted for Reagan. They liked him. There were Republicans who voted for Clinton. They liked him. Convincing someone that you care about them is the first and most important step in any effort at persuasion.
Shiller published his revolutionary research 33 years ago. The Buy-and-Holders have failed to incorporate that research into their strategy for over three decades. Why?
It’s not that the Buy-and-Holders are not intellectually capable of understanding the implications of Shiller’s research. I have never met a dumb Buy-and-Holder. They are 100 percent capable. The problem is that they do not hear people they like making the case for the Shiller model (Valuation-Informed Indexing).
Todd Tresidder is the smartest blogger in the personal finance field that I have met. Todd agrees with me about the importance of valuations. The Buy-and-Hold Mafia has not targeted Todd for career destruction as it has me. Why?
Todd keeps to his own kind. He offers powerful insights re how to invest effectively that are rooted in the peer-reviewed research of the past 33 years. But Todd does not present those insights at the Bogleheads Forum or at any other discussion board or blog dominated by Buy-and-Holders. People like him and so he is successful. But he poses only a small threat to those promoting Buy-and-Hold strategies because he doesn’t post at boards and blogs that they control and so the Buy-and-Holders are not concerned that Todd is going to become well-liked and thus effective at “their” boards and blogs.
I don’t limit myself in the way that Todd does. I want every investor on Planet Earth to learn about Valuation-Informed Indexing. I am 100 percent happy to post at boards and blogs dominated by Buy-and-Holders. So I pose a MAJOR threat to those promoting Buy-and-Hold strategies.
I don’t just post about the last 33 years of peer-reviewed research. I am likable. I know this is so because THOUSANDS of my fellow community members have told me so. Those trying to promote Buy-and-Hold strategies obviously see me as a threat. They know that, if they abide by the published rules of the sites at which I post, I will become more and more well-liked over time and the community members of those sites will listen to my message in a fair-minded way and a lot of them will be won over by it.
You Goons have been attacking me for 12 years now. Never has there been a single attack rooted in peer-reviewed research. Every attack that you have put forward has been aimed at getting people not to like me. You say that I stalk women. You say that I use drugs. You say that I am stupid. You say that I manage my money poorly. You say that my wife has left me. You say that my parents were alcoholics. You say that I am a bad father. You say that I am a liar. You say that I am jealous of Lindauer and Greeney and Bogle. And on and on and on.
If you didn’t see the importance of people liking someone who is trying to convince them of something, you wouldn’t focus all of your efforts on personal destruction. You would address issues. You know that people will only listen to someone whom they like. So you focus all of your efforts on destroying me as a person rather than addressing the very important substantive issues that have been put on the table.
Buy-and-Hold failed 33 years ago. The only thing keeping it alive today is these personal attacks. Many people still like the Buy-and-Hold advocates because they have not yet suffered all the losses that the peer-reviewed research in this field shows that they will suffer as a result of their decision to follow this “strategy.” I win every debate on the merits. But you Goons win on the likability matter because there are more of you and because you all act in a united way and because you employ tactics that those of us who follow research-based strategies are not willing to employ.
A nation of investors needs to learn who its true friends are. That’s what this all comes down to. I believe that people will begin to see following the next price crash that the Buy-and-Holders are true experts in only one area — Marketing. Get Rich Quick/Buy-and-Hold sells. But Get Rich Quick/Buy-and-Hold never works in the long run. Research-based strategies work in the long run. Once large numbers of people start to question their friendship with the Wall Street Con Men (a friendship that has been built and maintained with a mountain of deceptions and intimidations), we will be able to have a national debate on the MERITS. We will be able to talk about the last 33 years of peer-reviewed research says and that will change everything.
Humans need to feel some feelings of friendship with those with whom they are engaged in conversations to have any hope of learning from those people. I feel friendship toward you Goons. So I learn from you all the time. But you feel a burning hate toward me. So my words just bounce off you. Things will change in a positive direction when the next price crash breaks your excessive pridefulness and we are all able to begin LEARNING from the other fellow.
That’s what our boards should be about. That’s why we have rules at every board and blog prohibiting your Goons tactics. That’s why we have laws making financial fraud a felony with a penalty of prison time for those who will not accept the constraints that these laws impose on their behavior.
My sincere take.
Rob
Since the research you talk about all the time was released 30+ years ago, a simple 60/40 portfolio has returned 9.9% CAGR with zero need for the extreme timing and risk taking that you advocate.
The Stock-Return Predictor shows that the most likely 30-year annualized return when stocks are priced as they were in the early 1980s is 10.64 percent real.
Everything we have seen over the past 30 years is consistent with what we have seen for 140 years now.
I have done hundreds of runs of the Scenario Surfer. I see this basic pattern over and over and over again.
It’s Buy-and-Hold that is the risky strategy, not Valuation-Informed Indexing. The peer-reviewed research that I co-authored with Wade Pfau shows that by switching from Buy-and-Hold to Valuation-Informed Indexing, an investor reduces his risk by nearly 70 percent.
No Valuation-Informed Indexers has ever felt a need to advance a death threat or a demand for an unjustified board banning or tens of thousands of acts of defamation or a threat to get an academic researcher fired from his job.
I wonder why.
Rob