Set forth below is the text of a comment that I recently posted to another blog entry at this site:
How exactly is access to that knowledge restricted? AFAICT Shiller/Wade publish papers and Shiller has written some books. Seems like the knowledge is free flowing to me.
The only thing that has been restricted is your access to some pretty unimportant Internet message boards and it is basically because you are a big pain in the rear to deal with.
We need to have people talking about the implications of Shiller’s findings at every investing discussion board and blog on the internet, Laugh.
Shiller’s findings show that there is precisely zero chance that Buy-and-Hold can ever work for a single long-term investor. What percentage of the population do you think knows that?
I didn’t know it on the morning of May 13, 2002.
John Walter Russell didn’t know it when he and I began working together.
Wade Pfau didn’t know it when he and I began working together.
Wade has a Ph.D. in Economic from Princeton. You would sure think that he would know about an the work of an economist who won a Nobel prize, wouldn’t you?
But he didn’t. He had heard of Shiller. But he had never been in a discussion of the implications of Shiller’s work.
Why?
Because there are millions of people who have followed Fama’s work, not Shiller’s. Fama’s work takes one to a very different place. So those people are hurting.
And when people try to explore the implications of Shiller’s work, they get shouted down by the hurting Buy-and-Holders. So, no, information is not feee-flowing AT ALL.
We need to stop the shouting.
We need to stop the hurting.
We need to come to understand that we are all in this together and that we all should be working together to realize the benefits of Shiller’s amazing findings for ourselves and for all our fellow investors.
Internet boards are NOT unimportant. This new communications medium is very exciting. We can change the world by opening those boards to honest posting. My good friend Jack Bogle is a good man and a smart man. If we open those boards to honest posting, we will soon have Jack working with us. Jack has a lot of influence in this field. Once we get him working with us, things will get better and better and better. All of the negative energy will have been changed into positive energy.
I am NOT a big pain in the rear. I report on the peer-reviewed research of the past 33 years. We have seen the biggest advances in our understanding of how stock investing works ever achieved in history brought to light during those 33 years. The peer-reviewed research is NOT a big pain in the rear. The peer-reviewed research is our friend. The peer-reviewed research is trying to help us. The peer-reviewed research liberates us. It frees us to lead richer (in every sense of the word) lives than we ever before imagined that we might be able to live.
The research SEEMS like a pain in the rear end to a Buy-and-Holder because it shows us that the core premise of the Buy-and-Hold Model (the idea that price discipline is not necessary when buying stocks) is in error. The research that I co-authored with Wade shows us how to reduce the risk of stock investing by 70 percent while earning HIGHER returns. That ain’t no pain in the rear end. That’s investor heaven. That’s what we ALL want. Including Jack. Including you, Laugh.
I hope that helps a bit, old friend.
Rob
Anonymous says
We need to stop the shouting.
We need to stop the hurting.
Comments like “the other guy’s position could never possibly work” might need to be the first thing to go then.
Rob says
We couldn’t possibly disagree more, Anonymous.
There is now 34 years of peer-reviewed research showing that there is precisely zero chance that a Buy-and-Hold strategy could ever work for even a single long-term investor, either in this solar system or in any other.
What possible benefit is there in not telling people that? People need to know there are millions of people who have invested their retirement money pursuant to Buy-and-Hold strategies. Those people are in the process of seeing their lives destroyed. The next price crash is going to cause people not only to lose confidence in our economic system but even to begin to lose confidence in our political system. And you say that it is better not to tell. Huh? Are you joking?
You are on your way to a prison cell because people who came before me didn’t tell, Anonymous. Buy-and-Hold was 100 percent discredited by peer-reviewd research published by Shiller in 1981. Bogle should have got up on a stage and said the Three Magic Words at that time. If he had, I am 100 percent confident that you would not have tried to “defend” Buy-and-Hold 21 years later, when I put up my famous post pointing out the errors in John Greaney’s retirement study. Bogle’s failure to tell the truth in 1981 is what led to you behaving in the manner which has put you on a path to serving a long prison sentence following the next price crash, not anything I did or said.
You get angry at me just for mentioning your upcoming prison sentence. How about focusing a bit more on the 34-year cover-up that caused your upcoming prison sentence?
The problem here is not that some people have told the truth about this massive act of financial fraud, the problem is that so many people have either engaged in acts supporting the cover-up or at the least have tolerated acts supporting the cover-up without saying or doing anything about them.
I am proud to have exposed this massive act of financial fraud. Never will you hear me apologize in any way, shape or form for having done so. Never will you hear me saying that there is some sliver of a hope that a Buy-and-Hold strategy might in some distant solar system work for one or two long-term investors. The only possible exception would be if someone someday published the first peer-reviewed research supporting the smelly Buy-and-Hold garbage. I think it would be fair to say that that is a million-to-one shot. If we see that one come through, then I obviously will want to tell people about it. But short of that, what possible constructive purpose could be served by me engaging in deception on an important financial matter and telling people that there might be some mystical, magical planet where the purest and most dangerous Get Rich Quick scheme ever concocted by the human mind might actually start working for a few people?
It’s not telling the truth about what all the peer-reviewed research in this field shows that has caused the shouting and hurting. It is the acts of intimidation and deception that the Buy-and-Holders have been relying on for 34 years now to trick people into believing that Buy-and-Hold can never work in the long term. All the evidence shows this. So we need to tell people this. To fail to tell people this when others are trying to deceive them is an act of financial fraud.
We are all going to be appearing before congressional hearings or juries in civil or criminal cases in days to come. I don’t want there to be any doubt as to whether I was the lead voice saying that every responsible person on this planet should be doing all that he or she can to get the word out to every investor that Buy-and-Hold is a scam and has been known to be a scam by everyone who follows the peer-reviewed research (and that should be everyone who offers investing advice) for 34 years now.
Please mark me down as solidly IN FAVOR of telling the truth about what the peer-reviewed research says about how dangerous it is for an investor to follow a Buy-and-Hold strategy. Please don’t ever let it be said of me that I put forward some fuzzy words suggesting that there might be an alternate solar system where this Get Rich Quick garbage might work for one or two long-term investors. Never have I done such a thing. Never.
Pre-May 13, 2002, I did not speak out in clear terms. That was wrong. I am ashamed of my behavior in those days. You got me re that one. But I NEVER spoke in support of the garbage once I knew it to be garbage. I was a Buy-and-Holder myself prior to August 27, 2002, when Greaney put forward his first death threats. But once I saw with my own eyes how dangerous the pure Get Rich Quick approach is, how it not only destroys our retirement portfolios but also rots our souls, I began speaking out. And as I have learned more about this massive act of financial fraud, I have spoken out in stronger and stronger and stronger terms.
There are Post Archives.
My best wishes to you.
Rob
Anonymous says
Shiller must not be reading his own material since he has stayed in the market. According to your interpretation of his work, he should have gotten out a long time ago.
laugh says
“I am NOT a big pain in the rear”
Maybe no one ever told you this, but you don’t get to decide this. Your perception as an ass is determined by the court of public opinion.
Rob says
Shiller must not be reading his own material since he has stayed in the market. According to your interpretation of his work, he should have gotten out a long time ago.
You are being deceptive as usual, Anonymous.
I have been out of the stock market since the Summer of 1996. But I have never said that most investors should have been out of the market in any of the years from 1996 through today. I have said that the typical investor should be at something in the neighborhood of 30 percent stocks.
Shiller is more educated about stocks than the typical investor. So it may be that he can do okay with a somewhat higher allocation, perhaps 40 percent stocks or even 50 percent stocks. I have read that he is currently at 50 percent stocks. So that’s in the general neighborhood of what his research suggests, although it is certainly on the high side of the range of possibilities that makes sense.
And you are misleading yourself and anyone who reads your words when you suggest that it is immediately obvious to anyone who reads Shiller’s research what stock allocations follow from his findings. That’s very much not the case. Shiller’s research is truly “revolutionary” (his word). It is going to take decades before we are all able to take in the implications that follow from it. I have spent 13 years studying the implications of his work and have come to the conclusion that 30 percent stocks is the best allocation for the typical investor at times of insanely high stock allocations. But it is entirely possible that other reasonable people could come to other conclusions or that I will change my mind as I learn more.
It is also possible that Shiller will change his mind as he learns more. Shiller has obviously read his own material. But his UNDERSTANDING of the implications of his research is not terribly strong. He shows that in almost every comment he makes on the how-to aspects of the stock investing project. His comments OFTEN contradict each other (this is so of Bogle as well). If his thinking was clear, his comments would be consistent. Shiller is today still at a primitive level of understanding of the significance of his own work.
Why is that? It’s because there has not yet been a national debate on the implications of his work. We all learn from listening to other perspectives. Shiller needs to hear what I think of the implications of his work and I need to hear what Shiller thinks of the implications of his work. And we both need to hear what Wade Pfau thinks and what Jack Bogle thinks and what Bill Bernstein thinks and on an on and on. That’s how we ALL advance in our understanding of these matters.
Guess why that hasn’t happened, Anonymous?
It’s because of you Goons. Wade fears you. And Bogle fears you. And Bernstein fears you. And Shiller fears you.
The expect in this field created a monster when they failed to acknowledge that Shiller’s 1981 research entirely discredited the Buy-and-Hold concept. If they had done so, the national debate we all need to hear would have taken place in the early 1980s. Because the Wall Street Con Men elected to cover up their mistake rather than acknowledge it and correct it, they have misled millions of people as to how stock investing really works and are now afraid to acknowledge that they thereby caused millions of failed retirements and an economic crisis.
There is no way to turn back the clock to 1981.
The only way out of this mess is for big names in the field like Bogle and Shiller to walk to the front of a large room and to say the words “I” and “Was” and “Wrong.”
I have been advocating this step FOR YEARS NOW. What have you Goons done to help out?
I think Shiller would be better off with a somewhat lower stock allocation. But I also think think that his allocation is within the realm of the reasonable. He could be that he is right and that I am wrong re that one. There is no chance that I am wrong about the need for a national debate re these matters. Re that one, I am 100 percent sure that my position is the only remotely ethical one possible. Bogle is dead wrong re that one and Shiller is dead wrong re that one. There are responsibilities that come with offering investing advice. Both Bogle and Shiller have failed to behave in a responsible way re these matters for many years now.
Shiller would know more today if we had had the national debate. So would Bogle. So would I. So would Pfau. So would you.
We have not had the debate because Bogle delayed speaking out too long and now cannot figure out a way to do so that will not mean prison sentences for a good number of the Wall Street Con Men, possibly including himself. That is a terribly sad reality. If you loved the man one-tenth as much as I love the man, you would have urged him to get his backside to the front of a large room where he can say those Three Magic Words a long, long time ago.
And, yes, Shiller needs to get his backside up to the front of a large room too. Shiller knows about the many acts of financial fraud. He has made references to them in his public comments. He should be speaking out and doing whatever he can to bring this massive act of financial fraud to a full and complete stop as quickly as possible. It’s his country too.
That’s my sincere take re these terribly important matters in any event.
I naturally wish you the best of luck in all your future life endeavors regardless of what investing strategies you elect to pursue.
Rob
Rob says
Maybe no one ever told you this, but you don’t get to decide this. Your perception as an ass is determined by the court of public opinion.
We all get to form our own impressions, Laugh.
You believe that I am an ass. I don’t doubt that one.
And there are many others who feel as you do. That group obviously includes your fellow Goons. But it also includes lots of people who I do not believe can fairly be characterized as Goons.
But there are LOTS of people who have put up posts or sent me e-mails offering the most effusive praise that has ever been directed at anyone who has done work in the investing field. I can’t tell you how many people have told me that I am the first person who ever spoke about stock investing in a way that permitted them to make sense of the subject. There are as many people who think I am a hero as there are who think am an ass.
And the number who think highly of me grows all the time while the number who think I am as ass drops all the time. It has been YEARS since I have seen a fresh death threat in my e-mail inbox. There was a time when I was seeing new ones on a daily basis. So the times they are a changin’.
How many people do you think will be calling me an ass following the next price crash?
How many do you think will be calling you an ass then? And how many will be calling Lindauer an ass? And how many do you think will be calling Greaney an ass? And how many do you think will be calling Bogle an ass?
Live by investor emotion, die by investor emotion.
People call me an ass because I tell the truth about stock investing and thereby make it impossible for them to believe that their portfolios are worth as much as the Buy-and-Holders say they are worth. When the numbers on the portfolios drop to real-value levels or worse, who do you think they are going to blame — the guy who told them the straight story when it was not a tiny bit fashionable to do so or the people who tricked them into taking steps that caused them to lose most of their retirement money? You know what I think.
You are playing a dangerous game, Laugh. Once Bernie Madoff’s fund collapsed, he wasn’t able to go back in time and cite all the praise that was heaped on him in the days when all his Get Rich Quick made him the toast of the town. I have a funny hunch that it may work that way with you Goons as well. We will see.
I don’t like it that there are people in this world who think of me as an ass. I don’t like it one little bit. And I do acknowledge that there is a group that believes very strongly that that is the case.
But I couldn’t live with myself if I told those people lies that are likely to destroy their hopes of being able to retire some day.
I am on the record saying that Buy-and-Hold is the purest and most dangerous Get Rich Quick scheme ever concocted by the human mind. We’ll see how many think that that makes me an ass following the next price crash. My personal guess is that you will be one of the ones changing your tune and redirecting your ire at Bogle and the other Wall Street Con Men at that time.
But we’ll see, you know?
You and me are not going to resolve our differences by talking them through. They are too deep and the consequences attached to the realities being acknowledged are too big. It is time and the experience of events that will take place in time that will cause things to turn.
I naturally wish you and all the other Goons the best things that this life has to offer us all.
Rob
Anonymous says
” I have said that the typical investor should be at something in the neighborhood of 30 percent stocks.”
Why?
Using your Standard Roblogic(tm), overpriced stocks are like overpriced cars — smart people simply do not purchase overpriced goods and services, ESPECIALLY when an abundance of more palatable alternatives exist.
So why are you overtly shilling for the corrupt stock industry and trying to prop up sales at these outrageous prices? (points finger at Mr. Bennett) “Officer! Arrest him! He is part of the global stock conspiracy! To the dungeons with him!”
Rob says
Using your Standard Roblogic(tm), overpriced stocks are like overpriced cars — smart people simply do not purchase overpriced goods and services, ESPECIALLY when an abundance of more palatable alternatives exist.
The problem is that short-term timing does not work. There is as much historical data showing that short-term timing doesn’t work as there is showing that long-term timing always works and is always required.
We can say at times when stock are insanely overpriced that they offer a poor long-term value proposition and be virtually certain that we are giving good advice in doing so.
But we CANNOT say that investors will come to regret buying overpriced stocks within the next year or three years or five years or in some cases even the next 10 years. The peer-reviewed research (NOT Rob Bennett — all I do is to honestly report what the research says) says that the smart thing for the investor to do is to change his stock allocation enough to keep his risk profile constant.
We all should be aiming to Stay the Course. It is not possible for Buy-and-Holders to do that. But it is not necessary to go to a zero stock allocation to Stay the Course. So long as you lower your stock allocation enough to keep your risk profile constant, you are investing effectively.
Stocks are always a bad long-term choice when prices are insanely high. But they can be a very good short-term choice even when prices are high. Humans live in both the short-term and in the long-term. Effective investing requires a balancing of the two most important realities revealed by the peer-reviewed research of the past 50 years (that short-term timing never works and that long-term timing always does).
Rob
Anonymous says
According to VII a 68 year old can have anywhere between 0% to 50% in stocks at the same point in time and it would be appropriate.
Rob says
That’s the same as with Buy-and-Hold. In both models, investors need to take their personal circumstances and their financial goals into consideration when setting their allocations.
The only difference between the two models is that BH is rooted in a belief that the market is efficient and that therefore valuations do not need to be considered when setting one’s stock allocation (if the market is efficient, risk is stable) while VII is rooted in a belief that valuations affect long-term returns and thus risk is variable.
Rob
Anonymous says
“Shiller is more educated about stocks than the typical investor. So it may be that he can do okay with a somewhat higher allocation, perhaps 40 percent stocks or even 50 percent stocks. I have read that he is currently at 50 percent stocks. So that’s in the general neighborhood of what his research suggests, although it is certainly on the high side of the range of possibilities that makes sense.”
But Rob, this is a similar percentage of stock that most of us buy, hold and rebalance people have, yet you say we are all going to see our fortunes drop by 65%. How does this compute?
Rob says
Stocks are priced for a 65 percent price drop sometime within the next few years, Anonymous. That’s what the research shows.
You are free to go with whatever allocation you please. So is Shiller. So am I. So is everyone.
I own TIPS and IBonds paying 3.5 percent real. I see that as a better value proposition than an asset class priced for a 65 percent price drop within the next few years. I am going with a zero stock allocation.
I presume that you see things differently. You are free to see things as you please. It makes you angry when I report to you what the research says. That tells me that you are not confident in your strategy. But your stock allocation is obviously your choice.
Shiller has offered inconsistent statements re his allocation. A 50 percent allocation is on the high side today but not entirely unreasonable. Shiller has made statements indicating that he believes in short-term timing. It appears that he thinks that he will be able to get out of stock before the price crash (which he agrees is coming) hits. I am highly dubious of his ability to engage in short-term timing successfully. But maybe he knows something I don’t know. He is obviously a very smart man.
I would not advise Shiller to go with 50 percent stocks. I would suggest 30 percent or perhaps 40 percent. But he is investing his money and I think he should be making that call just as I believe that you should make the call as to what allocation you use and I should make the call as to what allocation I use. I don’t think that a 50 percent stock allocation is entirely unreasonable for someone with Shiller’s knowledge base. But I do believe that that allocation is very much on the high side given the valuation level that applies today.
I hope that helps a bit, my insanely emotional friend.
Rob
Rob says
Shiller should be talking about the emotion that you evidence in all of your posts, Anonymous.
So should Bogle.
So should everyone.
The emotion you feel — which follows from your belief in Buy-and-Hold — is what makes stock investing risky. People should be writing books about your behavior.
They aren’t doing it because they want to make a buck from you.
That’s not a good reason.
The #1 goal of any investing advisor should be to help his clients or readers to avoid risk. Your emotionalism is the risk of stock investing.
We now know how to avoid stock investing risk. The only reason why we aren’t all talking about it is that there is still a buck to be made in pretending that Buy-and-Hold isn’t the most risky strategy of all. I believe that that will change with the next price crash.
We will see.
Please take good care.
Rob
Anonymous says
We’ll see how many think that that makes me an ass following the next price crash.
That worst-since-the-depression price crash just happened in 2008-09. Result recorded. No need to wait for another. We saw, you know?
Rob says
The result has not yet been recorded, Anonymous.
A crash is not a one-day event. A crash is a response to a bull market. Bull markets are spread out over many years and so are the crashes that result from them. We are still overcoming the bull market of the late 1990s.
When the crash has fully revealed itself, you will know. It will be in all the papers. As will the announcement of your prison sentence.
I naturally wish you all good things.
Rob
Anonymous says
Rob, it appears that you’ve been at this for some 15 years without a great deal of what people would conventionally call success. Have you given any thought as to what it would take for you to consider that your interpretation of the world is flawed?
Rob says
It would take peer-reviewed research supporting the Buy-and-Hold strategy, Anonymous.
Nothing less would do the trick.
Nothing more would be needed.
What you are saying when you point out that I have not experienced what people conventionally call “success” is that the message delivered by the last 34 years of peer-reviewed research is not a popular one today. I get that!
But you know what? The entire point of using peer-reviewed research as a guide is to overcome our internal Get Rich Quick urge. It was because the Buy-and-Holders once argued for using the peer-reviewed research as a guide that I fell in love with Buy-and-Hold in the first place.
The essence of the entire debate is — Do we trust the peer-reviewed research to steer us in the right direction? I do. The Buy-and-Holders trust the peer-reviewed research only for so long as it appears to them to be consistent with their desire to go with a pure Get Rich Quick approach. That to me is the worst of all worlds. If you only follow peer-reviewed research when it supports your Get Rich Quick urge, you end up following the Get Rich Quick approach with a greater level of confidence than was possessed by all the investors who followed it in earlier days without tricking themselves into believing that Get Rich Quick is research-supported.
I believe in either ignoring all research and just going with common sense, which tells us that Get Rich Quick can never work, or reporting honestly what the research says, which is that a pure Get Rich Quick approach can never work for even a single long-term investor either in this solar system or in any other.
The short version?
SHOW ME THE PEER-REVIEWED RESEARCH!
Or else go home, you know?
If it’s all b.s., I want no part of it. The Buy-and-Holders have been showing me for 13 years now that it’s all b.s., all a big con, all a marketing gimmick. Buy-and-Hold is now The Marketing Gimmick That Ate the U.S. Economy. Yuck!
Find someone else.
Not this boy.
I can’t go for that.
No can do.
It’s not my particular cup of tea.
I’ll post honestly or I’ll post not.
Non-negotiable.
It’s not even a close call.
Going to prison is not on my bucket list.
Rob