Set forth below is the text of a comment that I recently posted to another blog entry at this site:
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.
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!