I’ve posted Entry #256 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called There Are Rare Circumstances in Which Short-Term Predictions of Price Changes Can and Should Be Made.
Juicy Excerpt: There are two reasons why I predict that we will see a crash by the end of 2016 rather than by the end of 2018 (the far safer prediction).
One reason is that a lot of my critics insist that I offer claims that can be verified as proof that the Valuation-Informed Indexing concept works. I always explain that precise predictions generally cannot be made. However, I do have some sympathy for their position. To say “there will be a crash someday because prices must revert to the mean but we have no idea when that will happen” is to say just about nothing. It is not fair for critics of Valuation-Informed Indexing to demand more precision than is possible. But it is also at least a little bit unfair for Valuation-Informed Indexers to refuse to offer any precision whatsoever. I think we should always employ caveats when we make predictions. But I think we also need to try to be a bit more specific than to say “there will be another crash someday.”
Valuation levels have been headed downward for nearly 16 years. It’s been seven years since the first crash. Ten years is not the amount of time we should expect to see pass before we see a second crash; it is the longest amount of time we should expect to see pass before we see that second crash. At the end of 2016, we will have seen eight years pass. I think it is reasonable to expect to see the second crash by then. It hardly seems fair to say in 2008 that we should expect to see another crash within 10 years and then to continue to say in 2015 that we should expect to see another crash within 10 years. If the 2008 prediction was valid (it was), then it should be possible to say in 2015 that we will see a crash within three years. And, given that that is the longest it should take for the crash to take place, it does not seem too far out to me to say that there is a very strong chance that we will see the crash by the end of 2016.
I don’t offer guarantees. I certainly acknowledge that my prediction could be proven wrong. But I see strong support for that prediction in the 145 years of historical return data available to us today.
Anonymous says
No link to the full column? For you that seems like a strange oversight. Guess I’ll Google it.
Now I see the issue. Value Walk has obviously declined your request for comment deletion privileges. How unfortunate.
Rob says
I don’t think that you have that one entirely right, Anonymous.
I generally DO have full comment deletion privileges at ValueWalk.com. I did not request them. But there has generally been available to me a button that I can push to make abusive comments disappear.
There is a complication. There are times when that button is not present. I don’t believe that this is because the privilege has been taken away from me. The reason why I say that is that the button reappears from time to time. If the privilege had been removed, it wouldn’t return from time to time.
The policy that I have followed is to leave comments up when the button is not there (because I have no choice!) and then to remove the most abusive of them when the button reappears. I sometimes leave up abusive comments to which I have posted a substantive response because I want readers to be able to make sense of the response and they need to be able to see the abusive post to which I was responding to do so.
I have not asked the owner of the site to make sure that the deletion button is always available. He is a busy guy and I don’t like to bother him re matters that don’t seem to me to be terribly consequential. I don’t view this one as being terribly consequential. The abusive garbage that you Goons post there is obviously ugly stuff and it would be better to delete it. But I don’t see that it does much harm in a practical sense. It lets people know what the problem has been for 13 years now. People need to know about that aspect of the story. And, as noted above, some of the abusive comments make points that call for a response that has substantive value. In those cases, the abusive comments are in an indirect way serving a positive purpose. So I don’t think that it is such a terrible thing that the abusive comments are not removed immediately.
It is possible that my read on this situation is not entirely on track. As noted above, I haven’t contacted the site owner re this matter. So I don’t know for certain. But I believe that things will work out one way or the other. In the past there have been site owners who loved my stuff that banned me because they believed that the Wall Street Con Men would sue them if they continued to permit honest posting (the threats along these lines that you Goons regularly put forward obviously put that idea into their heads!). It could be that something along those lines will happen here — that you Goons will continue to post abusively and eventually the site owner will get so fed up with the ugliness that he will drop the column. I don’t believe that that will happen but I don’t put the odds of that happening at zero given stuff that I have seen happen at lots of other sites over the first 13 years of our Debate About Whether or Not to Permit a Debate.
But what of it?
There are thousands of other web sites. I have been banned from lots of places. And I have always been able to find new places at which to post honestly. I believe that that will remain the case for as long into the future as I will be around to craft posts for publication on the internet. If anything, the number of places willing to permit honest posting on the last 13 years of peer-reviewed research will grow over time. The next price crash will bring on huge growth in the number of sites willing to stand up to you Goons and permit honest posting. And, once we see that growth, there will be thousands of people making millions telling the story of what the last 13 years of peer-reviewed research reveals to us all about how stock investing works. That will cause a second huge growth spurt in the number of sites permitting honest posting. And somewhere there in the mix we will see an article on the front page of the New York Times reporting both on the massive 13-year cover-up and on all the amazing substantive insights that those of us posting honestly have developed together over the first 13 years of The Debate. That will generate a third growth spurt.
The bottom line here is that I see no way that I do not achieve Steve Jobs-level wealth as a result of this thing. And I see no way that millions of middle-class investors do not learn about the massive act of financial fraud that has put millions out of work while also setting up millions for failed retirements in days to come. I think we have a tiger by the tale here! No, I don’t think it. I KNOW it. Perhaps the cautious way to say it is that I am HIGHLY confident. About as confident as I am of the assertion that the moon is not made of green cheese. Let’s put it at 99.999 percent. Nothing is ever really 100 percent.
Does that help?
I am not God. I could be wrong. It has happened before. If it were happening again, I would probably be the last to know. No one can say anything with absolute certainty.
But I wouldn’t trade places with any of you Goons for $500 million (just to pull a crazy number out of the air). If all fails for me, I still have my freedom; I think it would be fair to say that if there is only one person in the United States not going to prison for financial fraud following the next price crash, that person would be Rob Bennett. So I have my freedom and the strong possibility of collecting a settlement check of $500 million. Not bad!
This is a great country we live in. No?
My take is that it is a great country. I would never betray it. I would never give two seconds consideration to the idea of betraying it. Not in 13 years. Not in 13 million years. Not this boy.
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, dear Goon friend.
Rob