I’ve posted Entry #264 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Shiller’s Findings Revolutionize Our Understanding of How the Economy Works Too.
Juicy Excerpt: I have made this point on numerous occasions and have never been successful in generating much feedback. So I was happy to see a Letter to the Editor written in response to Shiller’s recent article (Rising Anxiety that Stocks Are Overpriced) that makes the essential point succinctly and yet compellingly. The comment was posted on August 31 by a fellow named “Ken” from Sydney.
Ken writes: “One of the problems that Professor Shiller ignores is that bubbles, in generating apparent wealth, have effects in the wider economy. As their asset values increase, they [investors who own stocks] tend to spend more, which increases the income of others in the economy. Seeing their increased income, they borrow more, pushing up asset prices.”
Anonymous says
Gee, Ken from Sydney has now weighed in. That changes everything. The world will now fall in place and follow VII. That $500 million is on its way to Rob.
Rob says
I of course understand that you are being sarcastic, Anonymous. But the point that you are making is 100 percent on the mark.
There are millions of Kent from Sydneys out there. I see people making the general point that he is making in every article that the New York Times runs on how stock investing works. And during the first 13 years of Our Debate About Whether or Not to Permit a Debate we have of course seen thousands of our fellow community members either make that same general point or at least express a desire that honest posting be permitted at every board and blog on the internet so that others can make that same general point in as effective a manner as they are able to make it.
Buy-and-Hold failed 34 years ago when Shiller published his 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. If Bogle possessed the level of ethics required of anyone who presumes to tell others how to invest their retirement money, he would have acknowledged his error within days of when Shiller published his “revolutionary” (Shiller’s word) findings and none of us would be suffering through this economic crisis today. It was Bogle’s cover-up of what the new peer-reviewed research says that led to Greaney’s embarrassment in May 2002 and then ultimately to the prison sentence that you will be receiving following the onset of the next price crash.
I had nothing to do with any of that. All of my energies have been directed to EXPOSING the cover-up and thereby bringing it to a full and complete stop. There are 13 years of Post Archives showing this to be the case. I am safe. And I am darned happy to be able to say that too!
Ken from Sydney has a right to be able to hear the truth about how stock investing works in the real world. So do the thousands of our fellow community members who have expressed a desire to see honest posting permitted at every investing discussion board and blog. So do the millions of middle-class investors who today still have confidence in Buy-and-Hold only because they have never been able to hear about the mountain of peer-reviewed research showing that it is pure garbage. So do even you Goons. Had Bogle not gone into cover-up mode when his error was discovered, you Goons would have been perfectly happy to have followed a strategy rooted in the peer-reviewed research. It is only because you were deceived by Bogle and the other Wall Street Con Men from 1981 through 2002 that you reacted to my posts pointing out the OBVIOUS errors in the Old School safe-withdrawal-rate studies 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.
There are millions of Ken from Sydneys out there and they will all be speaking out in much stronger terms following the onset of the next price crash. Your days living as a free man are limited because of the laws that the people of the United States adopted making financial fraud a felony. Good for the people of the United States! We need to put you Goons in prison cells before the rest of us can move forward in our understanding of how stock investing works in the real world. We are close. I think it would be fair to say that the day your prison sentence is announced will be celebrated as a Second Independence Day for the millions of middle-class people who will become free to plan their retirements effectively on that day.
I can’t wait!
Please wish us all luck with our continued efforts to get those prison sentences announced as quickly as possible!
Take care, man.
Rob