Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
Um no. This is exactly the result we should expect to see if PE/10 just isn’t that useful.
I had a short internal debate at to whether to approve this comment or not, Anonymous.
The case for approving it is that all signs are that you are sincere in what you say here. You don’t believe that P/E10 is too useful. There are obviously millions of others who feel the same way. So that point of view deserves to be heard.
The other side of the story is that you make no effort to make any rational case for your belief. Millions of people bought Shiller’s book. Behavioral Finance is a quickly growing discipline. Shiller was awarded a Nobel Prize for his work. The small group of Valuation-Informed Indexers who posted at the Bogleheads Forum before Lindauer took over control of the board were among the most popular posters in the community. You have long been insanely abusive in your responses to those who give expression to their sincere belief in Shiller’s findings. You do an exceedingly poor job of making the case for Buy-and-Hold. When you fail to state any reason for your beliefs, you don’t help the readers of this blog to come to a better understanding of the subject matter.
The Buy-and-Holders have made major contributions. Bogle is my hero. But most of them have given up the effort to make a rational case for their beliefs given the mountain of peer-reviewed research showing that they made a mistake re the importance of exercising price discipline when buying stocks. Not many engage in the insane level of abusiveness that we see from you and your Goon friends. But not many speak out in opposition to your Goon tactics either. That’s not quite as bad perhaps but it is almost as bad. It’s certainly not honorable or edifying or inspirational or generous. It’s terribly, terribly sad.
Perhaps you are right. Perhaps P/E10 is not as powerful a tool as I believe it to be. I think it is a very powerful tool indeed. But perhaps I am wrong. If I were, I would in all likelihood be the last to see it. Given that reality, I elected to approve the comment and let your words appear here. Perhaps you are telling the true story and I am telling the false one and those who read these words need to see your point of view expressed to warn them away from placing too much confidence in my own.
I don’t believe that, however. I see too much hate coming from you to believe that you are capable of thinking these matters through carefully. I find you an intelligent person. But I believe that the emotionalism that comes to dominate you when you give a tiny bit of consideration to the possibility that you have destroyed thousands of human lives with your dogmatic “defenses” of the Buy-and-Hold concept cancels out your intelligence when you are writing on investing issues.
It is obviously not my intent to be impolite in any way. People need to figure out which side is right and which side is wrong. Your abusive behavior provides us all with an important clue. Buy-and-Holders are almost always either abusive or silent. It is rare to find one willing to engage in a calm and reasoned back-and-forth discussion on the merits of the issues in play (which makes it all that much more exciting in those rare cases when such a good soul is discovered!). Valuation-Imformed Indexers NEVER respond to challenges to their thinking with abusiveness or sarcasm or evasiveness or anger or demands for unjustified board bannings. As much as I love my Buy-and-Hold friends, I cannot help but wonder why.
I think P/E10 is a powerful tool. You don’t. That much is all part of the wonderful Learning Together game.
You hate me with a burning and undying hate. I am grateful for your contributions and what I learn from them. I think that the difference between the two emotional states tells us something important about the differences between Buy-and-Hold and Valuation-Informed Indexing, that the former is the purest and most dangerous Get Rich Quick scheme ever concocted by the human mind while the latter is the first true research-based strategy.
But then, I would, wouldn’t I?
My best and warmest wishes you you in any event, Goon friend.