Set forth below is the text of a comment that I recently added to the discussion thread for one of my columns at the Value Walk site:
Yes, it makes a lot more sense versus running around calling people goons, making up stories about death threats, sending out 30,000 emails about Wade Pfau, calling Jack Bogle a con man, expecting $500 million windfalls, etc.
It’s a process, Sammy.
Shiller’s “revolutionary” (his word) finding that valuations affect long-term returns changed our understanding of how stock investing works in a fundamental way. It’s a huge advance. It’s good stuff piled on top of good stuff piled on top of good stuff. With now downside whatsoever.
So what’s the problem?
Really big advances are hard to accept. It’s a paradox. We all want to enjoy the benefits that come with huge advances in understanding. But the practical reality is that there are hundreds of thousands of people who make their living giving investing advice. When a fundamental advance is achieved, they are put in a tough spot. It makes them “look bad” to acknowledge to all the people they have advised that they got it wrong. This is a field in which “expertise” is highly valued. So the people who would have jumped at the opportunity to spread Shiller’s ideas had they not previously promoted very different ideas instead ignored them.
They have now ignored them so long (35 years!) that they feel a need to cover them up, to pretend that the finding that stock risk is not static but variable (that is, that all investors seeking to keep their risk profiles roughly stable are REQUIRED to change their stock allocations in response to big valuation shifts) is not such a big deal, that Buy-and-Hold might somehow work out okay for some despite the 35 years of peer-reviewed research saying otherwise.
Did I cause any of this? I did not. All of these realities were in place when I came on the scene in 2002. You are mad at the wrong guy.
Be mad at the humans, you know? The humans are the ones who suffer cognitive dissonance when huge advances are achieved and who try to delay realization of those advances for as long as possible. We are what we are. We are flawed in that we really do suffer from cognitive dissonance when faced with such circumstances and in that we really do engage in cover-ups that cause a lot of human misery. But please don’t forget that it is also the humans who come up with the huge advances that help so many to live richer and fuller and brighter and happier lives. Both things are so. We are mess-ups and we are heroes. Whachagonnado?
I’m going to continue to encourage a speeding up of the transition from the now discredited Buy-and-Hold Model to the first true research-based model for understanding how stock investing works — Valuation-Informed Indexing. I am excited re our future. This is the real thing. This is what Bogle had in mind when he came up with his first-draft version of a research-based approach. I want to see the guy realize his dream. So I am going to continue to do what I can to get the word out about what we have learned over the last three decades re what really works.
One of these days you are going to come around and join in the effort to get over The Big Black Mountain and to the place where deep in our hearts we all want to go. I hope it happens soon. The sooner it happens, the better for every single person involved. But, if there’s one thing that I have learned over the first 14 years of our discussions, it’s that you cannot rush a Goon. You are going to come around when you are good and ready to come around and not two seconds sooner no matter how much I long to see you (and millions of others!) enjoy all the good stuff waiting for you on the other side.
I naturally wish you all the best regardless of when you make your move or even in the event that you elect never to make it. Despite your nastiness, I have learned many important things by talking things over with you and I am grateful for the role you played in helping me out in that way.
My best and warmest wishes to you.
Rob
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