Set forth below is the text of a comment that I recently posted to the discussion thread for one of my columns at the Value Walk site:
Bogle didn’t need to change a thing. You continue to make it seem that Shiller is saying things he really hasn’t said. Instead, you say he is scared or holding back.
Just more of your fantasy world.
Of course you need to keep the fantasy going to cover up. Here you are just piling up lies after lies after lies, telling your poor family that you need to troll the internet all day long to save the world from an economic crisis, all to avoid having to go out and get a job to provide for your family. And all you can do is repeat the crazy claim to your family that you will be getting a $500 million windfall to make up for their years of suffering.
You get to the crux of the issue with this one, Sammy. My strongly held view is that Bogle needs to change EVERYthing he has ever said about stock investing. He got it ALL wrong. Not intentionally, to be sure. But still.
Say that there was an assignment given over the radio to add together the numbers 2, 3, and 8 but the line was bad and people only heard the 2 and the 3 and not the 8. So everyone concluded that the answer was “5.” Then someone got ahold of a recording and played the thing again without the static and determined that the answer really was “13.” But the group that had said “5” became too embarrassed to admit its mistake and continued for decades to insist that the answer really was “5” and then threatened to destroy the career of anyone who said otherwise. That would be a big mess. That’s what happened in our collective efforts to figure out how stock investing works.
The Buy-and-Holders turned stock investing analysis into a numbers exercise. They made something that used to be rooted in opinion and subjectivity into something objective and scientific. By itself that was a huge advance. If only we all were doing today what the Buy-and-Holders at one time said we should be doing, we wouldn’t be living through an economic crisis. But part of the scientific process is learning from one’s mistakes and this the Buy-and-Holders absolutely refuse to do. So the many people who want to give accurate and honest investing advice feel too intimidated by the smear tactics employed by the Buy-and-Holders to speak clearly about what they really know. Not good!
Bogle’s mistake is the biggest mistake ever made in the history of personal finance. Bogle saw Fama’s research showing that short-term timing doesn’t work and jumped to the hasty conclusion that NO form of timing is required. Shiller was the first researcher to check long-term timing. He found that long-term timing ALWAYS works and is ALWAYS 100 percent required. That shouldn’t be even a tiny bit surprising. Long-term timing is price discipline. No market can function without price discipline. But lots of people were fooled by Fama’s research and, like the people who heard the numbers wrong because of a bad radio transmission, they have become too embarrassed by their mistake to acknowledge it. So we still hear people advocating the crazy Buy-and-Hold stuff to this day.
Failing to include the effects of valuations doesn’t cause your numbers to be a little off, Sammy. Valuations is BY FAR the biggest factor affecting stock prices. So those who fail to count valuations get the numbers WILDLY wrong. Every time. The Buy-and-Holders are wrong about retirement planning, they are wrong about asset allocation, they are wrong about risk management, they are wrong about everything. And the only way they can fix their mistake is to admit it. But that’s hard to do after covering it up for 35 years. So they are in a real fix.
That’s my sincere take, in any event. People tell me that I am a meanie for pointing out Bogle’s mistake. I don’t see it that way at all. As I mentioned above, I think of Jack as a friend. If I had destroyed millions of lives as the result of a mistake that I had made, I would want my friends to encourage me to come clean. That’s what I do for Jack, I encourage him to come clean. I see that as an act of charity. It is my view that failing to speak up about the mistake is an act of cowardice, not an act of charity.
I naturally wish you the best of luck in all your future life endeavors, my old friend.