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:
“These discussions have been going on for 15 years, Dan. You have been present for them the entire time.”
No I haven’t. I only stumbled upon you in the last few months. But I have to admit, you are a unique individual.
“I am 100 percent confident that, if you do the calculation again, you will find something similar.”
Why should I do your work? You’re the one who claims to have the answers. State your exact formula, plug in your real time, real life numbers, and let’s see how you made out.
Of course, this will never happen. Your whole shtick is based on pushing vague, unprovable hypotheticals as undeniable fact. That your gut feelings are right, and actual data is wrong. And the fascinating thing is, you never get seem to get tired of it.
It’s true that my gut feelings tell me that the price you pay for stocks should influence the value proposition obtained by making the purchase. I don’t agree that this is a “vague, unprovable hypothetical.” It seems to me that this can be checked by examining the historical return data. And it further seems to me that this is what was revealed by Shiller’s “revolutionary” (his word) research. I am not the only one who believes that that research tells us something important. Shiller was awarded the Nobel prize in Economics a few years back.
I don’t get tired of it because I am always discovering new things that help me to understand in a better and clearer and deeper way what is going on. With Buy-and-Hold, investing analysis was a numbers game. Post-1981, it is still a numbers game. But it is a numbers game informed by consideration of the effects of human psychology. Shiller’s P/E10 is a metric that translates human emotion into a number so that it can be used in investing calculations.
Think of what happened when Freud showed that humans engage in self-deception. That changed everything, didn’t it? It gave us the means to approach issues like crime and drug abuse and marriage difficulties from entirely new perspectives and to make progress dealing with them that was not possible before his insights were advanced. I don’t say that Freud did everything perfectly any more than I say that Shiller did everything perfectly. But I believe that both Freud and Shiller opened up new worlds to explore.
That’s why I don’t get bored with this. I love learning and teaching. It’s the reason why I became a journalist. Exploring the many far-reaching implications of Shiller’s Nobel-prize-winning research provides me opportunities for unlimited amounts of learning and teaching in a field of human endeavor that affects us all in a big way. Putting me in the circumstances in which I have been put over the past 15 years is like putting a baseball player in the World Series or putting a politician in a Presidential debate or putting a group of four musicians on the Ed Sullivan show on Sunday evening in February 1964. This is where it’s happening. This is where I want to be, Dan.
I want to see the work helping millions of people. That’s the aim. So I am not trying to say that I enjoy your abusiveness. I am saying that the abusiveness is part of the story (we would not see abusiveness if Shiller were not right that investing is a highly emotional activity, right?) and that the story needs to be told and that I seem to have been placed in circumstances that permit me to tell it in a way that no one else possibly could. I feel a responsibility not to turn away from the job and to be sure to work it hard enough to get it right. It’s exciting. It’s fulfilling. It’s rewarding. It’s life-affirming.
I hope that that makes at least a little bit of sense to you, my good friend.