Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
I thought you said Shiller’s research was published in 1981. So somehow almost 40 years later it hasn’t changed a thing other than give you an excuse to carry on a deranged internet-based campaign.
Your point is not a bad one but it is overstated. Shiller’s research has changed everything and nothing at the same time. What I say is that as a society we are working our way through a PROCESS in which we achieve the transition from Buy-and-Hold to Valuation-Informed Indexing. It is sad that we have not made greater progress in 36 years. It is thrilling that we are so close to achieving such an amazing advance in our understanding of how stock investing works.
Shiller was awarded a Nobel prize. That’s not nothing. That’s a very big something.
Wade and I co-authored a peer-reviewed research paper that will in days to come show every investor on the planet how to reduce the risk of stock investing by 70 percent. That’s not nothing. That’s a very big something.
10 percent of the population already follows a Valuation-Informed Indexing strategy and warmly welcomes opportunities to engage in discussions about how stock investing works in the real world. That’s not nothing. That’s a very big something.
People like Jack Bogle and Bill Bernstein and Larry Swedroe and Bill Shultheis and Carl Richards and Michael Kitces includes snippets of research-based investing mixed in with heavy doses of the smelly Buy-and-Hold garbage ALL THE TIME. Bernstein has never said: “The Buy-and-Hold retirement studies are wildly inaccurate and should be corrected before they destroy even more livess” as I have. But he said way back in May 2002 that, to know the accurate safe withdrawal rate when stocks are as insanely overpriced as they were at the top of the bubble, you need to subtract 2 percentage pointd from the 4 percent number. That sort of thing is not nothing. That sort of thing is a very big something.
Intellectually, we have made enormous strides. The thing holding us back is that we have not applied the law that usually governs affairs conducted in our nation in the way that we usually apply it. The Wall Street Con Men have great amounts of money and power and connections. They have been able to get away with things that the leaders in any other field wouldn’t dream of being able to get away with for two minutes.
The Wall Street Con Men are human like all the rest of us. Give them the opportunity to cover up their mistakes and some of them are going to take advantage of it and most of the rest are going to keep quiet about what they see. That’s just human nature. It’s as unfortunate as all get out but it’s really the way it has always been. It could be argued that its not when our country messes up that is the exception but that it’s all the wonderful ways in which our country gets it right that is exceptional. This case is a case in which we have not quite managed to live up to the high standards that make our country such a great place to live.
I certainly wish that every site on the internet were open to honest posting on safe withdrawal rates and scores of other critically important investment-related topics as of this morning, Laugh. I fervently wish that. We would all be living better lives today if that were the case.
But it’s all in how you look at it. We could be living in a world in which we didn’t have 36 years of peer-reviewed research showing us how stock investing really works. Shiller just happened to marry a psychologist. It was through discussions with his wife about how the human mind works that he got started down the trail that led him to revolutionizing this field. He might have married someone else, he might have never gotten started down that trail. Where would we all be then? If that had happened, we would still experience the next price crash. But we would all be bewildered as to why it happened. Our economic system would go down, and in all likelihood our political system as well, and there wouldn’t be much we could do about it. At least this way we can tell the story of how we messed up and pull things back together and resolve never, ever again to let something like this happen.
It’s unfortunate that we have gone 36 years without spreading the word about the amazing insights developed in response to Shiller’s “revolutionary” (his word) research. But the good news here is 50 times more good than the bad news here is bad. I like it that I just happened to be born at a time when it is possible to reduce the risk of stock investing by 70 percent just by opening my mind to what the peer-reviewed research in the field says about how stock investing works in the real world. I could have been born at some other time and missed out on all this exciting stuff.
The Goon brain drives one in a negative direction. You are imprisoned by your negativity. I don’t want to deny that the death threats and the threats of career destruction have been a stone cold drag for 15 years now, destroying millions of human lives for no good reason whatsoever. But to me that is the small part of the story. The part of the story that people will remember many years from now is the part where thousands of good people put their lives on the line and put up posts expressing a desire that honest posting on the peer-reviewed research be permitted. Those people matter, Laugh. Those people shined a light into the darkness in which you Goons attempted to envelope us all. I don’t ever let myself forget those brave, kind, intelligent acts of defiance against your unrestrained hatefulness. Those people matter to me. It makes me happy to think what they will have achieved when we all make it together to the other side of The Big Black Mountain.
I have a funny feeling that you too will be looking at the efforts of those thousands and thousands of people in a different light in the days following the next price crash. But we will just have to exercise a little patience to find out for absolutely sure.
My best and warmest wishes to you.