Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
The gold to platinum price ratio is at a ten year high:
The article even mentions Shiller and CAPE:
“Professor Huang found that, at least since 1975, the gold-platinum ratio has had a significantly better track record than the CAPE of forecasting the stock market’s subsequent one- and five-year returns. In fact, he found the gold-platinum ratio to have a superior track record than any of nine other well-known indicators that researchers previously found to have predictive ability.”
Based on this stunning information, I’ve decided to go 100% into stocks. Not only that, today begins my 15 year jihad demanding that all finance boards talk about nothing but this topic. Any advice?
You should do what sounds good to you, Anonymous. It’s your money.
But there’s a big difference between something being so “at least since 1975” and something being so for the entire history of the stock market. Shiller was awarded a Nobel prize in Economics for his “revolutionary” (his word) 1981 research findings. That gives the Valuation-Informed Indexing project a credibility that no other investing advice project possesses today (the key claims of the Buy-and-Hold Model are also supported by Nobel-prize-winning research but Shiller’s 1981 research discredited the research that supports Buy-and-Hold.).
And I’ve never said that finance boards should talk about nothing but Valuation-Informed Indexing. What I say is that those who believe in Buy-and-Hold should post their honest beliefs and that those who believe in Valuation-Informed Indexing should post their honest beliefs. There are today two schools of thought in academia re how stock investing works. That reality should be reflected in the discussions held at every finance site. The problem for 15 years is that many Buy-and-Holders find it unsettling for those who believe in the minority school-of-thought to be heard. But it is financial fraud to present debates in which the claim is made that discussions of the peer-reviewed research are permitted when in reality only discussions of peer-reviewed research supporting the dominant school of thought are permitted and discussions of research supporting the newer, minority school of thought are banned. Those engaging in or supporting such fraudulent acts are obviously responsible for any losses suffered by those who believe the false claims of the site owners that the sites permit honest posting re the peer-reviewed research.
You believe in Buy-and-Hold. I believe in Valuation-Informed Indexing. You have as much right to post honestly as I do. But I also have as much right to post honestly as you do. I don’t advance death threats and demands for unjustified board bannings and tens of thousands of acts of defamation and threats to get academic researchers fired from their jobs to suppress discussions of Buy-and-Hold. And I don’t approve of you engaging in those abusive and criminal tactics to suppress discussions of Valuation-Informed Indexing. So I call you out on your b.s. when I see those sorts of smelly garbage appear before me.
If it is true that valuations affect long-term returns (I believe that it is true — I believe that Shiller merited his Nobel prize and that his powerful work and the powerful work done by hundreds who have come after him are in the process of bringing about a paradigm change in our understanding of how stock investing works in the real world), then the strategic recommendations of the Buy-and-Holders are dangerous. Every investor alive on the planet needs to know that. I don’t tell them that to hurt your feelings. I tell them that because it is simple human decency to protect people from acts of fraud practiced on such a widespread scale when opportunities to do so present themselves.
I hope that helps a small bit.
I naturally wish you all good things.