Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
News flash, Rob. It is not all about what you think. It is what the broader community thinks. Of course, you also think the community is not being honest or is holding back, yet that is just you again inserting your opinion.
What I think matters a great deal re one aspect of the question, Anonymous. I do not feel even a tiny bit comfortable posting dishonestly re the numbers that my friends use to plan their retirements. So, if I do not believe that the retirement study posted at John Greaney’s web site contains a valuations adjustment, I need to say that whether my fellow community members dare to do so or not. It is not ALL about what I think. But what I think influences my posting given that I do not feel comfortable posting dishonestly.
I agree with you that what the broader community thinks matters a great deal. If the broader community is not willing to insist on recognition of my right to post honestly, then you Goons can be successful in your efforts to get me banned from any board or blog at which I post. If my views are not heard, then in a practical sense the fact that I am posting honestly doesn’t matter much — no one is hearing those honest views. So in that respect, yes, what the broader community thinks matters a great deal. I don’t disagree.
I wish the broader community would insist on recognition of my right to post honestly. That’s what I have always wanted. It has not happened. I am not sure what you would have me do re this reality. I cannot change it. I have to accept it. I do. I don’t like it one tiny little bit. But I accept the reality.
I believe that the reality will change in the days following the next price crash. Stocks are today priced at two times fair value. A 50 percent price drop would just bring us to fair value. Following a 50 percent price drop, a fellow who today has a portfolio valued at $1 million would have a portfolio valued at $500,000. A fellow who today has a portfolio valued at $100,000 would have a portfolio valued at $50,000. And like that.
Will that change affect how millions view the question of whether honest posting on the last 36 years of peer-reviewed research should be permitted at every discussion board and blog on the internet? I sure believe that it will. I believe that many of my fellow community members will be stunned to see half of their life savings vanish into thin air. I think they will be looking for explanations of what happened to them. I think that the Ban on Honest Posting offers a pretty darn persuasive explanation. I believe that following the next price crash there will be as many people referring to Jack Bogle as “Saint Jack” as we have today referring to Bernie Madoff as “Saint Bernie.”
Could I be wrong?
It’s been known to happen. I believed on the morning of May 13, 2002, that the broader community would shut down you Goons within two or three days. I think it would be fair to conclude at this point in the proceedings that the joke was on me re that one. It is at least theoretically possible that that will prove to be the case re this other matter as well. I don’t expect to see it happen. But you never know, right?
It seems to me that we are just going to have to wait to see how things play out. I have a hard time coming up with any other realistic options to offer you at this point in the proceedings.
I don’t say that what the broader community thinks doesn’t matter. In fact, I think it would be fair to say that I believe that what the broader community thinks matters a great deal. I have put millions of words forward during the first 15 years of our discussions. I do that to persuade members of the broader community of the merit of the last 36 years of peer-reviewed research in this field. I wouldn’t bother if I didn’t think that what those people think matters.
I guess you could say that I don’t think that what those people think AT THIS POINT IN TIME matters enough to me to persuade me to post dishonestly. It does not. But the broader community may change what it thinks in response to the hit it takes in the next crash. And, even if I knew in advance that the broader community would never change what it thinks, I still would not to sacrifice my personal integrity by saying that I believe that Greaney’s study contains a valuation adjustment. So, even if the broader community didn’t change, I would still feel compelled to post honestly re these matters.
My personal view is that this stuff should not even be a tiny bit controversial. Honest posting is permitted in all other fields and no one even remarks on it. It is just taken as a given. Why is the investing advice field so different? I think it’s that darn Get Rich Quick impulse that resides within all of us. It makes us act contrary to our self-interest. That’s what makes this story so exciting. What Shiller has really done is to teach us what we need to know to for the first time in history act in our self interest when buying stocks. That’s no small thing.
Consider this one, Anonymous. Stocks are today priced at two times fair value. And there is now a Ban on Honest Posting in effect at every large investing board and blog on the internet. Do you think those are unrelated phenomena? I do not. If you ponder it a bit, I think you will see that we could never get to a P/E10 value of 30 without a Ban on Honest Posting being in effect. If honest posting were permitted, lots of people would tell us what the research says and that would cause us to sell stocks and that would bring the P/E10 level down to fair-market levels. It’s only the Ban on Honest Posting that permits us to continue acting in so self-destructive a manner as to push the P/E10 value up to 30.
The Ban on Honest Posting serves a purpose today. It’s not a constructive purpose. It is a self-destructive purpose. It is like the hiding place that an alcoholic uses to keep his addiction from being exposed. But it does serve a purpose. The Get Rich Quickers/Buy-and-Holders want to keep that P/E10 at 30 or thereabouts. And they can’t do it if we all gain the freedom to post honestly re the peer-reviewed research. So most of us go along with what has to be done to keep that P/E10 value at 30 even though it includes some pretty darn nasty stuff.
Does the alcoholic need a hiding place any more after he hits bottom and is lying in the gutter? It seems to me that he does not. There is no purpose served at that point in putting the bottles in a hiding place. So it is with Buy-and-Hold after prices have crashed. What good would it do anyone at that point to lie about this stuff? Once prices have crashed, you cannot keep them up by telling more lies. Once there is no need to feed the fantasy, it is my view that telling the truth re these matters will catch on like wildfire.
But we are going to have to wait to find out for sure. There’s no other way for me to persuade you that that is what is going to happen except for you to see it with your own eyes. And there’s no other way for you to persuade me that that is not what is going to happen than for me to see it with my own eyes.
Does all of that help at all?
Rob
Max says
Rob,
It’s the same old thing, people think the party will never end. until it does. I have a friend who retired with $1million cash, his advisor told him to put it in the market in 2008. Well after a 60% loss he sold I guess anyone would. After this his advisor suggested going back in with the rest to “make his money back stocks, are cheap”. Well after all the dust settled he was left with $150,000. He cant go back to work and now he lives on SSI and depression.
I myself have only 10% allocated to stocks now.
Until you live through this or know someone who has you dont get it, the goons don’t because they cant be wrong.
What really bothers me is the “common knowledge” that markets ALWAYS comes back? Really? all advisors say this, It is in all the financial articles on the web. I know I can’t remember the dates, but 7, 15, 20 years to recover. in the past,I for one do not want to sit and wait in fear hoping the market will come back for the rest of my life.
Thank you for working so hard to get the word out, some of us get it Robv
Rob says
Am I trying to get the word out or am I trying to learn myself? I think that the bottom line here is that I am trying to learn myself.
There’s a message that I push. But, when you boil it all down, that message is: “Not one of us knows as much as he thinks he does, so we should all be willing to hear the other fellow out and learn what we can from someone coming at things from a different perspective.” That’s a process that serves us well in our efforts to learn in all other fields of human endeavor and it seems to me, that given how important investing is, it makes sense for us to apply the same learning process there that works in every other other field of human endeavor.
Thanks for stopping by, Max.
Non-Dogmatic Rob
Anonymous says
“Stocks are today priced at two times fair value.”
To be clear, this is a fact Wall Street is not aware of – otherwise they would immediately dump stocks. Is that fair to say?
Rob says
You are making a great point here, Anonymous. If you would reflect on this point a bit, the entire matter would click for you.
Just about everybody on Wall Street is aware intellectually of what the P/E10 level is today. You see it mentioned all the time in articles. These people are obviously not dumb. So on an intellectual level, they know what they need to know.
But they have not emotionally taken in the knowledge that they possess so that they can make productive use of it. They rationalize away this knowledge that they possess. They tell themselves “oh, nobody knows when the crash is coming and I cannot afford to miss out on gains in the meantime” or whatever. The knowledge that they possess sits in their brains but they have not integrated it with their other thoughts on all of the various strategic questions and so it is as if the knowledge did not exist. It is passive knowledge. It is not being put to productive use.
It helps to remember what happened in the famous psychology experiment from the 1950s, the Asch experiment. People were put in a room and asked to identify which of two lines — a 12-inch line and an 18-inch line — were longer. Their brains possessed all the knowledge needed to supply the correct answer. It was obvious to them that the 18-inch line was longer. But the four people who were plants and who spoke before them all identified the 12-inch line as longer. This psychological reality neutralized the knowledge they possessed. Humans are social creatures. Evolution put something within us that tells us “don’t go against the tribe no matter what your brain tells you.” So they told the person conducting the experiment that they “thought” the 12-inch line was the longer one. Their emotions cancelled out the product of their mental processes.
All of these people on Wall Street “know” what it means to say that stocks are priced at two times fair value, Anonymous. But their emotions — their need not to defy the tribe — cancels out the effect of their mental processes. So they don’t give voice to what they “know.” They say: “timing doesn’t work” or repeat some other mind-numbing marketing slogan.
Prior to 1981, we were as a people largely ignorant of the effect of valuations on long-term returns. Shiller was awarded a Nobel prize because he published research in 1981 that in an intellectual sense dispelled that ignorance. Now we “know” how stock investing works. But it doesn’t do us any good to possess this “knowledge” if we cannot act on it. I am trying to take things to the next step, to win for us the ability to DISCUSS what we now know so that we can integrate it with our other thoughts on the subject of investing and thereby become able to make better strategic decisions.
That’s the story here. Do we begin to make collective use of the last 36 years of peer-reviewed research in this field or do we elect to remain in effective ignorance and suffer the consequences of doing so? I of course say that we need to move forward, that all of our social norms favor open discussion of peer-reviewed research and that there is no way to hold back the tide of history re these matters indefinitely.
If we all talked openly about the overvaluation problem, the overvaluation problem would go away. Shiller SOLVED the one big problem of stock investing — the risk attached to it. The peer-reviewed research that I co-authored with Wade Pfau shows that the risk that has always been associated with stock investing pretty much goes away once people are permitted to take the findings of the last 36 years of peer-reviewed research into consideration when making allocation decisions.
But people do need to be able to discuss these matters to be able to gain the power to overcome their unfortunate emotional inclination in favor of Get Rich Quick thinking. It is only by opening every discussion board and blog on the internet to honest posting re the last 36 years of peer-reviewed research that we can put those research findings to good use, that we can at last come to truly “know” what Shiller showed us 36 years ago. We need to enforce our laws against financial fraud. Those are good and necessary laws. They are a key part of the system that permits the American Experiment as a whole to work its magic.
Good question.
Rob
Anonymous says
It is a good thing that we have future billionaire Rob Bennett around to set us all straight.
Rob says
I think it would be fair to say that the work that I am doing is important work, Anonymous.
I didn’t ask for this job. But I have played the cards that I was dealt to the best of my ability for 15 years now. I offer no apologies.
I naturally wish you the best of luck in all your future life endeavors.
Rob
Anonymous says
“I think it would be fair to say that the work that I am doing is important work, Anonymous.”
I don’t think there is anyone else that would describe what you do as work, nor would anyone say that it is important. The cards were not dealt to you. It is the path you have chosen.
Rob says
I chose to put a post to a Motley Fool discussion board on the morning of May 13, 2002, pointing out that the retirement study posted at John Greaney’s web site lacks an adjustment for the valuation level that applies on the day the retirement begins. Thousands of people have looked at the study in the 15 years since and not one has been able to identify a valuations adjustment. I think it would be fair to wonder at this point in the proceedings if perhaps I was right in what I said in that post.
Buy-and-Hold is the biggest money-maker in the history of personal finance. Taylor Larimore summed it all up when he referred to his retirement home as “The House that Jack Built.” If the market really is efficient, then Taylor really does have Jack Bogle to thank for that house. Bogle urged Larimore to follow a Buy-and-Hold strategy, stock prices shot upward, and Larimore had the money to buy the house. But if Nobel-prize-winning economist Robert Shiller is right that valuations affect long-term returns, then the price increases were caused by a temporary irrational exuberance and Larimore’s Pretend Gains (and retirement home) will be washed away in the next price crash.
There are lots of powerful and wealthy people who do not want to see the last 36 years of peer-reviewed research discussed on the internet. I do.
It will be interesting to see how things play out in the days following the next crash.
I wish you the best of luck with it, my good friend. But that’s as far as it goes. No financial fraud for this boy. Not in 15 years. Not in 15 billion years.
My best and warmed wishes.
Rob
Rob says
The bottom line? I’m proud of my choice.
It’s the bravest, kindest, most intelligent thing I have ever done with my life energy.
I am a flawed person. I have not always lived up to my ideals. But the moment when I pushed the “Send” button on the morning of May 13, 2002, was my finest moment. I’ll accept whatever consequences I am asked to accept for making that call. I will take death over betraying my fellow community members and ultimately the country that I love.
My sincere, loving take.
Rob
Anonymous says
“The bottom line? I’m proud of my choice.”
Really???
If it were me, I would be embarrassed.
Anonymous says
You seem to spend a significant amount of time talking about what you think are accomplishments and praising yourself. People that have actually done something of value and have made great achievements dont need to tell people about it nor do they need to be self promoters.
It is sickening to watch you present yourself as the savior of the unwashed masses.
Rob says
If it were me, I would be embarrassed.
Okay, Anonymous.
I wish you all good things, in any event.
Rob
Rob says
You seem to spend a significant amount of time talking about what you think are accomplishments and praising yourself. People that have actually done something of value and have made great achievements dont need to tell people about it nor do they need to be self promoters.
I praise everyone who has helped me, Anonymous. And there have been thousands who have helped. This certainly has not been a one-man show. It’s been the farther thing from it that it is possible for the human mind to imagine.
I have even praised you Goons. Why? Because you have helped. That’s not your intent. But you are humans. Humans have minds. On occasion, you have put your minds to use in ways that have proven helpful. That’s just the way it is.
Greaney’s retirement study was a big advance. In the days before his study, there were smart people who believed that the safe withdrawal rate was 7 percent. His study showed them where they were wrong. Good for him, you know?
Greaney got the numbers wrong. I said that publicly and he flipped out. The big-picture reality remains that he helped us all out in a big way. And I am grateful for it.
My best and warmest wishes to you and yours, my good friend.
Rob
Anonymous says
“I praise everyone who has helped me, Anonymous. ”
Translation: “I will say a few good things about others so that it doesn’t look so obvious with my own self promotion. I am such a great person”
Rob says
Translation: “I will say a few good things about others so that it doesn’t look so obvious with my own self promotion. I am such a great person”
Okay.
I think that Buy-and-Hold is a big pile of smelly garbage.
Given that reality, I have two ways to go. I can say: “I think that Buy-and-Hold is a big pile of smelly garbage and I hate the monsters who created it.” Or I can say: “I think that Buy-and-Hold is a big pile of smelly garbage and I feel a great deal of respect and affection and gratitude toward the people who created it for all the good they did with the things they got right.” By choosing the latter option, I run the risk of being criticized of just saying these things to make myself look like a great person.
So be it, you know. I love my Buy-and-Hold friends. I wouldn’t feel any more comfortable selling them out than I would selling out my fellow community members or the country that I love.
I love you, you big ugly Goon. Deal with it.
Rob
Anonymous says
Because calling people goons and con-men and making up stories about death threats and job threats is another way of showing your affection…….lol.
Yes, you are a legend in your own mind, Rob.
Rob says
The Buy-and-Holders were sincere when they developed their strategy, Anonymous. Anyone who has promoted Buy-and-Hold since 1981 and who has failed to point out that there is peer-reviewed research showing that valuations affect long-term returns has done harm to their Buy-and-Hold friends. The Buy-and-Holders believe in research. We should show them the respect they merit by pointing out the 36 years of peer-reviewed research showing that the market is not efficient every time we refer to their beliefs about how stock investing works.
That’s my sincere take re these terribly important matters, in any event. I have shown a lot more respect and affection for the Buy-and-Holders than you have. I say that they made mistakes but I also say that they are sincere. You act as if they intended the human misery they have caused.
It will be interesting to see how it all plays out in the days following the next price crash.
Rob
Anonymous says
“That’s my sincere take re these terribly important matters, in any event. I have shown a lot more respect and affection for the Buy-and-Holders than you have”
Respect?
Name calling, made up stories about death threats and job threats (that have long been debunked), deleted posts, etc.
Respect? Give me a break.
Rob says
If I got an important number wrong in a retirement study posted at my web site, I would want my friends to tell me about it so that I could promptly make a correction and spare myself further embarrassment.
That’s respect, Anonymous.
To aid in a 15-year cover-up of the error is to suggest that you don’t believe that the friend is capable of acting ethically. That’s disrespect.
My sincere take.
Rob
Anonymous says
“But they have not emotionally taken in the knowledge that they possess so that they can make productive use of it. …The knowledge that they possess sits in their brains but they have not integrated it with their other thoughts”
And don’t you think it’s a wee bit presumptuous to claim you know the inner working of the minds of thousands of people you’ve never met, many of whom you agree are far more intelligent and experienced that you are?
Rob says
And don’t you think it’s a wee bit presumptuous to claim you know the inner working of the minds of thousands of people you’ve never met, many of whom you agree are far more intelligent and experienced that you are?
I’m intelligent enough to see that there is no valuation adjustment in the retirement study posted at Greaney’s site, Anonymous. And I am intelligent enough to know that Shiller’s research showing that valuations affect long-term returns must be legitimate research or else he would mot have been awarded a Nobel prize for it.
I am intelligent enough to know that there is no place for death threats in discussions of stock investing. And that there is no place for demands for unjustified board bannings. And that there is no place for thousands of acts of defamation. And that there is no place for threats to get an academic researcher fired from his job.
If you have a better explanation for the events that we have seen transpire over the past 15 years, I would be happy to hear it. Neither you nor anyone else has even tried to put forward a better explanation. So, no, I don’t think it’s presumptuous at all. These events demand an explanation. And there is an explanation available in the psychological literature — cognitive dissonance. So that’s the one that I am going with until I hear something better.
You don’t have to accept my explanation if you don’t care to. You asked me a question and I gave you an honest response. My explanation is 100 percent sincere. I am as intelligent as I am, no more and no less. And that’s what I have come up with at this point in the proceedings. I look for new insights every day. So perhaps down the road a bit I will be able to add some detail to it.
My best wishes.
Rob