Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
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 Rob.
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
It seems that Robert Shiller is becoming more of a goon every day. We continue to read as to how he thinks we should remain 8n stocks. Now he says we have seen the correction:
https://www.bloomberg.com/news/videos/2018-02-12/robert-schiller-says-we-ve-had-our-correction-video
Notice he doesn’t call for a 50 or 65% drop. Nor does he say to get out of stock. I guess you will have to send him to your prison as well, Rob.
Thanks for the link, Anonymous. That’s an important clip and I am grateful that you brought it to our attention.
I am not at all grateful for the way you presented it. Your wording was 100 percent goonish. Your wording was 100 percent misleading. Someone who read your comment and did not listen to the actual clip would be left with a completely wrong impression of what Shiller said. That sort of behavior doesn’t help. It hurts in a big way.
Now —
In fairness to you, it is very hard to make sense of what Shiller is saying here. He IS saying that we have seen a correction that could have been anticipated, which is what you are saying he said. But he is not at all saying that we are not going to see another big drop; he suggests that that is a possibility. You say that he doesn’t “call” for a 50 percent drop or a 65 percent drop. I don’t see him “calling” for either of those things either. But I sure don’t see him ruling them out. And the way that he says things suggests (only suggests) that he sees them as real possibilities.
We need to dig deeper. We need interviewers asking him hard, follow-up questions. We need to figure out what he truly believes about all this stuff. It is not at all clear at this point. And it is important that we know. And of course figuring out what Shiller truly believes is only the first step. We need to figure out what Bogle truly believes. And we need to figure out what Pfau truly believes. And we need to figure out what Bernstein truly believes. And we need to figure out what Kitces truly believes.
I’ll take it a step further. Shiller needs to figure out what Shiller truly believes. And Bogle needs to figure out what Bogle truly believes. And Pfau needs to figure out what Pfau truly believes. And Bernstein needs to figure out what Bernstein truly believes. And Kitces needs to figure out what Kitces truly believes. And Anonyomous needs to figure out what Anonymous truly believes. And so on and so forth.
We all need to be making an effort to figure out how this stock investing stuff really works. To do so, we need to do something about the death threats and about the demands for unjustified board bannings and about the thousands of acts of defamation and about the threats to get academic researchers fired from their jobs and just let people say what they believe in plain and simple and clear terms. And then we need to dig into what they say and explore it from multiple angles until we can make sense of the entire story. That’s my sincere take.
Shiller is talking here about his indicators. In numerous interviews he has suggested that he believes that short-term timing is possible by making use of certain economic indicators that he favors (here he is making reference to some sort of investor confidence indicator). I don’t believe in short-term indicators. I think Shiller is wrong about this. If he knew that a correction was coming, why didn’t he say so before it hit, you know? He didn’t say anything before because he didn’t really know. Short-term timing doesn’t work. Sometimes the indicators work and sometimes they don’t. If Shiller called for a correction each time his indicators saw one coming, he would end up looking like a fool because he would be proved wrong so often. So I just don’t buy that one. I personally don’t think that what he says about short-term indicators and short-term calls is of much consequence (I of course acknowledge that it is possible that I am wrong about this as it is possible that I am wrong about all else).
What I think Shiller did that has HUGE importance is to show that long-term timing always works. He doesn’t say it that clearly and I wish he would. But he showed with peer-reviewed research that valuations affect long-term returns. If that’s so, then stock investing risk is not static but variable. If that’s so, then long-term timing must always work because all that long-term timing is in that scenario is is price discipline. Investors should obviously be trying to keep their risk profiles constant and so investors should obviously be engaging in long-term timing to do so. There can be reasonable arguments about how to go about doing so. But there cannot be any reasonable arguments as to whether it is necessary for investors to make the effort to get it right. If the market is not efficient, then investors cannot keep their risk profiles constant without engaging in long-term timing/price discipline, so they obviously need to make the effort to do that.
I obviously do not buy into what you are saying that Shiller is saying. But you of course are being highly misleading. He is not saying what you are saying he is saying. He is saying something strange and confusing and hard to decipher. I will give you that much. I do not feel that I can say precisely what Shiller truly believes; my personal guess is that even Shiller could not do that at this stage of the proceedings. But I sure believe that it is a critical matter of national business that we all figure that out. And the way to do that is not to go goonish when he says something and to try to force his words into our own views of how stock investing works. The way to go is to ask more questions and to dig and to explore and to analyze and to ponder until we possess a far better understanding than we possess today.
If you believe that Shiller believes what you believe about stock investing, you are fooling yourself, Anonymous. Of that I am 100 percent sure.
I cannot say by his pubic words that Shiller believes everything that I believe. But I can say that everything that I believe logically follows from his “revolutionary” (his word) finding of 1981 that valuations affect long-term returns. I believe that Shiller is afraid to say clearly and plainly much of what he believes about how stock investing works and that, if he did speak clearly, we would learn that he believes most or at least much of what I believe. But I also believe that he probably does not today believe everything that I believe. He probably has not thought through some of the things that I have thought through. And of course I could be wrong about some things. So there is just no way of knowing until as a society we elect to permit honest posting at every site on the internet so that we can all gain a lot of depth re our understanding of the last 36 years of peer-reviewed research in this field.
Thanks again for the link. We all need to listen to that clip and ponder its meaning. I think you are very much off track in your public statement as to what you believe it means. But I also think that you are right to see the clip as being important enough to note and I do acknowledge that the clip suggests that Shiller holds some beliefs that are in accord with your own (it is more than a little hard to say precisely what those beliefs are because we have just not yet seen enough digging to make complete sense of what he says here).
Yowsa!
Take good care, man.
Rob
If Shiller isn’t making things clear, then he is acting like a goon, correct?
To a limited extent, yes, that is so.
Shiller has never put forward any death threats. So he hasn’t gone full Goon. But, yes, it would be better if he spoke clearly about the importance of the distinction between short-term timing (which never works) and long-term timing (which always works). Each time someone speaks clearly about this stuff, it makes it easier for lots of others who are trying to work up the courage to speak clearly. And each time someone hold backs from speaking clearly, it makes it harder for lots of others who are trying to work up the courage to speak clearly.
Bull markets are liar’s markets. A bull market is what you get when millions of investors all agree to tell lies to each other about the value of their stock portfolios. If we permitted honest posting at every site, there could never be another bull market. Stock prices are self-regulating so long as investors are aware of the benefits of lowering their stock allocation as the value of investing in stocks diminishes. We act as a society to keep a bull market going by banning honest posting. So long as people cannot gain access to honest reports of how stock investing works, a bull market can continue. So we impose harsh social punishments on those who attempt to speak honestly about the last 36 years of peer-reviewed research in public places.
I don’t want to play that game, Anonymous. I played it once. I saw people get hurt. So I stopped. I don’t ever want to go back to playing that game.
Shiller plays the game today to some extent. He doesn’t put forward death threats. But he gives evasive answers when he is asked about market timing. He fails to make clear the distinction between short-term timing and long-term timing. He extends the bull market by doing that. He hurts people by doing that.
We all need to work up the courage to speak honestly about this stuff. Shiller could help us all by being more honest about this stuff in his public statements. I would like to see him do that. I urge him to do that.
I cannot force him, right? So what would you have me do? I have done everything that I can think of.
I believe that he will see the need to speak more clearly and forcefully re these matters in the days following the next price crash. So it will happen then. I wish it would happen today. I wish that Shiller would come out with a 100 percent clear statement by the end of business today.
But I cannot force it, can I? I am just going to have to exercise some patience.
Does all of that not sound at least roughly right?
Rob
“I believe that he will see the need to speak more clearly and forcefully re these matters in the days following the next price crash.”
Since you obviously understand nothing about human psychology, I will spell it out for you. If Shiller believed “long term timing works”, he wouldn’t wait till after a crash to say it. He’d be mocked for such unhelpful hindsight. Instead he would be saying it now, when valuations are extreme, so that when the crash came he would be a hero. But he’s not saying it. And he’s had ample opportunity. The obvious conclusion is that he doesn’t believe it.
You can sit and wait and ponder all you want. Shiller is 71 years old. He’s not going to change his tune to suit you. (Here’s where you say it will be interesting to see how it plays out, since you are also blind to the fact that it has already played out.)
So if he is not speaking clearly, he is causing millions of failed retirements and is guilty of fraud, like Bernie Madoff.
Since you obviously understand nothing about human psychology, I will spell it out for you. If Shiller believed “long term timing works”, he wouldn’t wait till after a crash to say it. He’d be mocked for such unhelpful hindsight. Instead he would be saying it now, when valuations are extreme, so that when the crash came he would be a hero. But he’s not saying it. And he’s had ample opportunity. The obvious conclusion is that he doesn’t believe it.
You can sit and wait and ponder all you want. Shiller is 71 years old. He’s not going to change his tune to suit you. (Here’s where you say it will be interesting to see how it plays out, since you are also blind to the fact that it has already played out.)
We obviously disagree, Anonymous.
Why did I keep my mouth shut about the errors in Greaney’s study for three years?
I believe that evolution has instilled within us all a disinclination to break with the herd. We want to get along with others. We want to have friends. We want to be popular. We want to see people praising us and linking to us.
And it takes many years, in some cases decades, for the downsides of Buy-and-Hold to reveal themselves. So we rationalize. We tell ourselves stories that make it seem not so bad for us to keep our mouths shut. My rationalization was that the Greaney study was a big advance over what came before it (I still believe that to this day). My guess is that Shiller’s rationalization is that he can do more good saying things the way he does because at least he gets the message out, which would not be the case if he were banned at every site like I am. And, indeed, Shiller’s work has persuaded about 10 percent of the population. Perhaps he has gone about things in the right way. I don’t think so. But I could be wrong, no?
I don’t think it has played out. I see all the difference in the world between being in a situation where 100 percent of the evidence available to us shows that investors need to practice price discipline when buying stocks but in which the portfolio statements of millions don’t look so terrible to being in a situation where the peer-reviewed research still says what it has said for 36 years now but millions of people have lost hope that they ever will be able to retire because of the devastating losses they have suffered as a result of following a pure Get Rich Quick approach. I think we are all going to pull together and open every site on the internet to honest posting in the days following the next crash.
But then I thought that this would all be resolved within two or three days of my famous post of the morning of May 13, 2002. The joke was obviously on me re that one, no? So it is at least theoretically possible that I will be proven wrong again. That’s why I say that we are just going to have to wait to see how it all plays out to know for certain.
I wish you the best of luck with it in any event.
Does that help at all?
Rob
So if he is not speaking clearly, he is causing millions of failed retirements and is guilty of fraud, like Bernie Madoff.
He could do more. I certainly agree re that much.
But he has done more than any human alive on Planet Earth. None of the materials at this site would exist if it were not for Shiller (or Bogle — I rank the two roughly even re that good that they have done for millions of middle-class investors).
Both things are so, you know? So I am going to continue to say both things. Shiller is a Hero of the First Rank. And I wish that he would do more.
And of course I wish that all the rest of us would ASK him to do more. I am 100 percent certain that he would do more if we would make clear to him that we would not punish him in any way for doing so. Bogle could send Shiller an e-mail asking him whether he believes that the safe withdrawal rate is always 4 percent or whether he thinks it is a number that changes with changes in valuation levels. I am 100 percent certain that Shiller would respond in some way to that e-mail. And then we would all know more about that important subject matter. So I vote in favor of us all imploring Bogle to send such an e-mail.
But I only get one vote, you know? That’s always the thing that hold us back.
I only get one vote. It’s a reality that I have to accept, like it or not.
Yes?
I love Shiller, I love Bogle, I love you Goons, I love the Wall Street Con Men, I love the millions of middle-class investors whose lives are in the process of being destroyed. I vote for opening every investing site on the internet to honest posting re safe withdrawal rates and scores of other critically important investment-related topics by the close of business today. I can do no more and I can do no less.
And I naturally wish you all the best that this life has to offer a person, my dear Goon friend.
Rob
“My guess is that Shiller’s rationalization is that he can do more good saying things the way he does because at least he gets the message out”
What good is getting a message out if it’s the wrong message? MY guess is that your guess is pure speculation based on nothing more than wishful thinking. And that Shiller is saying exactly what he means. You would have us believe that Shiller will come out after the crash and say “I knew this would happen, I just didn’t want to be unpopular. But I’m telling the truth now. Really.”
What Shiller is saying is not the wrong message to the 10 percent of the population that has changed its investing behavior because of what he says. Take somebody like Microlepsis at the Bogleheads Forum. He was influenced by Shiller’s work. And he was an amazing poster. There were times when they took polls to see who the most popular posters were and Microlepsis was always at the top. Microlepsis helped lots of people. He was a goldmine of good information for all of us.
When the Linduaerheads took over, Microlespsis was banned. So none of us get the benefit of his thinking any more. I hate that. I want to change that. That’s what this is all about.
Some people tell me “oh, if you had just kept your mouth shut about the errors in the safe withdrawal rate studies, the Bogleheads Forum would still be at Morningstar and Microlepsis would still be posting and we would all be better off. I don’t see it that way. I agree that it would be good if we were still hearing from Micolepsis. But I want us all to be able to post honestly re safe withdrawal rates and scores of other critically important investment-related topics. So I cannot play it the Microlepsis way, which is essentially the Shiller way.
I want Shiller (and thousands of others) to speak out more clearly and more firmly and more boldly. There are lots of people who try to be kinda sorta honest to a limited extent and get away with it. I want more. I want to provide millions of people access to honest and accurate safe withdrawal rate studies. I want to bring the economic crisis to a full and complete stop. I want people to be able to retire many years sooner while taking on only a fraction of the risk that they were taking on in the days before we opened the entire internet to honest posting.
I get what Shiller is doing. I don’t endorse it. I urge him to speak out more clearly. But I get why he plays it the way he does. Maybe he is right, you know? I don’t think so. But I could be wrong. I sure believe that he has done a huge amount of good playing it his way. I can’t say different re that much. There would be no Valuation-Informed Indexing if not for Shiller’s willingness to put his neck on the line more than anyone else alive on Planet Earth has put his neck on the line re these matters. That’s no small thing.
I think that after the crash Shiller will probably say that he was worried that something like what happened might happen but that he didn’t focus on it too much because he was not sure and he did not want to upset people. And given all the good that he has done, I think that a lot of people will accept that. It may be that there will be some who will not accept it. That worries me. I will be urging people to accept it. But I cannot say whether my urgings will win the day or not. That one is not my call.
We are all in this together. Why don’t we all make clear to Shiller that we will impose no penalties for him speaking out clearly? We all play a role in this, each and every one of us. And we all will obtain the benefits that will follow from us making it together to the other side of The Big Black Mountain. And we all will suffer the negative consequences of further delays. Rather than single out Shiller or anyone else, I see it as the constructive route to just do what we are capable of ourselves to push things a tiny notch in the right direction. So that’s what I try to do each day when I wake up and come downstairs to see what appears on my laptop screen to kick off the new day.
Does all of that not make at least a reasonable amount of good sense?
Rob
“I think that after the crash Shiller will probably say that he was worried that something like what happened might happen but that he didn’t focus on it too much because he was not sure and he did not want to upset people.”
Everyone knows a crash “might happen”. That is utterly worthless. As is every market timing scheme ever.
So you say, Anonymous.
But Wade Pfau holds a Ph.D. in Economics from Princeton and he spent months trying to find a single peer-reviewed study showing that it is not necessary for investors to practice price discipline (long-term timing) when buying stocks. He wasn’t able to find one. He was amazed. He concluded that: “Yes, Virginia, Valuation-Informed Indexing works!”
Every investor alive on the planet needs to know that. We need to open every investing discussion board and blog to honest posting re the last 36 years of peer-reviewed research in this field by the close of business today.
My sincere take.
I wish you all good things.
Rob
Wade never advocated market timing. That is a lie. Your “Virginia” quote is likewise a fabrication.
Prove me wrong. That should be easy, if you’re telling the truth.
Your jury will determine the length of your prison sentence, Anonymous. That one is not my call.
My best wishes.
Rob