Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
If Robert Shiller posted here at your website and told you that you were wrong and that you are misrepresenting his work, would you agree with him, or would you accuse him of fraud?
1) I would do what I could to bring Shiller’s comment to the attention of as many people as possible by posting it as a future blog entry.
2) I would not agree with him if all that he did was to make that statement. I would ask him why he had come to that conclusion and try to find common ground with him by either coming to a better understanding of where he was coming from or by persuading him of the merit of my different take.
3) I would not accuse him of fraud if he merely stated his opinion re the matter and did not accompany his expression of his opinion with death threats or with demands for unjustified board bannings or with thousands of acts of defamation or with threats to get academic researchers fired from their jobs. In the event that he did engage in insanely abusive behavior, I would encourage him to knock off the funny stuff as quickly as possible with the aim of limiting his prison sentence to the greatest extent possible.
4) I would let him know that, regardless of his response, I would continue to view him as a giant in this field and would thank him for all that I have learned from him over the years.
Does that help?
Rob
“2) I would not agree with him if all that he did was to make that statement. I would ask him why he had come to that conclusion and try to find common ground with him by either coming to a better understanding of where he was coming from or by persuading him of the merit of my different take.”
So, you wouldn’t even think that you are wrong? What would make you think that you know more than Shiller?
The fact that he would be engaging in a logical contradiction in the hypothetical that you are putting forward.
The difficulty that we are having as a society making the transition from Buy-and-Hold to Valuation-Informed Indexing stems from the fact that the change is so enormous. The change is a change from a belief that investors are 100 percent rational to a belief that investors (and thus market prices) are heavily influenced by emotion. Both Buy-and-Hold and Valuation-Informed Indexing are numbers-based models. The difference is that one model excludes the most important number while the other excludes it. There is nothing worse than a numbers-based model that excludes the most important number. That model gets every single question that it examines wrong.
If Shiller did not know that he would have to pay a horrible price for speaking openly about his beliefs re how stock investing works, he would do it. Drop the death threats and all the other garbage and ask him to talk things over in an environment in which the laws of the United States govern how the discussions are conducted and he will be happy to tell you all sorts of things that he has not been willing to say until now. I would love to see that happen. You wouldn’t. You are not willing to go there. So we are stuck for the time-being.
You’re going to be willing to go there after the next crash, Anonymous. You are going to be as upset as everyone else in the days following the next crash. So we will be working together. We will be friends. That’s how I’ve always wanted it to be and that’s how it will be. It breaks my heart to acknowledge that it is probably going to take a deepening of the economic crisis to get us there. But things are what they are. I didn’t create this crazy situation and I cannot change it by myself. All that I can do is to play the cards that I have been dealt to the best of my ability.
Even your question evidences the core mistake about human nature that you made when you became a Buy-and-Holder. You say: “What would make you think that you know more than Shiller?” The suggestion is that I think that I possess more I.Q. points than Shiller possesses. But of course I think no such thing. You Goons have set things up so that there is a terrible price to be paid for posting honestly re stock investing topics in the Year 2018. I have elected to pay that price. Shiller has elected to pay it in part and not to pay it in part. The only reason why he doesn’t say the same things that I say is because of the death threats and all the other garbage. It has nothing to do with I.Q. points. I have been paying the price that you Goons dish out for 16 years running now. I may not know as much as Shiller. But I sure as shooting say many, many things that Shiller doesn’t say. Because I have elected to pay that price. It’s not even a tiny bit hard to figure out what is going on if you have been paying even a tiny bit of attention for 16 years now.
Shiller will be working with me in the days following the crash. So will Pfau. So will Bogle. So will Bernstein. So will Swedroe. So will you Goons. We will all be working together and we will all make amazing amounts of progress in amazingly short amounts of time when we are working together at last. And I will do everything in my power to help you Goons out, just as I do today. I cannot promise that all of my efforts will succeed. It is my belief that they may succeed in small part but that to a large extent they will not. But we will just have to wait and see to find out for sure, you know? I will make the efforts. That’s all that I can do and so that’s all that I can promise to do.
It’s not that I know more than Shiller. It’s that I say things that Shiller is not willing to say. And it’s you Goons that have created the situation in which Shiller does not feel comfortable speaking freely. Put away all your Goons garbage and you will hear lots of amazing things from him and from thousands of others. It’s your Goon garbage that is the strange thing here, not the fact that Shiller is not today willing to say that he agrees with me on every point. It’s perfectly natural that he would not be willing to say that he agrees with me on every point given the circumstances that prevail today.
We need to do something about the Goon stuff. That’s the block. It’s hard because the cover-up has been going on for 37 years. That reality makes the Buy-and-Holders look very, very, very, very bad. There are things that can be said to sugar-coat the reality. I say those things all the time. But there are limits to how far the sugar-coating process can go. Even after all the sugar-coating that is possible, the Buy-and-Holders still end up looking very, very, very bad. So they fight very, very, very hard. And so people like Shiller elect not to be 100 percent forthright in their public statements.
If you want to read a book about it, read The Structure of Scientific Revolutions. It is about how it is hard for the scientific community to accept a paradigm change when one is thrust upon it because powerful people have to acknowledge that decades of work that they have done is pointless or wrong because they have been working from the wrong starting point. Academics have told me that it will take a crisis to turn things around. It breaks my heart to acknowledge it but there’s a lot of evidence that they are right. I think it would be fair to say that a price crash of 50 percent or more would constitute a crisis. So we will begin moving forward in a big way following the next price crash, you know? If that’s what it takes, that’s what it takes.
I am your friend today. You will be able to acknowledge being my friend then. I think it would be fair to say that that’s the best we can do with the cards that have been dealt us.
I hope that helps a small bit.
Rob
In short, you want everyone to think about how they are wrong, yet you don’t even consider that you are wrong. As such, your definition of “working together” is for you to be the teacher and everyone else are pupils.
Something that I have suggested in the past is that a disclaimer could be added to the bottom of my posts saying: “Rob has acknowledged that his views are minority views and that it is possible that he is wrong in everything that he says about stock investing. He has also noted that his only claim to expertise in this field is that he has figured out how to get his posts to appear on the internet. It is his view that anyone who invests in the way that Rob recommends solely because he recommends it is a darn fool.”
I don’t have a problem with a statement like that because every word of it is true. I don’t think that I am wrong, I think that I am right. But one of the problems with being wrong is that the person who is wrong doesn’t recognize that this is the case (if he did, he would change his views). So I don’t have any problem with letting people know that, despite my confidence in my ideas, there is always the possibility that those ideas are in error.
I would like to see the same attitude from the Buy-and-Holders. I acknowledge that they believe that they are right. I think that it would be a huge help if they would at least acknowledge the POSSIBILITY that they are not. I wouldn’t say that I want them to “think about how they are wrong,” I would say that I would like them to reflect on that POSSIBILITY. For so long as my Buy-and-Hold friends believe in Buy-and-Hold, they have both a right and a responsibility to let that belief govern their postings. But it wouldn’t hurt for them to now and again acknowledge that Fama and Shiller hold very different views on stock investing and yet both have been awarded Nobel prizes. There is not one school of academic thought re how stock investing works today, there are two.
If someone asks me a question and I respond, I suppose that it would be possible for someone reading the words to conclude that I sound like I am “teaching.” What I am trying to do is to respond to the question effectively. I obviously have spent years thinking about Valuation-Informed Indexing in great depth and from thousands of possible angles. So it would be fair to say that I know things about Valuation-Informed Indexing that most others do not. My aim in responding to questions is to help people out, not to make them feel inferior.
The ultimate question here is the question as to whether it is Shiller or Fama who is right. If Shiller is right, then my investigations have great value (that’s so even if they are wrong — investigations often lead us down life-affirming paths even when they do not begin with perfect knowledge). If Shiller is wrong, then all the stuff that I say is wrong too. I can acknowledge that if it makes people hearing the words feel less insulted. But I cannot say that I believe either than Shiller is wrong or that I am wrong even if that means that someone might get their feelings hurt that I am implicitly suggesting that I know something that not everyone else knows. Any time someone in the world puts up a post to a discussion board, he is suggesting that he knows something that not every other person in the world knows; otherwise, he wouldn’t go to the trouble.
As a society, we do not today know whether it is Shiller or Fama who is wrong. We know that one of them is wrong — they are saying opposite things. It seems to me that it is in everyone’s interest that we figure out which one of the two is right and which one of the two is wrong. The only way that we can do that is to engage in a national debate in which people from both sides of the controversy feel free to state their sincere beliefs as plainly and clearly and fully as possible.
The Buy-and-Holders are in the majority today. If they want people from the other side of the table to challenge their views (they should — it is by being challenged that we learn the weaknesses of our beliefs and thereby sharpen our thinking on a subject), they need to warmly invite challenges from all who feel inclined to advance them. The key to getting the process to work smoothly is for people from both sides of the table to evidence respect and affection for people on the other side of the table. It is possible for humans to disagree without being disagreeable.
Do you think that you are assuming the role of teacher and putting me in the role of pupil when you explain why you believe that Buy-and-Hold is a good strategy, Anonymous? I don’t think that’s your intent. I think your intent is to share something of value that you have learned over the years with others with an interest in the subject matter. That’s my intent when I tell you why I am so excited about Valuation-Informed Indexing. Yes, I think I have something of great value to share with you. But, no, there is no desire on my part to make you feel small.
I would like to be one of many teachers of Valuation-Informed Indexing participating in a spirit of friendship in communities also populated with many teachers of Buy-and-Hold. If that’s the spirit in which discussions are held, the truth will reveal itself over time. There is no need for any of us to force things to a quick conclusion. We all need to accept that for the time being there are two schools of academic thought re these matters and that it is natural that both schools of academic thought would be represented on all of our board and blog communities.
Rob
“Shiller will be working with me in the days following the crash. So will Pfau. So will Bogle. So will Bernstein. So will Swedroe. So will you Goons. We will all be working together and we will all make amazing amounts of progress in amazingly short amounts of time when we are working together at last.”
What do you mean by “working together”?
Another crash will bring a deepening of the economic crisis. We all will want to recover from that. The key is getting accurate reports of what the last 37 years of peer-reviewed research says to every investor alive on the planet. We all will be working together to achieve that goal.
Shiller will be doing what he can do, Bogle will be doing what he can do, I will be doing what I can do. We all will be working together. We will at last be doing things in the way that we should have been doing them going back to the first day.
No one is going to be worried about what you Goons will say about them after the crash. We all are going to have bigger worries. So we will be directing our energies to bringing the economic crisis to an end. Why wouldn’t we all want to do that?
We all would want to do it today if it were not for you Goons. The difference after the crash is that the Goon stuff will not be perceived as being such a big deal in relative terms. We will be able to see in clear and concrete terms what the price is for letting stock prices get out of hand. So we will all be working to fix the problem.
Once we are all working together to fix the problem, it will be downhill sledding.
Except for the economic crisis! That will be the scary part. That’s the negative here. The economic crisis brought on by the promotion of Buy-and-Hold strategies has been hurting us all in very serious ways for a long time now and it will be worse following losses in the trillions of dollars on top of what we have already suffered.
The crash will force us to do what we should have been doing all along. The deepening of the economic crisis won’t permit us to put off the job of incorporating what we have learned from the last 37 years of peer-reviewed research into our understanding of how stock investing works any longer.
Hope that helps.
Rob
“The key is getting accurate reports of what the last 37 years of peer-reviewed research says to every investor alive on the planet. We all will be working together to achieve that goal.”
How is this working together? It sounds like you just want people to say “Rob Bennett is right and I am wrong”.
I want people to feel free to post honestly.
If we find that I am right, that’s great. If we find that I am wrong, that’s great too.
But a board or blog that does not permit honest posting is a corrupt enterprise. Not this boy, you know? Not a close call.
My best wishes.
Non-Corrupt Rob
“But a board or blog that does not permit honest posting is a corrupt enterprise.”
It’s been years since you even tried to post at any other board or blog. But you’re calling them all corrupt anyway. Does that sound fair to you?
The corruption affects everyone alive in the United States today, Anonymous. I have been a victim of it. But it is not just about me.
Look at our friend John Greaney. Greaney has been a victim of the corruption.
The reason why Greaney freaked out when I pointed out that his retirement study does not contain a valuation adjustment is that he was embarrassed for people to see that he got the numbers wrong in his study. Greaney took his methodology from the Trinity study, a peer-reviewed study. The purpose of peer review is to ensure that studies do not contain obvious errors. The Trinity contains the most obvious error possible — it lacks a valuations adjustment! Shiller had published his research showing that valuations affect long-term returns many years before the Trinity study was submitted for peer review. Yet it passed! What the f? Is that not corruption?
Now —
If you want to say that the members of the peer-review committee for the Trinity study were Buy-and-Holders who were suffering from cognitive dissonance and did not appreciate the extent of the problem of the failure to include a valuation adjustment, I can go along with that. I think that’s probably the case. So you might say that the corruption here was not deliberate. It still hurt millions of people in very, very serious ways, right? It’s still something that we need to talk about, something that we need to fix.
I didn’t intend to embarrass Greaney. I just wanted to report the numbers accurately. But because of the corruption that had gone on before I even came on the scene, Greaney was embarrassed. Do you see how it works?
It works that way for everyone. Wade Pfau wasn’t trying to hurt anyone’s feelings when he co-authored our amazing peer-reviewed research paper showing that investors can reduce the risk of stock investing by 70 percent by being willing to abandon Buy-and-Hold strategies. But he did, didn’t he? Because of the mountain of corruption that was in place before Wade ever came on the scene.
Shiller published “revolutionary” (his word) research findings in 1981. A national debate on the implications of those findings should have been launched within one week of the publication of that research. We didn’t see that. We are all today suffering the effects of the delay in the launching of the national debate. It is that delay that caused our economic crisis. It is that economic crisis that caused a lot of the political frictions that we have seen in recent years.
We need to fix the problem. To do that we need to expose the cover-up. But of course that embarrasses all the people who have gone along with it for all these years. That’s just about everyone who works in this field. Because those who speak out about the corruption see their careers destroyed and are never heard from again.
It’s quite a little pickle that we have gotten ourselves into, isn’t it?
We all have played a role in this massive act of corruption. I did so myself in the days prior to my famous posting of the morning of May 13, 2002. The only way to bring the corruption to an end is to EXPOSE it. And everyone who is part of it (which is everyone in the field) fears what will happen to their reputations when the corruption is exposed.
I’m being fair. It doesn’t take an I.Q. of 140 to figure out that retirement studies that do not contain adjustments for valuations cannot possibly get the numbers right in a world in which valuations affect long-term returns. If the boards were not corrupt, we would be seeing write-ups in all the papers every day talking about how the continued promotion of Buy-and-Hold caused the economic crisis. I haven’t heard of those sorts of stories being published. So, yes, I think it is fair to say that the corruption is ongoing whether I have recently posted at any of the boards or not.
The 37-year cover-up of Shiller’s “revolutionary” (his word) findings is the biggest act of financial fraud in the history of the United States. When the corruption comes to an end, we are all going to hear about it. We are all going to know. It is going to be in all the papers.
My sincere take.
Rob
Ask you a simple question and you spin wildly out of control, flailing away, hoping that something will sound sort of reasonable. But it doesn’t.
“If they weren’t all corrupt they would be doing something I want” is not evidence of anything. It’s exactly like a three year old saying “if I can’t have candy I’ll die and you’ll be guilty of murder.”
Grow up Rob.
Okay, Anonymous.
I wish you all good things, in any event.
Juvenile Rob