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 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.)
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
“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.”
Among the vast number of things that aren’t helping your cause, your smug, condescending attitude ranks right up there. You constantly present yourself as the one wise, rational, sensible person in a world where all the rest of us are frightened little rabbits.
But whatever helps you get through the day.
I don’t doubt that there are many people who feel that way, Anonymous. It is not my intent to make people feel that way.
I believe that we all have inclinations that make us frightened little rabbits. I played the role of frightened little rabbit myself for three years. I knew in May 1999 that Greaney got the number wrong in his study. I had studied safe withdrawal rates on my own before I ever visited his site. So the first thing that I looked for was the valuation adjustment. There was none there. For three years, I kept my mouth shut. It wasn’t until the morning of May 13, 2002, that I worked up the courage to ask my fellow community members: “Do you think we should be considering valuations when we calculate the safe withdrawal rate?” So it would be fair to refer to me as Frightened Little Rabbit #1, right?
Shiller is a frightened little rabbit, no? We discussed just yesterday how back in 1996 he was saying things very much in tune with what I say today and then his prediction didn’t work out and he became a frightened little rabbit and now he just tried to keep it zipped re the controversial stuff. This is the guy that I describe as the most important investing analyst ever to walk Planet Earth. And he’s a frightened little rabbit in the extreme! If Shiller would stop being such a frightened little rabbit, things would go a lot easier for me, no? I have to acknowledge that that is what he is if I am going to make any sense of what has gone down over the past 16 years.
We are all frightened little rabbits. That’s a core reality of stock investing. And we all possess a powerful Get Rich Quick urge within us. That’s a second core reality. It is these two core realities that make stocks a risky asset class. Wade Pfau and I showed in the peer-reviewed research that we co-authored that we can all reduce the risk of stock investing by 70 percent just by not being frightened little rabbits and by working to rein in that Get Rich Quick urge a bit. Pretty darn exciting stuff, right? But how many of the millions of middle-class investors living in the United States today and seeking to put together effective retirement plans even know about the amazing Bennett/Pfau research? It’s a small number. Because the editors of the New York Times are frightened little rabbits. Wade would love to be awarded the Nobel prize he very much deserves for the work he did with me on that study. But he sees that most of us are frightened little rabbits and he worries that that might be so of the editors of the New York Times too and so he keeps his mouth shut for the time-being.
I don’t say that we are all frightened little rabbits because I want to hurt the feelings of my Buy-and-Hold friends, Anonymous. I say it because there is now 37 years of peer-reviewed research showing that this is what they need to hear to make sense of stock investing and to invest effectively for the long run. None of this is personal. I want people to be able to invest more effectively so that they can retire earlier. There’s no way to do that without pointing out that all the humans possess a Get Rich Quick urge and have an inclination to be frightened little rabbits at times. I don’t do it to hurt their feelings. I do it because I believe that it is something they need to know.
I 100 percent respect the right of any who don’t want to hear my message to just tune it out. But I know from long experience that there is a large number who very, very, very much want to hear the message and I believe strongly that they have every right to hear it. If you would just tune it out when it bothers you, all our troubles would go away. You would get what you wanted (freedom from having to hear how you can sometimes be a frightened little rabbit) and those who want to hear the message would get what they want. That’s the answer.
I do believe that you can be a frightened little rabbit at times. I get that it hurts for you to hear that. I believe it all the same. I don’t say that I am any different. I say that I have been a frightened little rabbit at times too. I say that every human has that inclination. I mean no offence. But if you take offence, I think the best thing for you to do would be just to tune out the message that you find offensive while permitting those who have expressed a desire to be able to hear it to make their own decisions about what messages to listen to.
I wish you all the best that this life has to offer a person, my sometimes frightened little rabbit friend.
Rob
So you’re saying that the only possible reason why Shiller, Wade and everyone else don’t think like you, or act the way you want, is because they are frightened little rabbits. No other reason is possible. No other explanation will be considered. Yup, it’s hard to even imagine a more unhelpful mindset.
“But I know from long experience that there is a large number who very, very, very much want to hear the message and I believe strongly that they have every right to hear it.”
I agree they have that right. And I will immediately cede the floor to them. First one I see.
Shiller and Wade and millions of millions of others should of course be expected to disagree with me on matters of substance for a wide variety of reasons.
But, no, there is no other possible explanation for their failure to speak up in opposition to death threats and demands for unjustified board bannings and thousands of acts of defamation and threats to get academic researchers fired from their jobs than that they are frightened little rabbits. They don’t want what was done to me to happen to them and so they keep their mouths shut.
And that of course makes the problem worse. If every person who since 1981 came to entertain doubts about the merits of the Buy-and-Hold strategy had said so in clear and firm and bold and unmistakable terms, there would have been no “controversy” when I advanced my famous post from the morning of May 13, 2002, asking whether we should be considering the effects of valuations when calculating the safe withdrawal rate. It is because not too many had had the courage to speak up before I did that we experienced a disconnect between what lots of aspiring early retirees believed and what the peer-reviewed research in this field showed to be so. That disconnect supplied the energy that produced the nuclear reaction that followed.
The answer is not for me to stop speaking up about my doubts re Buy-and-Hold. The answer is for everyone else who entertains similar doubts to insist on his or her right to express them clearly and unapologetically. When enough people play it in the way that I have played it for the past 16 years, the “controversy” will vanish into the mist and it will be possible for us all to be friends again. We hold different views re how stock investing works, no more and no less. No biggie. No major deal. What I said on the morning of May 13, 2002, was perceived to be a major deal by some because they had never been exposed to the other side of the story. And they were never exposed to the other side of the story because too many of us Valuation-Informed Indexers act like frightened little rabbits when it comes to these matters.
This is my sincere take re these terribly important matters, in any event.
My best wishes to you.
Rob
“there is no other possible explanation for their failure to speak up in opposition to death threats and demands for unjustified board bannings and thousands of acts of defamation and threats to get academic researchers fired from their jobs than that they are frightened little rabbits. ”
Seriously? I can immediately think of several other possible explanations.
1. They never heard of you.
2. They aren’t aware of your claims.
3. They are aware you claim such things happened, but don’t believe you.
4. They don’t care about your board bannings and other perceived injustices. Why would they? Do you care about other people’s bannings? If so, if you’ve never mentioned it.
You seem to firmly believe that everyone ought to be a social justice warrior on your behalf. How many more years will it take you to grasp the fact that the world doesn’t work that way?
We didn’t discover that valuations affect long-term returns yesterday, Anonymous. We discovered it 37 years ago. Millions of people have been hurt in very serious ways because of the 37-year-delay in our launching of a national debate re how stock investing works in the real world. This stuff matters.
I would say that people should be social justice warriors on their OWN behalf. We all benefit from learning how stock investing works in the real world. It’s not even possible for the rational human mind to imagine any downside to permitting honest posting at every discussion board and blog on the internet.
The world hasn’t worked in the way that I believe it should work for 16 years running now. You’ve got me re that one.
Will things change after the next crash, when people will be able to see by looking at their own portfolio statements how much they have been hurt by the continued promotion of the Buy-and-Hold “strategy”? I think so. But I acknowledge that it is at least possible that I will be proven wrong.
Even if no one works up the courage to speak up and we all go down together, I will at least enjoy the small satisfaction of knowing that I did everything in my power to protect the country I love. In difficult circumstances, that’s something, no?
Do you have any better ideas? Should I be willing to go to prison with you Goons? Somehow that option doesn’t light my fire. Call me madcap, you know?
I think people should speak out. 100 percent. I think people WILL speak out following the crash. Also 100 percent. I know that, even if not one other person speaks out, I want it on my record that I spoke out. I want to be able to sleep at night. I made lots of friends back at the old Retire Early board. I listened to their stories. I heard about their dreams and their fears. If I can’t work up the courage to do what it takes to protect them from a con man, then I don’t feel good enough about the person that I have become to be able to sleep at night. So I play it the way my conscience tells me to play it.
If loving one’s country makes one a social justice warrior, then loving one’s country makes one a social justice warrior. I love my country and I offer precisely zero apologies for feeling that way. Others will have to figure out what others will do. I speak out for the idea of permitting honest posting re the last 37 years of peer-reviewed research in this field at every discussion board and blog on the internet. I wish that I has spoken out sooner. That’s my only regret.
I love you Goons, Anonymous. But there are limits, you know? We all have to have lines that we will not cross. Mine is that I will never say that I believe that Greaney included a valuation adjustment in the retirement study posted at his web site. I will go down with the ship before I take that one back (unless someone is able to produce evidence that the study does indeed contain a valuations adjustment that not one of the thousands of people who have looked at it have been able to identify until this day).
My best wishes.
Social Justice Warrior Rob