Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
“Does Shiller believe that we will be returning to fair-value P/E10 levels in the not-too-distant future?”
He did in 1996. Wrote a whole paper about it. And he gave himself ten years to be proven right. But he was still wrong. So now he won’t answer that question. Maybe that’s why you like him so much. You never answer questions either. Because you believe if you never answer a question, you can never be proven wrong. When’s the last time you provided even a hint of new information about VII, or your financial situation, or your family, or anything else?
You won’t answer that, so I will. It’s been many years.
I agree that Shiller was proven wrong re his 1996 prediction.
I still believe that he has a lot to offer. I believe that he has a mountain of good stuff to offer. I believe that he merited the Nobel prize that he was awarded.
I believe that every person who has money to invest should be informed that Shiller got that prediction wrong. I think it is an important fact and that people need to know it. Some will decide not to follow Shiller’s advice as a result. That’s their right. Each person gets to decide how to invest his or her own money. If people want to decide that the one thing that Shiller got wrong is more important than the many important things that he got right that no one else got right, it’s up to them.
I think that Greaney got the safe withdrawal rate wrong. And I think that people need to know that too. And it’s not just Greaney. The authors of the Trinity study also got the SWR wrong. And Bogle got it wrong indirectly. He allows his name to be used at a discussion board that encourages people to use the old safe-withdrawal-studies to plan their retirement even though it has been public knowledge that those studies do not contain valuation adjustments for 16 years now. Bogle has not spoken up about this or taken steps to remedy the situation. That’s a wrong that Bogle has committed that is 500 times worse than the mistake that Shiller made, in my assessment. Shiller doesn’t deny his mistake. People can learn from it. Bogle hasn’t even acknowledged his mistake in failing to speak up about the errors in the Buy-and-Hold retirement studies for 16 years now.
We all make mistakes. Shiller has made them. Bogle has made them. I have made them. You have made them. The trick is to LEARN from our mistakes. That’s how we get better at things over time. Shiller presented us with a wonderful opportunity to get better at stock investing 37 years ago. To a large extent we have squandered that opportunity because speaking clearly about what we learn from Shiller means pointing out that our Buy-and-Hold friends got some important things wrong back in a day when not all the research they needed to become fully informed was available to them. I think that’s unfortunate, as unfortunate as unfortunate can be.
I think it comes down to this, Anonymous — Did our Buy-and-Hold friends want to get it right when they started out? I think they did. I think they made a mistake. And I think that, if they were thinking clearly, they would have wanted to correct that mistake as soon as they learned about it, 37 years ago. I think that those of us who love the Buy-and-Holders for all of the amazing contributions they have made should be doing all in our power to help them find their way back to a better path as soon as possible. Our Buy-and-Hold friends want to help people and we all should be helping them get back to a path where they can do that again.
Shiller is a flawed human. But he also is a great human. Bogle is a great human. But he also is a flawed human. It’s only when we recognize both sets of realities that we can engage in positive learning experiences that permit us all to live better and richer lives from that point forward.
That’s my sincere take re these terribly important matters, in any event.
I naturally wish you the best of luck in all your future life endeavors, my dear Goon friend.
Mistake-Prone (and Mistake-Acknowledging) Rob
Oops, they did it again: https://www.cnbc.com/2018/09/18/warren-buffett-and-jack-bogle-recommend-buying-and-holding.html
The title says it all, “Warren Buffett and Jack Bogle agree on the formula for long-term success: Buy and Hold”
Buffett and Bogle are super rich, famous and respected. You are the exact opposite of all those things. What is your plan for convincing people that they are wrong and you are right?
Since you never answer questions directly, I’ll handle this one myself. You have no plan, and have never had one. You write this stuff only to distract yourself from the disastrous results of your decades of poor decisions. Doesn’t seem to be working so well though.
Bogle says in the article you linked to: “never, never, never be in or out of the market. Always be in at a certain level.”
What does he mean by “a certain level”? If he means that the typical investor should always keep perhaps 30 percent of his money in stocks, then I agree. Is that what he means? Or does he mean that investors should always stay at the SAME stock allocation regardless of changes in valuations? If that’s what he means, I strongly disagree and so does the last 37 years of peer-reviewed research in this field. If valuations affect long-term returns, as the last 37 years of peer-reviewed research shows, then an investor who sticks at the same stock allocation despite dramatic shifts in valuations is permitting his risk profile to change dramatically. Huh? What the f? That means precisely zero sense.
I posted a blog entry a long time ago about an interview that Bogle did in which he came pretty darn close to endorsing Valuation-Informed Indexing. I recall debating with myself whether I should use the word “endorse” in the headline for the blog entry. Bogle said that there are six times in the life of an investor when he might want to adjust his stock allocation upwards (three times) or downwards (three times) because of extreme valuations. That’s exactly what I say. I once looked at the historical return data to see how often investors would need to adjust their stock allocation in response to valuations to keep their risk profile roughly stable. The answer is that it needs to be done on average once every 10 years. Most investing lifetimes last 60 years, from age 25 to age 85. So what Bogle said in that interview checks out.
Now —
It’s a close call as to whether Bogle actually endorsed Valuation-Informed Indexing or not. He didn’t say that all investors MUST make the allocation changes, as I do. He indicated that he thought that there was a good chance that they would work out if they did. He said things in a way that suggested that he felt some distaste about the idea. The way he said it was, you COULD do this, rather than you SHOULD do this. So I don’t think it is quite fair to say that he endorsed Valuation-Informed Indexing. But he came as close as a person could come to doing that without actually doing it.
So Bogle knows more about all this than he is letting on. Why does he play it so cagey?
He doesn’t want to acknowledge that Buy-and-Hold is a marketing gimmick, a scam, that never in 150 years of stock market history has it worked for even a single long-term investor. The Bennett/Pfau peer-reviewed research shows that following a Buy-and-Hold strategy rather than following the peer-reviewed research ALWAYS dramatically increases risk while also dramatically diminishing long-term returns. Huh? What the f? Why would anyone want to increase risk while diminishing return? Because it feels good in the short term. We all have a Get Rich Quick impulse residing within us and Buy-and-Hold appeals to that impulse. That’s it. That’s the only appeal. There is no intellectual appeal to Buy-and-Hold.
Here is more from Bogle from the interview you link to: “If you try to trade in and out of the market, “your emotions will defeat you totally,” Bogle added. “Short-term betting is not a good way to go.”
So he is not talking about long-term timing. He is not rejecting Valuation-Informed Indexing. He is rejecting some crazy way to invest in which the investor engages in short-term timing, an approach that has been discredited not just by 37 years of peer-reviewed research but by 53 years of peer-reviewed research. Surprise! Surprise! Thanks for sharing a link that confirms what we have all known for 53 years now, Anonymous.
If there were even a tiny sliver of evidence suggesting that it is not necessary to practice price discipline when buying stocks, you would have put it forward 16 years ago, Anonymous. No such evidence exists. Common sense tells us that price discipline must work when buying stocks (price discipline is what makes markets work) and of course Shiller’s Nobel-prize-winning research confirms that what common sense tells us must be so really is so.
If Bogle had it to do over, he would have come clean about the mistake he made when he developed the Buy-and-Hold concept when it was first revealed by the peer-reviewed research, back in 1981. Now he’s trapped. So he engages in the word games that you see in that article. I am trying to help him escape his trap and you are trying to make it harder for him to escape. And you are Bogle’s friend? You are not Bogle’s true friend. I am Bogle’s true friend. Prior to 1981, Bogle believed that investors should consult the peer-reviewed research when deciding on an investment strategy. I think that the big guy was right the first time. Full truth be told, I am 100 percent sure of it.
Research is great. Bogle is a hero to me because his was the loudest voice telling investors to consult the research when deciding on an investment strategy. But part of the scientific process is staying alert to new developments in the field. We saw a huge new development take place in 1981. In the days when Buy-and-Hold was developed, there was research that many people interpreted as showing that the market is efficient and that price discipline (long-term timing) is not required. In 1981, that research was discredited. Now we know how stock investing really works. Now we know that not only does long-term timing/price discipline always work, long-term timing/price discipline is always 100 percent required for investors seeking to keep their risk profile roughly stable over time.
Bogle should be helping us to spread the word about this very, very exciting advance in our knowledge of how stock investing works.
I believe that in the days following the next price crash, he will be. I think he is a good man and, when he sees the ocean of human misery that he has caused by ducking the issue for so many years, he will become a fierce advocate of my 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.
We’ll see, you know?
I am the biggest Bogle fan in the world. Except for the garbage about how investors do not need to exercise price discipline when buying stocks. That one is a long-discredited lie. It makes my friend Jack Bogle look bad when he engages in word games suggesting that he thinks it is just fine for investors to fail to exercise price discipline when buying stocks. I don’t like to see my friend look bad. So I am going to continue to encourage him to come clean re the garbage aspects of Buy-and-Hold and update the concept to reflect Shiller’s Nobel-prize-winning research findings. At that point, Bogle will be promoting the Valuation-Informed Indexing concept and I will be proud to stand beside him and promote it with as much energy as he does.
Does all of that not make perfect sense, my dear Goon friend?
The Opposite of Super Rich and Super Famous and Super Respected Rob
So your answer is that Bogle doesn’t really believe in Buy and Hold. He just says that to play word games. But someday, “Bogle will be promoting the Valuation-Informed Indexing concept and I will be proud to stand beside him and promote it with as much energy as he does.”
That is delusional. Get help, Rob. You seriously need it. And so many people have told you that over the years. Practically everyone who has interacted with you enough to make a judgement. How is it that they are all wrong?
Take a look at the slider that runs across the top of every page of this site, Anonymous. There you can read 200 comments by some of the smartest people in the field and find out what they really think of me and of my work developing the Valuation-Informed Indexing concept.
Death threats are a crime. Threats to get academic researchers fired from their jobs are a crime. Demands for unjustified board bannings are not ordinarily a crime but become one when used as part of an effort to cover up an error made in a retirement study. Thousands of acts of defamation are not ordinarily a crime but become one when used as part of an effort to cover up an error made in a retirement study.
The fact that you Goons feel that the only way that you can “defend” Buy-and-Hold in the year 2018 is by committing crimes tell the tale that needs to be told. The fact that people like Jack Bogle don’t act when informed of your behavior (numerous posters at the Vanguard Diehards board asked Bogle to take action) tells even more of the story that needs to be told.
Please mark me down as believing that valuations affect long-term returns. Please mark me down as believing that the last 37 years of peer-research in this field is legitimate research, Please mark me down as believing that Robert Shiller merited the Nobel prize that was awarded to him. Please mark me down as believing that the safe withdrawal rate is not always the same number but is a number that can rise to as high as 9 percent at times of super low valuations and that can drop as low as 1.6 percent at times of super high valuations. Please feel free to spread the word all across the internet. I would feel that you were doing me a favor.
My best wishes.
Delusional Rob
I’m not marking you down as anything but a hopelessly brain-locked internet nutcase. But I don’t care enough about that to spread it around. You’ll have to grow your readership on your own. Do let us know if it ever gets back to double digits.
I will let you know, Anonymous.
I do wish you the best of luck in all your future life endeavors, in any event.
Brain-Locked Rob