Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
You USED to try. Now you’re hiding under the bed, looking for your Big Boy pants. Because you can’t handle rejection. But you’ll be back, as soon as you find a site with nice people who always agree with you.
Good luck with the internet, Rob.
The internet has the potential for great good, Anonymous. Please remember that I was a Buy-and-Holder on the morning of May 13, 2002. I obviously am not that today. A lot of the things that I learned that caused me to lose confidence in Buy-and-Hold and to gain confidence in Valuation-Informed Indexing I could not have learned but for the internet. You don’t learn new things by sitting in a room thinking up great thoughts. You need to interact with others. I have interacted with thousands of people that I could not have interacted with but for the internet. I am grateful for those learning experiences. I am grateful for the internet.
You are right, though, that the internet has a dark side. The mob rule stuff is not appealing and that sort of thing takes place more on the internet than it does in other communication mediums. I have seen a lot of the mob rule stuff. I have seen the dark side of the internet up close and personal.
What happens after the crash? It would not surprise me if the mob rule stuff turns in the opposite direction, if people become so angry over the losses that they have suffered that they go after the Buy-and-Holders in a mindless way. I obviously want no part of that. I want people to learn why Buy-and-Hold is flawed. I don’t want people to go from one emotional extreme to another. Maybe I will always be the man on the outside, you know? Maybe if you don’t go emotional, you cannot develop a following on the internet. I hope that’s not so. It’s possible that it is. If it is, there’s nothing that I can do about it. I have to be what I am.
I think that what may happen is that I will team up with Buy-and-Holders after the crash. I obviously don’t agree with Buy-and-Holders on valuations. But I very much relate to their basic approach to investing questions. The Buy-and-Holders were trying to develop a rational, research-based strategy. I think they were sincere about that. I cannot prove it, I cannot see into their minds. But everything that I can see points in that direction. So I think there is a natural kinship between the Buy-and-Holders and me. I think they made a mistake, I think they got caught up in something bigger than them. But I also believe that deep down inside they want to get it right. I believe that, following the crash, they are going to reevaluate their positions and I will probably be someone taking the side of the more open-minded Buy-and-Holders over the side of any mobs attacking them because of losses they have suffered.
If everything was mob rule left, right and center, we wouldn’t have Buy-and-Hold. You say “good luck with the internet.” Someone could have said to Bogle when he was starting out “good luck with a research-based investing approach” or “good luck with a focus on the long-term” or “good luck with persuading people that they don’t need to pick stocks” or “good luck with low fees.” I think that Bogle has been proven right about a lot more things than the number of things that he has been proven wrong about. And yet Bogle has been extremely successful in persuading people of the merit of his investment strategy. So it is not always mob rule that prevails.
Mob rule is about emotion. That is part of what humans are. We are emotional creatures. And that does us in sometimes. Mob rule hurts us in the investing realm and in lots of other realms too. But it is a mistake to conclude when mob rule hurts us in some way that all we are is mob rule. Mob rule holds us back from achieving the potential of the internet. But there’s a lot of good on the internet. So mob rule is not the entire story. I believe that it is possible to use the internet to do good. I believe that it is cynical to believe that mob rule is the entire story of the internet.
That’s my take, Anonymous. We are just going to have to wait to see how it plays out to know for sure. I am not capable of playing it any other way, in any event. So all that I can do is to give it my best shot. You are right that I have been hurt by rejection. You are not right to say that I cannot handle rejection. I have handled more of it than anyone else alive. I have done amazing things in the face of a mountain of rejection and still kept getting up and rushing in for more. So I offer no apologies. But, yes, there comes a point where the relentless rejection hurts. That is so. I wish that I were Superman. But I am not.
But I think that there are a lot of good people in this world who will be happy to help out when conditions change. And I think that conditions will change after we all experience a 50 percent price crash. I think that experience is going to change the thinking of millions of people and that people are going to want to find out where their hopes for a decent retirement went. And I believe that the materials at this site will help to provide them some answers. I believe that I will be able to tell them both where the Buy-and-Holders got it wrong and where the Buy-and-Holders got it right. It is my intent to tell a balanced story and I believe that there is going to be a great need for that in the days following the crash.
I see a happy ending to the story. Now the full reality is that I would almost have to see a happy ending or else I couldn’t get up in the morning, you know? I think we humans build narratives that help us cope with the circumstances in which we find ourselves and sometimes those narrative are right on and sometimes not so much. That’s my narrative. I believe that as a society we are very close to making some amazing advances in our understanding of how stock investing works. I have seen some very smart people enjoy the click moment re this stuff and it is very gratifying to see that. I want to see that with millions. And I think we are close to making that happen. So it is my intent to soldier on and wait for that change in attitudes that we need to see to travel together to the other side.
We’ll see, you know? That’s the best that I can offer you. Either it will happen or it will not. I am not a mob rule kind of guy. So I cannot be part of a mob cursing Buy-and-Hold any more than I can be part of a mob praising Buy-and-Hold. That’s just not in me. I am a guy who wants to take the good out of it and make sure that that lives forever while wanting to leave the bad — which can end up ruining the good if not addressed — behind. Time will tell the tale. Mob rule is a real thing on the internet. But it is not the only thing. It is certainly not my thing. I think that I can overcome it. I certainly hope so. But we are just going to have to wait a bit to find out whether I am right re that one or not.
I hope that helps at least a tiny bit, my mob-rule-embracing friend.
Rejection-Damaged Rob
With each stock market drop, I have yet to see anyone blame it on Buy and Hold. What do you expect to be different in the future that would make people begin to blame buy and hold. Without that, how is your retirement plan going to work as that seems to be your linchpin in getting the settlement payment.
The core Buy-and-Hold belief is that stock prices reflect economic realities. Shiller showed that that is not so. When prices are at fair-value levels, they reflect economic realities. When prices are above fair-market levels, as they are today, the price increases beyond those that it took to get to fair-value levels reflect irrational exuberance. Those price increases are caused by out-of-control investor emotion and they disappear over time. So investors cannot count on them to finance their retirements.
Those who follow the peer-reviewed research in this field have known all this for 37 years now (Shiller published his “revolutionary” [his word] research findings in 1981). So nothing that I have said should have been even a tiny bit controversial. I just took Shiller’s finding that valuations affect long-term returns (and that therefore the market is not efficient and price changes do not reflect economic realities) and applied it to various practical questions. If valuations affect long-term returns, you obviously cannot calculate the safe withdrawal rate accurately without including an adjustment for the valuation level that applies at the time the retirement begins. As a society we have ignored Shiller’s findings for 37 years. I don’t ignore them. So I am controversial.
The question is — Why? Why have we elected to ignore Shiller’s Nobel-prize-winning research findings for 37 years. The Bennett/Pfau research shows that investors can reduce the risk of stock investing by 70 percent just by taking valuations into consideration when making asset allocation choices. Why the heck doesn’t everybody do that?
It’s the Get Rich Quick urge that resides within all of us that holds us back. Someone who today holds a stock portfolio with a value of $500,000 is told by his portfolio statement that he holds a stock portfolio with a value of $1 million. He likes hearing that! And the Buy-and-Holders back that claim up. They say that there is no need to adjust that number. They tell him that he can use that number in retirement planning. This loco Rob Bennett fellow tells him that he must divide the number on the portfolio statement by two at times when stocks are priced at two times their real value to identify the true value of his portfolio. Huh? What the f? Has this Rob Bennett fellow forgotten to take his meds or something?
There has never in U.S. history been a bull/bear cycle that ended before the P/E10 value dropped to 8 or lower. That’s a 75 percent price drop! Even if we only see prices drop 50 percent (I pray that we see a 50 percent price drop this time instead of a 75 percent price drop), will most people still get angry when I tell them what the last 37 years of peer-reviewed research says after they have seen 50 percent (or more) of their life savings disappear into the wind? I don’t think that they will. I don’t think that people will still be upset to hear the real numbers once their portfolio statements also reflect the real numbers (or perhaps something worse than the real numbers). I don’t think that the Get Rich Quick urge will still be working against me in the days following the next price crash. And it’s primarily the influence that the Get Rich Quick urge has on people’s thinking that has been holding me back for 16 years now.
That’s the theory anyway, Anonymous. I have mentioned before that I could be wrong. It has been known to happen and, if it were happening again, I would probably be the last to know. But that’s the theory. That’s my expectation for how things will be playing out in days to come. When people are able to get past the influence of their Get Rich Quick impulse, I will do what I can to explain to them what the last 37 years of peer-reviewed research teaches us about how stock investing works in the real world. And I will of course say all the positive things about Buy-and-Hold that I believe in my heart to be true. I just won’t say that it is possible to know the true and lasting value of your stock portfolio without taking into consideration the extent to which stocks are either overpriced or underpriced at the time you are making the assessment.
I don’t see how any of us are going to be able to retire if we are not able to work together to open every investment discussion board and blog on the internet to honest posting on safe withdrawal rates and scores of other critically important investment-related topics. Most middle-class people have a significant portion of their life savings tied up in the stock market. So we have to provide some means for them to learn the realities of stock investing whether it makes our Buy-and-Hold friends feel funny to acknowledge their mistake or not. There is just no other way,
Today’s P/E10 level is in the low 30s. It was a P/E10 level in the low 30s that brought on the Great Depression. I am not sure that we can as a nation survive a Second Great Depression. Because we all have more money now (as a result of 90 additional years of productivity), losses suffered in stock crashes hit us harder. The Great Depression almost took us down. It’s foolish for us to take a risk that we will survive something like that a second time. I think that we need to open the entire internet to honest posting. Not just because it will aid my retirement for us to do so. Because it will aid the retirement of every single person alive on the planet for us to do so.
Yes, that includes you Goons! You don’t see it that way. But I sure do. Every one of the millions of words that I have advanced over the past 16 years has been put forward to benefit you Goons ( as well as millions of non-Goons, to be sure).
And, no, I haven’t seen anyone else blame the price drop on Buy-and-Hold either. That’s the entire freakin’ problem. Stock prices don’t fall for no reason. Every stock price drop that we have ever seen was caused by the same thing — excessive price increases! There have been times when prices dropped when stocks were already priced fairly. But those price drops don’t remain in place long — so they don’t matter to investors who are focused on the long term, which is what we all should be. Price drops that remain in place for a long time are caused by excessive price increases.
We all would benefit from a stabilizing of stock prices. And to achieve a stabilization of stock prices, we need to be willing to explain to people that they need to distinguish the real economic-based price increases of 6.5 percent real and the phony, emotion-based price increases that take us to P/E10 level of higher than 15. The real price increases are of course a good thing. The phony price increases hurt us all in very serious ways and we all should be working together to stop them from taking place.
We do that by teaching people the realities of stock investing as revealed by the last 37 years of peer-reviewed research in this field. Shiller’s research findings truly were revolutionary. They changed the world in a very, very, very positive way. But thus far the change has only been in the theoretical realm. Those of us who follow the peer-reviewed research now know how stock investing works. But it doesn’t do anyone any good for us to know how stock investing works until we tell the world and thereby protect our economic system from collapse. We all can get to work doing that once we have opened every investing site on the internet to honest posting on safe withdrawal rates and scores of other critically important investment-related topics.
I hope that helps a small bit.
Buy-and-Hold Blaming Rob
“And, no, I haven’t seen anyone else blame the price drop on Buy-and-Hold either. That’s the entire freakin’ problem.”
You agree that no one blames buy and hold for drops, so how will things be any different for you if a crash occurs? No one will blame buy and hold. There won’t be any New York Times articles or “I was wrong” speeches or prison sentences or settlement payments if you lack that crucial link.
I will certainly be blaming Buy-and-Hold.
Today, people don’t like to hear my message because I am telling them that their portfolio value is less than what they want it to be. After the crash, that won’t be an issue. If prices go below fair value levels, I will be telling them that their real portfolio value is MORE than what the statement says. That’s a big change. Even if prices only drop to fair value levels, I won’t be telling them that their real portfolio value is less than what the statement says. So there will be no opposition to the message and we will be able to get it out to every investors alive on the planet.
It’s not complicated, Anonymous. People didn’t want to hear that the Madoff fund was a con in the days before it cratered. So Madoff stayed out of prison for a long time even though people in the know could see that he was working a con. Madoff is in prison today. What changed? The fund value collapsed. When the find value collapsed, the Get Rich Quick urge no longer worked in Madoff’s favor. So he was put in prison.
Buy-and-Hold is popular because it is a Get Rich Quick scheme. There’s lots of stuff in Buy-and-Hold that is wonderful. But Valuation-Informed Indexing has all that stuff going for it too. The only distinction is that Valuation-Informed Indexing does not contain the Get Rich Quick component (the “idea” that it is not necessary to practice price discipline when buying stocks). When prices drop, the Get Rich Quick component will no longer be considered a positive. People don’t view the loss of 50 percent of their life savings as a positive. The change in prices will change everything. Get Rich Quick schemes are always a temporary thing. They have great appeal for so long as prices remain high but only for that long.
My sincere take.
Get-Rich-Quick Blaming Rob
“I will certainly be blaming Buy-and-Hold.”
Again, no one else is blaming buy and hold. They never have, so with any drop/crash there will always be various reasons. As such, your scenario is dead from the very beginning.
Are you okay with waiting a bit to see how things play out?
Dead Scenario Rob
“Are you okay with waiting a bit to see how things play out?”
I understand the need to wait for examples to see what happens in certain events. We have seen numerous drops over many years since your claims. Not once have we seen any drop blamed on buy and hold.
You have your answer.
We have not seen the end of a bull/bear cycle since Shiller published his revolutionary research findings in 1981. A drop from a P/E10 of 30 to a P/E10 of 25 does not show people the dangers of Buy-and-Hold. When we are at 25, a pure Get Rich Quick approach is still looking good to those who have not examined the last 37 years of peer-reviewed research. It’s a different story when we get to a P/E10 of 8 or even a P/E10 of 15 and it remains in effect for a good number of years.
I think that that will open the minds of enough people to get the ball rolling in the right direction. And once we have even one large site permitting honest posting on the last 37 years of research, the ball will pick up a lot of momentum. The Wall Street Con Men will see that the gig is up and we will be seeing hundreds of books published reporting on what the peer-reviewed research says. And we will see calculators that offer accurate numbers. And we will see podcasts that explain the benefits of research-based strategies.
Or at least that’s my sincere take as to how things will play out. We will have to wait a bit to find out for sure.
I wish you the best of luck with it, in any event. I hope that helps a small bit.
Man-with-the-Answers Rob
“Or at least that’s my sincere take as to how things will play out. ”
Your “take” on this has never been right, so why would this situation be any different.
The timeforwaiting around has long since past.
It’s not like I have any other options available to me, Anonymous. I don’t feel a tiny bit comfortable with the idea of posting dishonestly re the numbers that my friends are using to plan their retirements. I think we are all just going to have to try to make the best of a bad situation.
Option-Limited Rob
Remember this?
“I was asked to give a time frame and ?felt that that was a reasonable thing to demand of me. So I gave it my best shot. I said that, if we do not see a crash by the end of 2015, that would be grounds to question this VII stuff. I think that is fair. We cannot say when it will come but there are lots of reasons to believe that it should come by the end of 2015. If it doesn’t, that would suggest that we are missing a big piece of the puzzle and I think it would be fair for my critics to point that out. That’s all I can say on the matter.
I can give the reasons why I view the end of 2015 as being an outside date. But they don’t matter. You’ve heard them before. The bottom line is that we cannot give a precise date. Emotions are not predictable to that extent. But the entire historical record indicates we should see the crash by the end of 2015. I don’t have a crystal ball. I am just reporting what the data tells us. WHICH WAS THE ENTIRE IDEA OF THE BUY-AND-HOLD PROJECT ONCE UPON A TIME. ”
ROB
I saw a report in my company that mentioned the tariffs, the trucker shortage, increased labor costs due to low unemployment, high inflation, and even “extreme” actions to raise revenue that include charging an additional 7% for our products *even if the contract was already signed*. Naturally, I sold off 90% of my 401K and Roth IRA. I sold the remaining 10% on Thursday. Thanks mom & pop for “buying the dip”! I left the wife’s Roth IRA (which I manage), my taxable stocks, and my children’s 529 plans alone.
Most of my “cash” is in TIPS and the rest are in T-Bills (for now). I’m with you, in a way, for a little bit at least. Like every other recession and (and bull market) that you’ve missed since 1996 this too will pass.
Sorry, Sensible, but you really don’t have anything. Only Rob’s money is real. Everyone else just has cotton candy nothingness.
Remember this?
I remember. And I stand by those words.
I have a catch-phrase that I use from time to time that “precisely 100 percent of the evidence available to us today supports Valuation-Informed Indexing and precisely 0 percent of the evidence available to us today supports Buy-and-Hold.” I have an ongoing internal debate as to whether or not that assessment remains valid given that we have now seen stock prices remain at either high or super high levels for 22 years (with the exception of a few months immediately following the 2008 crash). We have never seen anything like this before. We are in uncharted territory. Does that mean that all of the things that we learned from examinations of the historical return data should be thrown out the window? Or does it just mean that the investors of today have reached a new level of irrationality, that stocks are more dangerous today than they have ever been before and that we all should be working together to bring prices down before our overvalued market does us even more harm?
I don’t know the answer to that one with complete certainty. I personally lean strongly to the latter assessment, that the fact that we have seen more irrational exuberance over the past 22 years than at any earlier time in U.S. history is not a reassuring one but a disturbing one. But I agree with the point that I made in that earlier comment of mine that you quoted here — “if we do not see a crash by the end of 2015, that would be grounds to question this VII stuff. ” And “that would suggest that we are missing a big piece of the puzzle and I think it would be fair for my critics to point that out.”
People have to make up their own minds re this stuff, Anonymous. I cannot give you a guaranty that, if you begin following Valuation-Informed Indexing today, it will work out well for you. I think it will. I have strong confidence that I am right. But I had strong confidence that that 2015 prediction would work out and it did not. So you would be a fool to go by what I say just because I say it. If I were in your shoes and were trying to make the case against Valuation-Informed Indexing I would be leading with the argument you are making in this comment. My predictions as to when the crash will come have not played out. And of course neither have Shiller’s predictions played out. I think it would be fair to describe that reality as a point in favor of Buy-and-Hold.
But there are a lot more points in favor of Valuation-Informed Indexing than there are in favor of Buy-and-Hold at this point in the proceedings. A LOT more. So I continue to believe that we should be permitting honest posting re the last 37 years of peer-reviewed research at every investment discussion board and blog on the internet. If you had confidence in Buy-and-Hold, we never would have seen a single death threat or a single demand for a single unjustified board banning or a single act of defamation or a single threat to get a single academic researcher fired from a single job. People just do not behave that way when they have confidence in the ideas that they are advancing. People behave that way when they are working a con.
It’s not my intent to insult you when I say that. It’s my intent to make a very important point. If the best that the Buy-and-Holders can do when trying to make their case is to engage in criminally abusive behavior, there cannot be too strong of a case there. I have certainly never done anything like that and Shiller has never done anything like that and no other Valuation-Informed Indexer has ever done anything like that. That puts our side way, way, way ahead in the argument. I mean, come on.
We should be pointing out that my prediction did not turn out and that Shiller’s prediction did not turn out. That’s all part of the wonderful game. We should be holding Bennett accountable and we should be holding Shiller accountable. We should be asked to explain why the high prices have remained in place for so long. All of that is on the right side of the line. The other stuff, not so much.
The key point in dispute is whether stock price changes are caused by economic developments or by shifts in investor psychology. If it is shifts in investor psychology that cause price changes, as Shiller says, then we still will be seeing that price crash. And those who followed Valuation-Informed Indexing strategies will end up ahead of their Buy-and-Hold friends when we see it. So the bottom line will be the same as it has been for the entire history of the market.
The only way that the Buy-and-Holders can end up ahead is if it turns out that the market really is efficient, that stock price changes really are caused by economic developments, that valuations do not affect long-term returns. If that’s so, Buy-and-Hold is the ideal strategy. I just don’t buy it, however. I think that Shiller’s research is legitimate research. I think that the man merited the Nobel prize that he was awarded for his work in this field. I think that Buy-and-Hold has been discredited and needs to be replaced (or updated, if you prefer to say it that way). I believe that we should be permitting honest posting at every site on the internet so that we can all learn together how stock investing really works in the real world.
Yes, we should be looking at the cases where Valuation-Informed Indexers got their predictions wrong. Those cases are part of the story that we all need to be developing together. But we also need to be looking at the cases where the Buy-and-Holders got it terribly, terribly wrong. The errors that the Buy-and-Holders made in their retirement studies have put millions of people on a track to suffering failed retirements in days to come. That’s bad stuff. The Buy-and-Holders need to be held accountable for those discredited studies, and for the 16-year cover-up of the errors in those studies, just as the Valuation-Informed Indexers need to be held accountable for their failed predictions. What’s good for the goose is good for the gander, in my sincere assessment.
I hope that helps a small bit.
I naturally wish you all the best that this life has to offer a person.
Goose and Gander Accountability Advocate Rob
I’m with you, in a way, for a little bit at least.
Fair enough.
Like every other recession and (and bull market) that you’ve missed since 1996 this too will pass.
I don’t see a bull market as something that one “misses.” I see a bull market as a phenomenon of intense irrationality that one jumps out of the way of in hopes of avoiding its insanity. So I think we are coming at these matters from differing perspectives.
I of course agree that this too shall pass. But I try not to let that philosophical attitude get in the way of my belief that it is possible for the humans to achieve advances in their understanding of the world about them and to profit from those advances. There was a time when we did not know that smoking causes cancer. Lots of people died because of that deficiency in our understanding of things. I am happy that we eventually figured that one out and that not as many people smoke today as a result of the warnings that we put on the cigarette packages and all the other good things we did as a result of the things we learned about what causes cancer. I am similarly happy that we learned 37 years ago that the market is not efficient, that valuations affect long-term returns, that the safe withdrawal rate is a number that changes with changes in valuation levels, that investors need to be willing to change their stock allocations in response to big shifts in stock prices to have any hope whatsoever of keeping their risk profile roughly constant over time.
I enjoy learning experience, Sensible. This crazy 16-year journey of mine has been one massive learning experience. I look forward to the day when I will be able to share all that I have learned with every investor on the planet without having to deal with the massive heaps of intimidation that you Goons have been bringing to our discussions for 16 years now. Yucko, you know?
I wish you all good things. But come on.
Philosophical (Kinda, Sorta, Up to a Point) Rob
Only Rob’s money is real. Everyone else just has cotton candy nothingness.
The stuff that is the product of irrational exuberance is cotton candy nothingness. That is indeed my take, Anonymous.
We should be telling people. We are doing people great harm by keeping them in the dark about what the last 37 years of peer-reviewed research teaches us about how stock investing works in the real world.
It’s a little late to tell people after the crash, after a large percentage of their life savings has gone “poof!” Wait until then to tell and lots of people are going to be very, very, very pissed off. And rightly so.
The key to successful long-term stock investing is distinguishing the real stuff from the cotton candy nothingness. Shiller was awarded a Nobel prize because he told us what we need to know to do that.
My sincere take.
My best wishes to you and yours, dear Goon friend.
Real Money Advocate Rob
“I remember. And I stand by those words.”
And, you were wrong. In fact, when you were reminded of this claim in 2015, you then said the crash would happen before the end of 2017.
“.Shiller was awarded a Nobel prize because he told us what we need to know to do that.”
Yes, Shiller told us to stay in the market and not to use CAPE for timing the market. You should have listened to what he said and then you wouldn’t have had a failed retirement.
And, you were wrong. In fact, when you were reminded of this claim in 2015, you then said the crash would happen before the end of 2017.
The prediction certainly did not prove out. There’s no dispute re that one.
I still say today that there’s going to be a crash. I now say “in the next year or two or three.” And it is possible that I will be proven wrong again.
Does it matter? If it turns out that Shiller is right that stock price changes are caused by shifts in investor emotion rather than by economic developments, investors who follow a Valuation-Informed Indexing strategy are still going to end up in a much better place than those who follow a Buy-and-Hold strategy. I think that’s important. I think results matter. LONG-TERM results.
And there’s no way that a strategy rooted in a belief that price changes are caused by economic developments can produce good long-term results in a world in which price changes are really caused by shifts in investor emotion. If price changes are really caused by shifts in investor emotion, then the investors who believe that they are caused by economic developments are counting phony, temporary “gains” as if they were real, as if they could be used to finance their retirements. Huh? What the f?
We need as a nation to figure out whether it is Shiller or Bogle who is right. The only way to do that is to open every investing discussion board and blog on the internet to honest posting re the last 37 years of peer-reviewed research in this field.
My best wishes.
Wrongo Rob
Yes, Shiller told us to stay in the market and not to use CAPE for timing the market. You should have listened to what he said and then you wouldn’t have had a failed retirement.
Shiller didn’t say that. At least not the way you are suggesting he said it. Shiller published a paper in 1996 advocating long-term timing. So he obviously understands that a belief that long-term timing works follows from his research findings.
There was one interview that I saw in which Shiller said something close to what you are saying. He didn’t go into enough detail for us to be clear what he was saying. He said that he doesn’t believe in “timing.” But that doesn’t mean much because 99.9 percent of the references that we hear to “timing” in this field are references to short-term timing, which everyone who is familiar with the peer-reviewed research knows does not work. So that’s of no consequence. But he added a throwaway line to the effect of “I used to believe that it worked that way, but not anymore” (this is not an accurate quote, I am paraphrasing based on a vague recollection of something I read some time ago).
That possibly supports what you are saying. But it is not entirely clear that it does. And, even if it does, it conflicts with Shiller’s research findings. If valuations affect long-term returns, long-term timing MUST work. It is a logical impossibility that it would not. So Shiller has advanced a lot more statements showing that long-term timing is required (his entire life’s work) than he has suggesting that there might be circumstances in which long-term timing might not work (possibly one off-hand interview comment).
If you wanted to know what Shiller really thinks, you would work to open every discussion board and blog on the internet to honest posting. You would then be able to hear lots of smart people come at the question from lots of different angles. And, if you would put the criminally abusive stuff in a giant trashcan, I am 100 percent certain that you could persuade Shiller to come to one of those boards and tell you himself in great detail what he believes re these matters. You should do that. That would be a positive. I would love to see that.
Bogle gave an interview in which he endorsed Valuation-Informed Indexing. He said: ““Big moves out of stocks should not be done at all. But strategic asset allocation can be done at very rare times, maybe six times in an investor’s lifetime, three times when the market is stupidly high and three times when stupidly low.” That’s Valuation-Informed Indexing. Do you conclude from that one statement that Bogle endorses Valuation-Informed Indexing? It would be fair to conclude that. But it would also be fair to go the other way given the hundreds of times that Bogle has expressed disdain for market timing without specifying whether he is talking about short-term timing (which never works) or long-term timing (which always works).
We need to stop with the criminally abusive stuff. That’s what is holding us all back. We all need to know how to invest effectively. We should all want to know what Bogle really thinks and we should all want to know what Shiller really thinks. But neither of them is going to be 100 percent candid until we bury the criminally abusive stuff in a ditch somewhere. For obvious reasons.
My best wishes to you.
Candid (and Willing to Pay the Price for Being So!) Rob
“There was one interview that I saw in which Shiller said something close to what you are saying. He didn’t go into enough detail for us to be clear what he was saying. ”
Actually, he did say all that. Want the link? You said that he made those comments because of the pressure by the goons.
If the end result of your approach to the market is never investing it, it’s not practical. You might as well stop writing about “buy and hold”. Anything stock-market related is about as relevant to your life as real estate values on the Moon.
Actually, he did say all that. Want the link? You said that he made those comments because of the pressure by the goons.
I agree that what he said could be interpreted in the way that you are interpreting it. But what he said was no more clearly a rejection of long-term timing than what Bogle said in the quote that I provided just above is a rejection of Buy-and-Hold. Bogle endorsed long-term timing in the quote. I think that’s great. But I am reluctant to say flatly that Bogle endorses long-term timing because his life’s work is a rejection of all forms of market timing. I certainly took note of his comments when he offered them. But I don’t feel comfortable drawing grand conclusions from them. Similarly, I think Shiller’s comments were noteworthy. We should be looking at them and trying to figure out why he said them. But I am not willing to draw grand conclusions from comments that go against the man’s entire life’s work.
Yes, it is the pressure applied by you Goons that cause Shiller and Bogle and many, many others to be less than clear in their comments about how stock investing works. There are reasons why we have laws against financial fraud. There are reasons why the tactics you employ to block people from discussing the last 37 years of peer-reviewed research in this field are prohibited at every board and blog at which I have ever posted. Those sorts of tactics make people feel uneasy about speaking openly and freely and sincerely. And that hurts us all.
I hope that helps a bit, Goon friend.
I naturally wish you the best of luck in all your future life endeavors.
Goon-Pressured (But Still Honest!) Rob
If the end result of your approach to the market is never investing it, it’s not practical. You might as well stop writing about “buy and hold”. Anything stock-market related is about as relevant to your life as real estate values on the Moon.
The Bennett/Pfau research shows that those who practice price discipline when buying stocks end up earning far more from that asset class over the course of a lifetime than those who follow a Buy-and-Hold strategy. I love stocks. I don’t love irrational exuberance. When I can buy stocks without the amount of irrational exuberance attached to them that we have today, I’ll be all in. And I’ll do fine, in the event that stocks continue to perform in the future anything at all as they always have in the past.
If you truly loved stocks, you would want to see honest posting on the last 37 years of peer-reviewed research permitted. It’s only by permitting honest posting that we can get the level of irrational exuberance down and have most of our stock-buying money going to buy stocks. If you really loved stocks, you would want to get as much stocks for your money as possible. So why not help get the irrational exuberance removed from the equation? We do that by warning people of the dangers of Buy-and-Hold (which does not even distinguish irrational exuberance from real economic-based stock gains).
My take.
And my best wishes.
Moon Man Rob
“I see a happy ending to the story. Now the full reality is that I would almost have to see a happy ending or else I couldn’t get up in the morning, you know? I think we humans build narratives that help us cope with the circumstances in which we find ourselves and sometimes those narrative are right on and sometimes not so much. ”
Take a look at your words. You are admitting that you created your own narrative in order to cope. Unfortunately, it doesn’t fix your problems.
I don’t see Shiller’s Nobel-prize-winning research as a problem, Anonymous. I see it as a solution.
The “problem,” if you want to call it that, is that Valuation-Informed Indexing is such a huge advance that some Buy-and-Holders feel bad that they haven’t been advocating it for a long time. So we have seen some resistance and it has taken longer than we would like to make the transition that deep in our hearts we all want to make.
That’s a surface problem. The deep realities are very, very, very positive.
Or so my narrative says.
I don’t know it all. I am flawed, like all the other humans. I could be wrong.
But that’s what I believe. I think the good news here is 50 times more good than the bad news here is bad.
It will be interesting to see how it all plays out.
Narrative-Creating, Problem-Fixing, Good-News-Seeing Rob
Oh wait, I forgot. Everyone else is all living a fake narrative and only Rob Bennett lives under a true narritive. We just have to wait under 73 to 86 years to “see how it all play out”.
I don’t know what the “73 to 86 years” thing refers to. The thing that we need to wait for to see how it all plays out is the next price crash. If you look at the research, you can see how it all always plays out. That’s what the research is there for — to tell you how things work. But many people are more impressed by concrete realities than by research findings. The concrete reality is that Buy-and-Hold is not doing so horribly for most people today. It will be doing horribly for them in the event that we see the price crash that the research tells us to expect. So I believe that we will see a change in people’s attitudes at that time. Get Rich Quick schemes do not remain popular after they cause people to go bust.
Re the narratives, we all have our own narratives. Yours is not the same as mine and mine is not the same as Bogle’s and Bogle’s is not the same as Shiller’s and on and on and on. That’s why we need to permit every community member to post honestly. It is only when all narratives are shared without anyone being intimidated into silence or self-censorship that community discussions can achieve their full potential. There are no doubt things that I get wrong. I need to have everyone else posting honestly so that someone employing a different narrative will catch my mistake and correct it. Shiller needs the same. Bogle needs the same. You need the same. We all have different narratives and we all need to feel free to share them so that we can enjoy a solid community learning experience.
My best wishes to you.
Fake Narrative Rob (Truly)
And you want us to wait, even if it takes 73 to 86 years more for it to play out, right?
I’ve asked myself that question, how long would I wait? Shiller predicted in 1996 that those going with high stock allocations would regret it within 10 years. That would have been 2006. We are now 12 years past that. This is the longest that we have ever gone with stocks at crazy high prices and not seen them crash (they crashed in 2008 but prices went back up after the passage of only a few months, so that crash didn’t turn out to be terribly consequential). Does there come a point when you just say “this has continued for so long that it just doesn’t make sense to continue to expect a crash?”
The long wait is a point against Valuation-Informed Indexing, in my assessment. I can see someone saying “if stock prices had just recently risen to crazy high prices, I would listen to Shiller and Bennett and lower my stock allocation but this has gone on so long that I feel that they are like the boys who cried wolf, I just do not have confidence that what they are saying will happen will actually take place.”I don’t agree with that view. But I don’t see that view as being entirely unreasonable. So I don’t say that someone who concludes that “it has taken too long for prices to crash” and therefore rejects Valuation-Informed Indexing is crazy.
The problem that I have with that view is that we all need to invest our money. If you are considering making a bet on the World Series but you can’t figure out whether the Red Sox or the Dodgers are the better baseball team, you can just elect not to place a bet either way. You can opt out of the choice. You can’t do that as an investor. You can’t say “Valuation-Informed Indexing beats Buy-and-Hold for about 10 different reasons but I am concerned about how long it has taken for the crash to arrive so I am just going to opt out of making a decision re how to invest my money because I don’t want to get it wrong.” You’ve got the money, so you have got to make a choice. There is no opt out.
I think the case is so strong for Valuation-Informed Indexing and so weak for Buy-and-Hold that I could not bear to elect to go with Buy-and-Hold. So I still go with Valuation-Informed Indexing even though it has taken a long time for the crash to come. What if it took another 100 years for the crash to come? Would I still opt for Valuation-Informed Indexing in those circumstances?
I don’t see how I could opt for Valuation-Informed Indexing in those circumstances. That would just be too crazy.
But where do you draw the line? At what point do you say “it has taken too long for the crash to come” and abandon the concept? I cannot answer that question. If there were a great alternative, if would make sense to move to it. But there’s not. If some brilliant researcher came up with a third model that seemed to make sense, I would be inclined to investigate that third model and see if it might be a better answer than the two existing models. But there are no signs of that happening. I could see eventually moving in the direction of a middle ground, changing my stock allocation in response to what the last 37 years of peer-reviewed research shows but not changing it as much as that research suggests because of a concern that the crash hasn’t arrived in the time that you would expect it to arrive based on what has happened through history. That will probably be my path if the crash does not come for a long time.
But I cannot see going with Buy-and-Hold. It just doesn’t stand up to scrutiny. Price discipline is key in every market that exists and the Buy-and-Holders have never given any reason for their belief that it isn’t needed in the stock market. Wade Pfau spent months searching the literature for studies showing that it is not necessary to practice long-term timing when buying stocks and he came up empty-handed. So I just do not feel comfortable going there. It seems at least possible to me that there might be some way to practice price discipline (long-term timing) other than what the peer-reviewed research available to us today teaches us. I don’t think that we know all the answers. But I cannot see going backwards. Buy-and-Hold has failed. Shiller checked whether its premise (that the market is efficient, that prices fall in the pattern of a random walk both in the short term and in the long term) held up to scientific scrutiny and Buy-and-Hold failed the test. I cannot see going back to it unless the Buy-and-Holders offer some explanation for why their model failed the test that it must pass for the model to be valid.
I believe that the case for Valuation-Informed Indexing is 100 percent rock-solid GOING BY THE EVIDENCE AVAILABLE TO US TODAY. Not all of the evidence is available to us today. You are raising a hypothetical where we see another 73 years pass without a price crash. I agree that that would change things. But I cannot say precisely how many years it would take for me to change my views. 73 years would certainly bring a change (but probably not to Buy-and-Hold, I would need to look for some third option), five years would certainly not bring a change, given how strong the case is for Valuation-Informed Indexing today. Somewhere in the middle of those two scenarios, I would experience enough doubts that I would begin to shift away from Valuation-Informed Indexing and perhaps somewhat in the direction of Buy-and-Hold.
The question you are asking is a good one. Skepticism is part of the scientific process. If people are not skeptical toward Valuation-Informed Indexing, we will not learn of its flaws and that would be a negative for all of us. So the skepticism is good. I wish that you would direct some of that skepticism toward Buy-and-Hold. In addition to asking how many more years Valuation-Informed Indexing advocates can go without seeing a crash, you should be asking how many more years of price-return data Buy-and-Holders need to see in which valuations affect long-term returns before they are willing to acknowledge that the market is not efficient and that price increases that take stock prices beyond fair-value levels do not represent economic realities but only the effect of an irrational exuberance on the part of stock investors.
You are with this question pointing to the weak spot in the case for Valuation-Informed Indexing. I think that the overall case is very, very strong. But, when I am going over the case in my head to determine whether I might have gotten something wrong, this is the question that my mind turns to. I have explanations for why it has taken so long for prices to crash. Valuation-Informed Indexers need to try to answer that question if they are to retain their intellectual integrity. It is not a question that can be ducked. So I have explanations that are partly satisfying in my mind. However, I am not sure that I can say that all of them added together are completely satisfying. This aspect of the question troubles me a bit. If there were completely satisfying models available, I would be at least checking them out at this point in the proceedings.
So thanks for asking the question.
Somewhat Questioning But Generally Steadfast Rob
The third option is Buy, Hold and Rebalance.
So 2008 didn’t count. You require not only a 50% (or more) crash, but also a market that stays down for an undetermined number of years. But somehow you’ll know when it’s about to turn. And only then will you dive head-first into stocks, at which point you will be rewarded by the decades-long bull market that inevitably comes next. And when it peaks, you’ll sell everything and start enjoying your profits, because now you’re old and rich, and you don’t need to take any stock market risk.
So your scenario takes at least 20 years to play out, even if it starts today. (And that’s assuming you even have any significant assets left to invest, a perfectly valid question that you refuse to answer.) Planning on taking a lot of trips to Disneyworld in your 80s and 90s?
Don’t bother replying with that tired old “what other choice do I have, I can’t post dishonestly.” Life offers infinite choices beyond your two stupid ones. You just refuse to see them.
The third option is Buy, Hold and Rebalance.
“Buy, Hold and Rebalance” is what I am referring to when I say “Buy-and-Hold,” Anonymous. It is not using a different stock allocation when prices change. It is returning to the stock allocation you started with. It is not exercising price discipline. Those who follow Buy, Hold and Rebalance are permitting their risk profiles to get wildly out of whack when valuations change dramatically and they do not respond with changes in their stock allocation.
That’s the thing that I am saying doesn’t work. I believe that it is as important to practice price discipline when buying stocks as it is when buying anything else. It is price discipline that makes markets work. Take price discipline out of the picture and you create a dysfunctional market. Dysfunctional markets crash. It is because many of us do not practice price discipline when buying stocks that we experienced an economic crisis in 2008. It is because many of us do not practice price discipline when buying stocks that we will be looking at a repeat of that crisis in not too long a time,.
Not this boy.
Price Disciplined Rob
And what portfolio mix are you referring to?
So 2008 didn’t count. You require not only a 50% (or more) crash, but also a market that stays down for an undetermined number of years. But somehow you’ll know when it’s about to turn. And only then will you dive head-first into stocks, at which point you will be rewarded by the decades-long bull market that inevitably comes next. And when it peaks, you’ll sell everything and start enjoying your profits, because now you’re old and rich, and you don’t need to take any stock market risk.
So your scenario takes at least 20 years to play out, even if it starts today. (And that’s assuming you even have any significant assets left to invest, a perfectly valid question that you refuse to answer.) Planning on taking a lot of trips to Disneyworld in your 80s and 90s?
Don’t bother replying with that tired old “what other choice do I have, I can’t post dishonestly.” Life offers infinite choices beyond your two stupid ones. You just refuse to see them.
Stock prices have been playing out in a hill-and-valley pattern (NOT a random walk pattern, as the Buy-and-Holders posit) ever since the day that the market opened for business, Anonymous. It is not me who requires this. It is human psychology. We all have a Get Rich Quick urge residing within us. So our natural inclination is to push stock prices up, up, up and enjoy the Pretend Gains that we create to the fullest. At some point common sense takes over and our irrational exuberance is transformed into irrational depression and prices go down to levels every bit as crazy as the levels to which they in earlier days rose up to. Once stocks are priced at one-half of their fair value (which is truly insane), the irrational depression has exhausted itself and the Get Rich Quick urge is able to assert itself again and a new hill is ascended.
You say that I say that 2008 didn’t count. It happened. I obviously acknowledge that it happened. But the boom/bust cycle cannot resolve itself until prices at least go to fair value and stay there for some time (there has never been a case in U.S. history in which a boom/bust cycle resolved itself without prices going to one-half fair value and remaining there for some time). Do you think that Buy-and-Holders are depressed today? I sure don’t. Some are a little worried. But not depressed. If all of the Buy-and-Holders were depressed, stocks wouldn’t be priced as they are today. When the Buy-and-Holders become truly depressed, you will know about it. It will be written up in all the papers. Prices will be far lower than where they stand today. I will be talking stocks up at that time and everyone will be saying that I must have forgotten to take my meds, can’t I see that no middle-class person should ever own this dangerous investment class? Emotional extremes eventually beget emotional extremes in the other direction.
I don’t need to know when prices will turn. No one does. That’s the difference between short-term timing and long-term timing. With short-term timing, you are guessing when prices will turn. That is decided by investor psychology and we do not know enough about investor psychology to be able to guess effectively. So that’s a loser. Valuation-Informed Indexing is just risk assessment. All consequential price crashes take place at times of high prices. So we know that the odds of seeing a consequential price crash are far higher when prices are crazy high than they are when prices are moderate or low. We take that enhanced risk into consideration when setting our stock allocation. And of course it always works. How could it not work? There is no guesswork, it is just an acknowledgment of the realities of stock investing. You never know when prices will turn. But so long as you make the allocation changes you need to make to keep your risk profile constant over time, you cannot lose. Sooner or later, you are going to move ahead of the Buy-and-Holder by a huge number. And then the magic of compounding returns works its magic for the remainder of your investing life.
I don’t think it is stupid to follow the peer-reviewed research. No personal insult intended, but I think it is stupid to ignore the peer-reviewed research.
Stupid (Or Maybe Not) Rob
And what portfolio mix are you referring to?
I endorse everything that Bogle says as to how an investor should determine his portfolio mix. He needs to look at his age, he needs to look at his risk tolerance, he needs to look at the purposes for which he is investing the money, that sort of thing.
The one difference is that Bogle says that the investor does not need to practice price discipline (long-term timing) when buying stocks. I say that it is just as important to practice price discipline when buying stocks as it is when buying anything else. The investor should be aiming to maintain the same risk profile over time. To do that, he MUST be willing to adjust his stock allocation in response to big price shifts since valuations affect long-term returns and stock investing risk is not constant (as it would be if the market were efficient) but variable. If Bogle acknowledged what Shiller’s Nobel-prize-winning research has taught us about how stock investing works in the real world, we would see eye to eye.
Boglehead (Almost!) Rob
So, to you, there is no difference in just buying and holding the S&P 500, versus a three fund portfolio versus the Coffee House portfolio versus the Cowards portfolio, etc.
“I don’t need to know when prices will turn.”
So what you’re dancing around saying in that long unresponsive comment is that your personal investments are shot to hell and nothing can change that. Except your $500 million settlement.
Fair enough, but the problem is that no matter what happens in the market, people are not going to listen someone whose couldn’t personally profit from his own investment ideas. It’s that nasty little thing called credibility.
So, to you, there is no difference in just buying and holding the S&P 500, versus a three fund portfolio versus the Coffee House portfolio versus the Cowards portfolio, etc.
My preference would be the Total U.S. Stock Index. To me, that’s just accepting that, whatever the market provides, you will get. You are not making any guesses as to whether some particular mix will outperform. In my eyes, that is the most humble choice and thus the most appealing choice.
There’s a good intellectual argument for going with a global index since we are moving to a global economy. My personal thought is that the U.S. market has a longer track record and is thus a safer choice today. In time, the global economy will have been a reality long enough that it will make sense to make the change. I am not convinced that we are there just yet. But I am certainly not dogmatic re any of these points.
I like index funds because they take the guesswork out of investing. The way that I see it is that, the less you are guessing, the less likely you are to guess wrong and thus the less risk you are taking on. Which is good! I think that a big part of why Buy-and-Holders like to stick at the same stock allocation at all times is that they don’t want to engage in guessing re stock allocations either. The logic follows. When you are talking about small differences in valuations, it makes sense just to keep things simple and not make an allocation change. But when valuations get extreme, as they are today, the price attached to not making an allocation change is so great that I just don’t see how you can refuse to do so on the grounds of simplicity. I can see making limited changes so that you avoid guesswork to the greatest extent possible. But valuations is such a big factor in long-term success that I just don’t think that any rational investor can afford to altogether fail to make allocation changes in response to valuation shifts.
I hope that helps a bit. I have heard of the Coffeehouse Portfolio. I don’t know what the Cowards Portfolio is. I obviously get it that a three-fund portfolio would include three funds but I couldn’t tell you what those three funds would be. These questions don’t interest me too much. I am perfectly happy to go with a total U.S. stock index fund. It is my view that the U.S. stock market has the best and longest track record and is thus the lowest risk in the long term. I suppose that someone might argue that that is putting all of one’s eggs in one basket and that it would be better to choose one of these other options. I can see the argument. Personally, I feel that betting on the U.S. is the best bet. The U.S. could go down. But, if the U.S. goes down, everything else is probably going to go down with it. So I don’t personally feel a need to take that possibility into consideration.
My sense is that my views on this question were highly influenced by Bogle, I believe that he has argued that a total U.S. stock fund is a good choice. If he has changed his thinking in recent years, it is possible that I wouldn’t know that. I don’t follow this stuff closely. For so long as valuations are where they are, I don’t feel comfortable with any big stock bets. There’s just too much irrational exuberance in the mix for my liking. When prices go down, my intent is to go with a total U.S. stock fund. But at that time, I will probably check in again on what Bogle is saying and, if he has changed his recommendation, I will certainly look into his reasons for doing so.
Again, this one is not a biggie for me, I like index funds because I believe that investing in them diminishes risk (I think that most of us exaggerate our ability to pick stocks effectively). It is my personal belief that a broad U.S. fund will do the trick. But I think it is good that lots of good and smart people make the case for alternatives and I acknowledge that they could well be on to something. So no dogmatism re this one from this guy. So long as the subject of valuations doesn’t come up, I am a puppy dog poster again, like I was in the days when I only posted about saving strategies.
Puppy Dog Rob
So what you’re dancing around saying in that long unresponsive comment is that your personal investments are shot to hell and nothing can change that. Except your $500 million settlement.
Fair enough, but the problem is that no matter what happens in the market, people are not going to listen someone whose couldn’t personally profit from his own investment ideas. It’s that nasty little thing called credibility.
Um, yeah, that’s exactly what I’m saying, Anonymous. Truly outstanding!!!
If you didn’t think that lots of people would listen carefully to what I was saying, you never would have demanded a single board banning. If people didn’t love my stuff, I would not represent a threat to you personally or to Buy-and-Hold generally. People have always listened. That’s been so going back to the morning of May 13, 2002. My problem is that the 10 percent that listens is not nearly as intense as you Goons. You Goons can poison any board community that you want to poison for so long as the site administrators do not take effective action. And most site administrators are either Buy-and-Holders themselves and thus affected by a bias or want the money that comes in when they appease Buy-and-Holders, which by definition comprise the vast majority of investors at times when prices are at insanely dangerous levels.
I don’t have a problem getting people to listen. I can’t get a majority to listen, that’s certainly fair to say. The majority is not interested in hearing my message today. In fact, I think it would be fair to say that the majority is somewhat repulsed by my message and some are very, very, very repulsed, even violently repulsed. But 10 percent of the investing population is a lot of people and I believe strongly that those of us who believe that the last 37 years of peer-reviewed research in this field is legitimate research have a right to post where we please and that that 10 percent of investors will have a right in the days following the next price crash to bring both civil actions and criminal prosecutions against those who denied them their right to hear the message that they very much needed to hear.
We will just have to wait to see how it all plays out. I am not God, I could be wrong. But I don’t think that I am. And I certainly am not going to move to the wrong side of the felony line just to appease you Goons in the meantime. We will all have to wait a bit and see how things play out in the days following the crash.
I wish you the best of luck with it, in any event.
Credibility Lacking Rob
You don’t have ten percent of people listening to you. You don’t have ten people. You don’t have even one person (since JWR, may he RIP.) That’s what makes you so special. Even the craziest nut on the internet can usually find a few other nuts who will support him.
I’ve seen how people react to my stuff, Anonymous. I have never seen so many extreme positive reactions to a post as I saw to my famous post from the morning of May 13, 2002, pointing out that the Greaney retirement study lacks an adjustment for valuations. That post took off like a shot. I have had hundreds of people tell me that I have done more to help them understand how stock investing works than anyone else alive. You have never had anyone say that about you. And those posts appeared on public boards. If you were capable of being honest re these matters, you would acknowledge that you saw them too and that the reason why you demanded that I be banned at every board on the internet is that you see me as a threat to the continued survival of your dangerous Buy-and-Hold dogmas.
So be it, you know? I don’t like it. But I sure am not going to take a trip to the wrong side of the felony lie to appease you Goons. We will see how it all plays out. I think it would be fair to say that you will be landing in a prison cell in the days following the next price crash. Which of us will have more credibility then, the fellow sitting in a prison cell or the fellow who pointed out the errors in the Buy-and-Hold retirement studies when the people who were tricked into following them still had time to save their retirements?
I don’t like what has happened. I don’t want to be banned at a single board. I want to be sharing what I know about stock investing with all of my friends who want to hear what I have to say on a daily basis. But this is the reality we all face. I sure am not going to go to the other side of the felony line to get unbanned. That would be a 100 percent insane thing for me to do. Zero chance. Not this boy. It doesn’t happen.
The craziest nut on the internet doesn’t have 37 years of peer-reviewed research backing up every word he says. That’s the difference. The craziest nut on the internet doesn’t represent the threat to lots of wealthy and powerful and ethics-challenged people that I do. Greany’s study lacks an adjustment for the valuation level that applies on the day the retirement begins. That’s the bottom line here. I said it on the morning of May 13, 200, I say it today, and I will say it 16 trillion years from today if I am still around that long. I have a funny feeling that the general reaction to that 100 percent accurate statement of mine will change dramatically in the days following the next price crash, when the millions of failed retirements that you Goons have set in motion are being reported on in the newspapers on a daily basis.
But we’ll see, you know?
I wish you the best of luck with it. But that’s as far as I can go. No felonies for this boy. I love my country. So I just don’t go there. I don’t even think of going there.
The fact that the strongest advocates of Buy-and-Hold have come to the conclusion that it cannot be defended without death threats and demands for unjustified board bannings and thousands of acts of defamation and threats to get academic researchers fired from their jobs should tell us all something about Buy-and-Hold, It doesn’t tell us something good.
That’s my sincere take re these terribly important matters, in any event.
My best and warmest wishes.
Crazier Than the Craziest Nut on the Internet Rob
“I have had hundreds of people tell me that I have done more to help them understand how stock investing works than anyone else alive. You have never had anyone say that about you. And those posts appeared on public boards.”
Links to those posts don’t exist. Here in the real world, that fact renders your statement invalid.
“The craziest nut on the internet doesn’t have 37 years of peer-reviewed research backing up every word he says.”
He always thinks he does.
The links to the posts in which thousands of my fellow community members expressed a desire that I able to post honestly exist at every board at which I have posted. And those links will all be shown to the members of your jury when they are considering what sort of prison sentence is appropriate for you. You wouldn’t even be here today if you weren’t worried about what the length of your prison sentence is going to be. Please give me a freakin’ break.
The craziest nut on the internet does indeed think he has something supporting him. I think that is so. But sometimes a fellow who is initially viewed as crazy because he is saying something different turns out to have been making a hugely important contribution, Our laws are set up to insure that we all get to hear those voices. If you have evidence to show that someone is crazy, you get to present it, If all you can think of to do is to advance death threats and demands for unjustified board bannings and thousands of acts of defamation and threats to get academic researchers fired from their jobs, you end up in a prison cell.
Our laws against financial fraud are good and important laws. I support them.
Although I also support the employment of a good measure of mercy when it comes time to apply them. You Goons have that working for you. I will do whatever I can to help you out. But I won’t be saying that I believe that Greaney had included a valuation adjustment in his study all along. Because that puts me on the wrong side of the felony line. And a stay in a prison cell is not in thus boy’s future. Call me madcap.
Hang in there, man. Don’t let the bad guys get you down.
Prison Cell Phobic Rob
“If you have evidence to show that someone is crazy, you get to present it.”
I don’t have to present it. You present it yourself in your very next sentence: “If all you can think of to do is to advance death threats and demands for unjustified board bannings and thousands of acts of defamation and threats to get academic researchers fired from their jobs, you end up in a prison cell.”
You’re completely bonkers. Looney tunes. Insane. That’s not an opinion. It’s a unanimous conclusion shared by all who know of you, in a world where unanimous conclusion are nearly unheard of.
The nicest thing anyone can say about you is that you’re only hurting yourself and your family (as far as we know.) So to be nice, thank you for not sending out pipe bombs and shooting up synagogues.
Okay, Anonymous. I definitely intend to stay far away from any pipe bombs. Not this boy.
Please take good care, old Goon friend.
Loony Tunes (Unanimously Verified) Rob
“I hope that helps a bit. I have heard of the Coffeehouse Portfolio. I don’t know what the Cowards Portfolio is. I obviously get it that a three-fund portfolio would include three funds but I couldn’t tell you what those three funds would be. These questions don’t interest me too much.”
So you don’t really know what is in all those portfolios as well as their strategy, yet you say that they will all lose 50% of their value and that VII is superior.
I don’t say that. It’s the last 37 years of peer-reviewed research in this field that says that. I REPORT it. I am a reporter. That’s the kind of thing we do. We don’t just push smiley-face marketing slogans. We REPORT realities.
What if these funds went by the name of “The Irrational Exuberance Portfolio”? Do you think that would sell? Why do you think they don’t do it that way? It’s because they want to turn a quick buck. Valuation-Informed Indexing is what works. Buy-and-Hold is what sells.
It can’t all be about marketing. When millions of middle-class people see their lifetime savings wiped out, they are going to get angry. When they learn that there were people trying to tell them what the last 37 years of peer-reviewed research teaches us about how stock investing works in the real world, their anger is going to intensify. The Buy-and-Hold marketing slogans will be spoken as obscenities in those days. Not a good thing.
There’s plenty of money to be made in this field telling the truth. You could have all these funds and still tell people the truth about the need to practice price discipline (long-term timing) when buying stocks and the funds would actually work and people would like them. The problem stems from the fact that we didn’t always know everything there is to know about how stock investing works, and when Shiller published his Nobel-prize-winning research, the Buy-and-Holders elected to ignore it rather than to work up the courage to say the words “I’ and “Was” and “Wrong.” Now we are in a trap. It is now 500 times harder for Bogle and the other Buy-and-Holders to say those words than it would have been to say them 37 years ago.
Am I responsible for any of that? I was a Buy-and-Holder myself on the morning of May 13, 2002. I was just trying to point out an error in a retirement study because I had come to care about my fellow community members at a discussion board at which I posted and I didn’t want to see them get hurt. I gave up on Buy-and-Hold on the evening of August 27, 2002, when Greaney advanced his first death threat and 200 Buy-and-Holders endorsed it. Huh? What the f? Does that sound like science to you? I became a Buy-and-Holder because it was promoted as being rooted in peer-reviewed research and I believe in science. Death threats ain’t science. Endorsements of death threats ain’t science. No way, no how. It’s not a close call.
Part of the scientific process is learning new things and acknowledging your mistakes when you do. That’s how human knowledge advances over time. Shiller didn’t hurt the Buy-and-Holders when he published his “revolutionary” (his word) research findings. He helped them. He gave them a chance to avoid all of the embarrassment that they are feeling today. That’s what I did for Greaney when I pointed out the error in his retirement study. He should have thanked me. He didn’t. But he should have. If your aim is to help people with a retirement study, you want to know if you have made a mistake. Greaney has made it look like he INTENDED to cause millions of failed retirements, that he was working a con from the first day. It is Greaney who is making Greaney look bad, not Bennett. I have described his study as a big advance over what came before that happened to include an error because lots of people in the field had not come to terms with Shiller’s findings at the time that Greaney prepared his study. I was Greaney’s best friend. And I still am. I am still trying to help him out 16 years later, whether he is able to see that or not.
If you invest in any of those funds without exercising price discipline, you are going to hurt yourself. I am 100 percent sure. Of course that’s true of any good or service that you could possibly buy. If you buy cars or sweaters or bananas without exercising price discipline, you are going to hurt yourself. The idea that stocks are the one exception to the otherwise universal rule was a MISTAKE that in an ideal world would have been corrected when it was uncovered by the peer-reviewed research in 1981. Shiller has described the intellectual leap from the finding that short-term price changes are unpredictable to the Buy-and-Hold belief that the market sets prices properly as “one of the most remarkable errors in the history of economics.” That’s the story here. When you make a mistake re an important matter, you need to correct it. The Buy-and-Hold claim that there is no need to exercise price discipline (engage in long-term timing) is the biggest mistake ever made in the history of personal finance. It is hurting us all. It is in the process of potentially bringing our economic system to its knees.
That’s my sincere take re these terribly important matters, in any event, Anonymous.
I naturally wish you all the best that this life has to offer a person.
Mistake Correcting (and Proud of It!) Rob