I’ve posted Entry #422 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Shiller Is Anticipating Only a Mild Recession.
Juicy Excerpt: High stock prices represent a threat to economic stability. Is that not so? It certainly seems to be so to me. I consider it one of the most important implications of Shiller’s work that he showed how stock gains that are built on passing investor emotion rather than hard economic realities hurt us all when the emotion shifts. Shiller is not saying different in the words of his recent interview. But his failure to even mention the stock valuations aspect of the question makes me wonder a bit whether he views the role of stock valuations in causing economic contractions in the way that I have long believed he does. Perhaps Shiller will provide greater clarity re his views in a future interview.
Shiller must be a goon since he is not saying what you want him to say.
The way that I would say it is that Shiller is one of those darned humans. Which means that he has both good and bad in him. I rank him as the most important investing analyst of all time. So he obviously has done a huge amount of good, for which we all should be grateful. But he certainly has not done all the good that he could do. Has Shiller ever stated directly and clearly and firmly that “the Buy-and-Hold retirement studies get the numbers wrong and the false claims advanced in those studies will likely cause millions of failed retirements in the days following the next price crash”?
He has not. Huh? What the f? Why the heck not? It would be a huge help to me (and to everyone in this field who possesses a desire to do honest work, and that’s obviously all of us, including you Goons) if he would do that. So I wish that he would work up the courage to just do it and thereby to help us all out.
But he wants to be liked. That’s the killer for the humans. We all want to be liked. So we hold back from discussing what the last 38 years of peer-reviewed research tells us about how stock investing works in the real world.
It sure doesn’t get easier over time, does it? Had we started the national debate on the far-reaching implications of Shiller’s “revolutionary” (his word) research findings back in 1981, when those research findings first became available to us all, we never would have seen any of this nasty stuff. We ducked. We elected as a society to take a pass because facing the realities that Shiller presented to us meant rewriting all the textbooks and rejiggering all the calculators and so on. Learning how to pronounce the words “I” and “Was” and “Wrong,” in other words. So now it is 500 times harder to launch that debate than it would have been to do it when it first became clear to all who follow the peer-reviewed research that it was needed.
Shiller has Goon tendencies, like all the rest of us. He’s one of those darned humans. But he has also done more good in this field than anyone else who has ever walked Planet Earth. I’ll take that. Shiller has improved my life immensely and I am grateful.
But I would certainly like to see him do more. I would like to see him overcome whatever Goon tendencies cause him to keep it zipped on the scores and scores of critically important investment-related topics that he has kept it zipped on up to this point in the proceedings. We all can help him out, of course. We all can put forward statements saying that we want to hear everything that Shiller has to say re these matters and that we will not permit one more death threat or one more demand for one more unjustified board banning or one more act of defamation or one more threat to get one more academic researcher fired from his job. I have a funny feeling that, once enough of us work up the courage to do that to get the job done, not one of us will look back and wish that we had put off that important piece of business for another 24 hours.
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But we’ll see, right?
My best and warmest wishes to you and yours.
Rob
I guess Shiller is going to prison as well, right?
We will decide as a society who goes to prison and who does not.
I doubt very much that Shiller will be in the group that will be going to prison. But I am highly confident that Shiller will be expressing regret that he did not speak up re lots of critically important investment-related topics in a clear and firm and simple and bold way.
Harvey Weinstein will probably be going to prison for crimes he committed that have been brought to light as a result of the Me Too movement. Many people have noted that it is virtually impossible that Meryl Streep did not have some suspicions about Weinstein’s behavior for years before he was publicly exposed. Yet she referred to him as a “God” in those days. Streep is not going to prison. But I think it would be fair to say that she today feels regret that she did not come forward with her suspicions at a time when she could have done a huge amount of good for many people by doing so.
We will work it out, Anonymous. We will not work it out by living in fear of what you Goons will do to us if we post honestly. We will work it out by working up the courage to stand up to you and to say what we truly believe about how stock investing works, just as we do in our discussions of hundreds of other important topics.
Intimidation tactics ain’t the way. Each time one of you Goons advances an intimidation post, I feel that much more confident that I was wrong to keep quiet about what I knew about safe withdrawal rates from May 1999 through May 2002 and that I was right to work up the courage to begin posting honestly re safe withdrawal rates and scores of other critically important investment-related topics on the morning of May 13, 2002. The moment in which I pushed the “Send” button on that famous post was my finest moment in the 62 years in which I have been walking Planet Earth. All of the learning experiences that we have enjoyed together over the past 17 years had their origins in that single moment of personal courage and honesty and good will toward my fellow community members.
Yes?
Rob
“ I rank him as the most important investing analyst of all time. So he obviously has done a huge amount of good, for which we all should be grateful. But he certainly has not done all the good that he could do“
Since you have put all the pieces together, unlike anyone else, wouldn’t you be the most important investing analyst of all time ?
It would be better for someone else to make that assessment and for that person to do it after we have had the national debate re these matters that we need to have and after which all of the insights that I have developed over the past 17 years have been examined by lots of good and smart people. I am extremely proud of the contributions that I have made. I offer zero apologies for rolling up my sleeves and putting forward my take re hundreds of implications of Shiller’s amazing, “revolutionary” (Shiller’s word) research findings.
But I obviously could not have developed any of those insights without Shiller (and Bogle) having done their amazing work before I came on the scene. And, while I have a good bit of confidence that most of what I have put forward has great value, I would obviously feel even more confident in that assessment if every site had been open to honest posting for the entire 17 years and if we had had people like Shiller and Bogle commenting on my work all along and pointing out any weaknesses in my work product.
Shiller did his part and Bogle did his part and Bennett did his part. Why are you so focused on knowing who is going to get the most credit? It seems to me that the important thing is getting it right for the millions of middle-class people who are using our work product to plan their retirements. That’s what matters to me.
I am 100 percent happy to give Bogle the huge credit that he has merited with his work product and I am 100 percent happy to give Shiller the huge credit that he has merited with his work product. And I am 100 percent certain that Shiller and Bogle and thousands and thousands of others will be 100 percent happy to give me the credit that I have merited with my work product in the days after the entire internet has been opened to honest posting re safe withdrawal rates and scores of other critically important investment-related topics.
Why does this matter of who is going to get the credit for all of the powerful, amazing insights that we have developed over the past 17 years come up again and again? Why do you care about that so much? How about just enjoying the amazing insights and learning from them? And. in the event that you have some worry that I might have gotten something wrong somewhere along the way, how about doing what you can to get every discussion board and blog opened to honest posting by the close of business today?
I think it would be fair to say that, once we open the entire internet to honest posting, someone is going to identify any mistakes that I have made. That’s obviously what I want to see happen. If I have made any mistakes, I would be grateful to have someone point them out to me so that I can correct them. Can we work together to see that we all begin experiencing the benefits of an internet opened to honest posting on the last 37 years of peer-reviewed research by the close of business today?
That one’s got my vote..
Rob
“Why does this matter of who is going to get the credit for all of the powerful, amazing insights that we have developed over the past 17 years come up again and again?”
Shouldn’t we recognize those that are the experts? You yourself mention Shiller’s Nobel Prize and Wade Pfau’s credential.
Of course we should recognize the experts. Obviously.
But why do you put so much focus on where I rank? I pointed out the error in the Buy-and-Hold retirement studies on the morning of May 13, 2002. Bogle hasn’t called for those studies to be corrected to this day. Neither has Shiller. So I obviously am far ahead of those two (and lots and lots of others) re that matter. And, seeing that none of the recognized experts had yet called for correction of the discredited retirement studies, I went about the business of figuring out why and then of using what I learned to offer insights re lots of other matters.
Does that make me the #1 expert? Maybe. I don’t know. Time will tell, you know? Getting the retirement numbers right is obviously a matter of huge importance. I am far ahead of Bogle and Shiller re that one. But Bogle offered many very important contributions long before I came on the scene. And so did Shiller. Is there some reason why I need to be ranked first or Shiller needs to be ranked first or Bogle needs to be ranked first?
How about we give each person credit for what that person did? Shiller and Bogle offered many very valuable contributions. I was the first to point out the errors in the Buy-and-Hold retirement studies and then I moved on to write hundreds of articles pointing out lots of other areas where the Buy-and-Holders got things wrong. So I have made a big contribution. But so have Shiller and Bogle. That’s all that we really need to know.The precise ranking does not matter. What matters is that we get good information out to the millions of middle-class investors in need of it.
My sincere take.
Rob
“But why do you put so much focus on where I rank? ”
There are so many out there with opinions. Shouldn’t we give more credence to those that are more expert than others?
Absolutely.
This is why I became a Buy-and-Holder. When I was putting together my binders to plan my early retirement, I became exasperated that there seemed to be as many opinions about how stock investing works as there were people commenting on the subject. Then I found Bogle. He advocated using the peer-reviewed research as a guide. That made sense to me. That took things out of the subjective realm and into the objective realm.
An expert is someone who keeps up to date with the peer-reviewed research in the field. One upon a time, that was Bogle. Not today. Now he is 38 years behind the curve. So is Bogle an expert today or not? According to his own key principle (that one should use the peer-reviewed research as a guide),he is not. He is either wrong about the importance of peer-reviewed research or he is wrong to ignore the last 38 years of peer-reviewed research.
I would say that Bogle is an expert re all the stuff that he says that is not impacted by Shiller’s revolutionary findings of 1981. So, when he says to keep it simple, I am in. When he says to index, I am in. When he says to tune out the noise, I am in. When he says to invest for the long term, I am in, But when he says that there is no need to consider valuations when calculating the safe withdrawal rate, I am out.
I don’t consider myself an expert in this field. But Bogle is not really an expert anymore either. He was prior to 1981. But when he failed to update his investment advice to reflect Shiller’s “revolutionary” (his word) research findings, he fell out of the world of objective research and into the world of subjective opinion.
Shiller is an expert in the realm of theory. He is aces in that department. But Shiller rarely comments on the practical how-to aspects of the stock investing story. So I don’t think that he can be called an expert in that realm. That’s my niche. I take Bogle’s ideas and update them to reflect Shiller’s research. And I take Shiller’s theory and give it practical significance by addressing all the how-to aspects of the question that Shiller ignores.
So who is the true expert here? Bogle did hugely important stuff and then dropped the ball on other hugely important stuff. It’s the same with Shiller. I think that my work has huge importance. But all that I really did was build on the work of Shiller and Bogle. So I don’t feel comfortable saying that I rank higher than those two giants. I would say that all three of us have contributed something essential to solving the stock investing puzzle and leave it at that.
I don’t offer any apologies. But I don’t want to suggest that I could have done what I have done without a lot of help from a lot of others either. I filled in the spots that Bogle missed and I filled in the spots that Shiller missed. That’s not nothing. That’s a big deal. But I sure could not have done what I have done without a lot of help. That idea is laughable and I do not want to be associated with it.
Does all of that not make good sense?
Rob
“I filled in the spots that Bogle missed and I filled in the spots that Shiller missed.”
So that means you stand alone as the only true expert.
I’m the only one who has been telling the truth about safe withdrawal rates for the past 17 years. I think that much would be fair to say.
If that’s your test, then I’m the one. No argument here.
But I have a funny feeling that there might be more to it than that, you know?
Fidelity took out a full=page ad in the Wall Street Journal calling Bogle “Un-American” for promoting the indexing concept. They hated him for that. Not because he was wrong. Because he was right. One of the not-so-great realities of life with the humans is that they sometimes experience feelings of hate for people who speed past them on the highway of life.
Still, we need to get the safe withdrawal rate thing right. People use those studies to plan retirements. A failed retirement is a serious life setback. So we all need to work hard to get that one right.
I am obviously not the only true expert if I depended on hundreds of things that I learned from Shiller and Bogle to do what I did. They did their bit and I did my bit. We were getting the safe withdrawal rate thing wrong for a good stretch of time there and for 17 years now we have had an opportunity available to us to start getting it eight. We should take advantage of that opportunity. It is to the benefit of every last one of us to do that.
Did I add something important? Obviously.
Could I have done it without the help of thousands of good and smart people who came before me? Obviously not.
Bogle made indexing a thing. I made the accurate calculation of safe withdrawal rates a thing. Good for Bogle. Good for me.
We all have to learn to accept good fortune when it falls into our laps. It is better to get safe withdrawal rates right than to get safe withdrawal rates wrong. When Bogle starts getting safe withdrawal rates right, all of the good stuff that he has done over the years looks better. When Shiller feels comfortable speaking out on the how-to aspects of stock investing, his powerful theoretical insights gain a great deal of added power.
That’s the story here, Anonymous.
I wish you all good things.
Rob
“I’m the only one who has been telling the truth about safe withdrawal rates for the past 17 years. I think that much would be fair to say.”
I guess we should turn over the major investing boards (like the Bogleheads forum) over to you.
We should work together to open every discussion board and blog on the internet to honest posting re safe withdrawal rates and scores of other critically important investment-related topics. If we were all thinking clearly, it would be a unanimous vote
My sincere take.
Rob
Sure, we can open every investing board to you, Rob. Here is what you have to do. 1) Stick to the topic instead of hijacking a thread. 2) Keep your responses short and to the point, instead of long diatribes 3) Answer questions directly, instead of evading or changing the subject 4) provide 3rd party evidence to support your claims (such as your unsubstantiated claims of job threats and death threats).
Seems reasonable, correct?
I am 100 percent happy to have the same rules that apply to Buy-and-Holders apply to Valuation-Informed Indexers.
I always stick to the topic being addressed in a thread to which I post. But, because the far-reaching implications of Shiller’s “revolutionary” (his word) research findings have not been widely explored, simple statements that I make describing how stock investing works if the last 37 years of peer-review research in this field is legitimate research are viewed cause nuclear explosions among some Buy-and-Holders and it is those nuclear explosions that highjack threads.
I don’t want to see any thread highjackings. I want us all to enjoy learning experiences by sharing our sincere takes with each other. When I put my famous post of the morning of May 13, 2002, to the Motley Fool board, there were hundreds of community members who described the discussion as the most exciting and helpful one that they had ever seen at that board. So we know that there is a huge interest in exploration of these matters.
But a number of Goon posters responded to that thread and hundreds of follow-up threads started by many different community members with death threats and other insanely abusive thread-hijacking tactics. It is you Goons who want the threads discussing Valuation-Informed Indexing hijacked. The published rules of every site prohibit the tactics that you have employed. For the majority of community members who want to be able to discuss these matters in civil and reasoned discussions, we need to have enough community members willing to stick their necks out and demand that the site owners take effective action against you Goons when you advance your insanely abusive thread-highjacking tactics. Are you willing to help out, Anonymous?
It is definitely my preference to keep my posts short when I am able to give effective responses to intelligent and legitimate questions with short posts. But you Goons have been spreading a lot of confusion re these matters for many years now. Many investors have heard the phrase “timing never works” so many times now that they assume that there must be some truth to it. This is of course false. Shiller showed in 1981 that valuations affect long-term returns. If that is so, then stock investing risk is not static but variable (changing with valuation changes). If stock investing risk grows larger when stock valuations go higher, then investors seeking to keep their risk profiles roughly constant over time MUST adjust their stock allocations in response to dramatic valuation shifts. That is, market timing is MANDATORY for investors seeking long-term investing success.
The confusion on this point stems from a failure on the part of our Wall Street Con Men friends to emphasize the critically important distinction between short-term timing (which really does not work) and long-term timing (which always works and which is mandatory for investors seeking to keep their risk profile roughly constant over time). When you Goons put forward thousands of posts that fail to note the critically important distinction between short-term timing (bad) and long-term timing (very, very, very good — it is impossible to exercise price discipline when buying stock without practicing long-term timing), you cause confusion over what Shiller’s research says and I am not able to respond to questions from my fellow community members effectively without spelling out the distinction over and over again, which of course makes my posts longer than I would like them to be or than they would need to be if only you Goons were willing to participate in the discussions we all want and need to have in a less disruptive manner.
I of course always answer questions as directly as possible and I of course never aim to change the subject. It is of course my intent to continue answering questions as directly as possible and to continue to avoid ever changing the subject.
I am of course happy to provide a mountain of evidence showing how your criminally abusive behavior has held up progress in our community discussions at a large number of boards for 17 years now. I know that the vast majority of community members finds the discussion of death threats and threats of career destruction and board bannings and financial fraud and prison sentences extremely unpleasant. I obviously share that point of view. So I would be grateful if you Goons would just knock off the funny business 100 percent by the close of business today.
Make sense?
Rob
“I of course always answer questions as directly as possible”
What is your current net worth? What is your primary source of income?
What is your current net worth? What is your primary source of income?
I am 100 percent happy to answer these sorts of questions in a clear and direct manner as soon as the Campaign of Terror against our board and blog communities is brought to a full and complete stop, Anonymous.
There have been thousands of cases in which I have responded to such questions and in which you Goons then posted distorted reports of my responses all over the internet. It doesn’t help any of our fellow community members to be misled re these matters. And it doesn’t help me to be lied about. And it doesn’t help you Goons to have your civil liabilities increased and the length of your prison sentences increased.
So I am not willing to participate in that sort of thing.
My best wishes.
Rob
“I of course always answer questions as directly as possible”
I’m sure you still believe that statement, even though your last comment directly contradicts it. THAT is what cognitive dissonance is.
Okay, Anonymous.
I wish you all good things, in any event.
Cognitive-Dissonance-Suffering Rob
So basically you are unable and / or unwilling to follow the 4 points mentioned above.
I’m not willing to post dishonestly re the numbers that my friends are using to plan their retirements. That much would be more than fair to say.
No apologies whatsoever.
I wish you all good things, dear Goon friend.
Unapologetic Rob
“I’m not willing to post dishonestly re the numbers that my friends are using to plan their retirements. That much would be more than fair to say.”
That has nothing to do with the 4 points.
It has everything to do with them.
I put up my famous post on the morning of May 13, 2002. Today’s date is January 15, 2019. It’s been 17 years. Greaney’s study has not been corrected to this day. None of the Buy-and-Hold retirement studies have been corrected to this day.
How is such a thing possible? The only way something like that could be possible is if there were thousands and thousands and thousands of abusive posts by Buy-and-Hold Goons. It’s not the people posting honestly re the last 38 years of peer-reviewed research who are hijacking threads. It’s you Goons. It’s always been you Goons.
Why do responsible people let you get away with it?
Because they don’t want to see family members killed and they don’t want to see their careers destroyed. Lots of responsible people have tried to help us out by posting a few honest posts here and there mixed in with all the ones in which they suggest that Buy-and-Hold is something more than a marketing gimmick. But how many are willing to hang in there and continue to do honest work in the face of your insane levels of brutality? Very, very few.
Will that change in the days following the next price crash?
I believe it will change. I believe that our Wall Street Con Man friends are good and smart people. Knowing that there’s 38 years of peer-reviewed research showing that a Buy-and-Hold strategy could never work for a single long-term investor is a lot different from seeing with your own eyes the human misery that you have caused by failing to speak up. I think that we will see influential people speaking up in the days following the next price crash. And then things will quickly start to get better for all of us.
I will be doing everything in my power to help you Goons out at that time. I won’t be saying that Greaney included a valuation adjustment in his study. But I will be doing everything that I can think of that doesn’t take me to the wrong side of the felony line. We will just have to wait a bit to see how things play out.
I naturally wish you all the best that this life has to offer a person.
4-Points Rob