I’ve posted Entry #452 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Shiller Should Write a Sequel to “Irrational Exuberance” Titled “Buy-and-Hold Is Dangerous.”
Juicy Excerpt: Please consider the title. It should shock you. Shiller’s book argues that much of our stock wealth is phony wealth. Is that not what the phrase “Irrational Exuberance” suggests? The conventional (Buy-and-Hold) view is that stock price changes are caused by economic developments. So they are real. You can count on them to finance your retirement. Shiller is saying something different. He is saying that they are rooted in emotion, that to the extent that the numbers on our stock portfolios are larger than what they would be if stocks were priced at fair-value levels, they are temporary and cannot be counted on to finance a retirement.
But he never actually says those words. He makes a compelling case for his belief that inflated stock prices do not possess lasting significance. But he never spells out how dangerous a situation it is that the vast majority of investors still possess confidence in the Buy-and-Hold Model.
“But he never actually says those words.”
And there you have it. Shiller says what HE is thinking, not what Rob Bennett wants him to say. You do this with almost everything. You twist around what people say, or don’t say, in order to make it seem like everything aligns to what you want. You somehow feel as if everyone needs to say what you want and that people need to let you say whatever you want on their forum. Write your own book and say what you want to say, but leave everyone else alone.
We live in communities, Anonymous. When one member of the investment advice community (Shiller) says something important (that valuations affect long-term timing), other members of the community (like me) incur an obligation to take that something into consideration when advancing their own contributions to the community discussions. If valuations affect long-term timing, there is precisely zero chance that the safe withdrawal rate is the same number at all times; it is a number that is higher when valuations are low and lower when valuations are high. So I said that. Good for me. I did what all community members are supposed to do.
You didn’t like that. Because you want people to maintain confidence in Greaney’s study. I don’t want that. I want people to have confidence in Greaney’s study if it is accurate. But if Greaney got the numbers wildly wrong, I want people to lose confidence in Greaney’s study. I like Greaney as a friend and I am perfectly happy to help him out when I am able. But I like all of my fellow community members. I am not willing to risk seeing thousands of my fellow community members suffer failed retirements just because one insanely abusive community member is embarrassed to have people learn that he got the numbers wildly wrong in a retirement study posted at his web site. No freakin’ way, no freakin’ how.
I don’t feel that everyone should say what I want. I believe that everyone should feel 100 percent safe saying precisely what they believe. I am 100 percent opposed to the use of intimidation tactics to coerce community members into saying things that they do not believe to create a phony impression of consensus when no consensus truly exists. The majority of our fellow community members are Buy-and-Holders. I want them saying why they think Buy-and-Hold is a good approach. But a significant minority (perhaps 10 percent) has serious doubts about Buy-and-Hold. I want those people expressing those doubts and not being threatened into silence by you Goons.
Why should I “leave everyone else alone,” as you suggest? If I see that Greaney’s study is in error, I have a responsibility to point that error out to community members who might believe that the study is legitimate if I fail to speak up. I want to help people, not destroy their lives. I am going to continue pointing out errors in studies when I see them. I am going to continue objecting to acts of financial fraud and to death threats and to all the rest that you Goons bring to the table.
The United States is a community of people too. As a community of people, we have made it a crime to advance threats of physical violence and to engage in extortion and financial fraud. I think that those are good and necessary laws. So I am not going to join you Goons in pretending that Greaney included a valuation adjustment in his study. Thousands of our fellow community members have looked at the Greaney study over the past 17 years and not one has been able to locate a valuation adjustment in it. That tells me that I am on the right track in thinking that there is not one there.
I will indeed say what I have to say in my book. But I will then try to share what I write in my book with every investor on the planet, including those who congregate at all of the boards from which I have been improperly banned at the demand of you Goons. I offer no apologies whatsoever. I like those board communities and I want to see them serving the purposes for which they were formed. It is not possible for them to do that for so long as this massive act of financial fraud continues.
My sincere take.
And my best and warmest wishes to you and yours.
Saying-What-He-Believes (Not Just in His Book But Everywhere!) Rob
Your erroneous comments about John Greaney have been explained to you thousands of times. You choose to ignore it. People have long grown tired of you and your poor behavior and had no choice but to ban you. Instead of talking all the time about what you think other people should be doing and saying, you need to step back and consider your own words and actions.
You Goons are only a portion of the people who congregate at our boards. You can speak for your fellow Goons but you cannot speak for the rest of us.
Thousands of people have said that they would like to see honest posting permitted at every discussion board and blog on the internet. I am with that group.
I have considered my words and actions. I am ashamed that it took me three years to work up the courage to point out the error in Greaney’s study. I am very proud that I finally did work up the courage to do that because of the long list of amazing things that we have all learned together over the past 17 years. Viva la Honest Posting!
I wish you all good things. But, I mean, come on.
Once Ashamed (But Now Proud!) Poster Rob
There is no “us”. There are no “thousands”. Your response also shows that you continue ignore what people say.
We obviously are not in agreement re this one, Anonymous.
Beyond that, I am not sure what I can tell you.
I certainly wish you the best.
Does that help a tiny bit?
Well-Wishing Rob
“We obviously are not in agreement re this one, Anonymous.”
Okay. Let’s see what all these “thousands” say. Let’s wait to see them post here to see what they say. Okay?
That makes perfect sense, Anonymous.
There is no reason to believe that they are going to start posting here prior to the next price crash. But I believe that the crash will open some peoples’ minds. We saw that with the Bernie Madoff scandal. His investors praised him to the skies until they saw most of their retirement money wiped out. That’s what I think we are going to see re the Buy-and-Hold matter.
Once a good number of people are posting here on a regular basis, it’s all downhill sledding. Other sites will get excited about the learning experiences that we are enjoying and they will open up to honest posting too. And things will just keep getting better and better and better for all of us. It’s not possible even to imagine a downside.
I look forward to whatever discussions we are able to participate in on the other side of The Big Black Mountain, my dear friend.
Hang in there.
Agreeable Rob
Okay. I am waiting. Where are all these thousands? We should have seen a bunch of posts by now, right?
Things are a little slow today, Anonymous.
Whachagonnado?
Patient Rob
How long should we wait for comments? All these thousand just happen to be busy?
If you want to make efficient use of your time, you’ll wait until you see the next price crash written up on the front page of your local newspaper. If you see an article in the Wall Street Journal that mentions the possibility of a Second Great Depression, I think it would be safe to say that we will all be darn close to the point at which large numbers of people will begin asking Important Questions.
As for whether the thousands who have expressed a desire that honest posting be permitted at our boards and blogs happen to be busy at the moment, the truth is that they happen to be human at the moment and at all moments. Which is another way of saying that they are capable of irrationality. Investment advice that acknowledges that reality of the human condition is superior to investment advice that ignores it, in my oh-so-humble opinion.
My sincere take.
Interpreting-the Signs-of-the-Times Rob
So these “thousands” are really not supporters of you at the moment. Got it.
They are supporters of the laws of the United States and they are supporters of the published posting rules of every site to which I have posted.
There are limits to what they are willing to put at risk because of their support. When they see death threats, they get quiet. They don’t see it as their job to stop that sort of thing. They see that as something that site administrators or legal authorities should handle.
After a crash, there will be people who will come forward to take on you Goons. At that time, all of the thousands who have already posted in support of the idea of permitting honest posting will speak up. They will feel safe doing so once they see others doing so. And of course the thousands who have already spoken up represent millions who feel the same way but who just did not happen to be posting on our boards.
Eventually, there will be millions who will be upset about what has been done to them. That’s not good for you, Anonymous.
But I cannot prove any of this. I am telling you what I sincerely believe is going to happen. I could be wrong. I have been wrong before. If it were happening again, I would probably be the last to know.
We are just going to have to wait to see how it all plays out to know for sure.
I know that I feel a lot better holding my cards than I would feel if I were holding your cards. But then I felt better to be holding my cards on the afternoon of May 13, 2002. And here we are more than 17 years down the road and the retirement study posted at John Greaney’s web site has not been corrected to this day. Can you beat that one? You never know for certain. right? As soon as you start to think you do, life throws you a nasty curve ball.
Supported-by-Thousands (Millions?) Rob
“But I cannot prove any of this. I am telling you what I sincerely believe is going to happen. I could be wrong. I have been wrong before. If it were happening again, I would probably be the last to know.”
Of course you can’t. It’s all made up. Look at what you claim to be a death threat.
“I know that I feel a lot better holding my cards than I would feel if I were holding your cards. But then I felt better to be holding my cards on the afternoon of May 13, 2002. And here we are more than 17 years down the road and the retirement study posted at John Greaney’s web site has not been corrected to this day. Can you beat that one? You never know for certain. right? As soon as you start to think you do, life throws you a nasty curve ball.”
Why would I want to hold your cards? It is all based on a fantasy.
Okay, Anonymous.
Rob
“And here we are more than 17 years down the road and the retirement study posted at John Greaney’s web site has not been corrected to this day. Can you beat that one? ”
Yep, easy to beat that one. As Wade pointed out, John Greaney already addressed your question in under 2 hours after you asked the question. Are you a bit slow when it comes to understanding things? Here you are now in your 60’s and you have wasted all this time. Sorry if we just aren’t interested in joining you.
What Greaney said didn’t solve the problem. Greaney said that, if people didn’t think that a 4 percent withdrawal is perfectly safe, they could take a lower withdrawal. Okay. But what if there are people in the community who have a hard time understanding why someone would conclude that a 4 percent withdrawal is not perfectly safe? What if those people ask questions? Can the person who has concluded that a 4 percent withdrawal is not perfectly safe respond to those questions?
That’s the dispute. If the person responds to the questions, then we are having a debate as to the implications of Shiller’s research findings. I believe that we need to have such a debate. Greaney doesn’t want to see one. That’s where we are working at cross purposes.
We don’t learn just by publishing peer-reviewed research. That’s an important step. But that alone doesn’t get the job done. We learn by talking things over. Shiller published his research in 1981 and we have not as a society debated the far-reaching implications of his research findings for 38 years now. We need to launch that debate.
Rob Bennett says: “Let’s go! This is exciting stuff!” John Greaney says: “Not here! Not now! No way!” That’s the dispute. I want to move forward to Valuation-Informed Indexing and Greaney wants to remain stuck in the Buy-and-Hold days.
I don’t believe that you Goons are going to join me. But I believe that after the next price crash I will be able to get enough Normals to join me to overcome the abusive tactics of you Goons. Time will tell the tale, you know?
My best wishes.
More-Than-a-Bit-Slow Rob