A Rich Life http://arichlife.passionsaving.com The Old Ideas on Saving & Investing Don't Work -- Here's What Does Wed, 16 Aug 2017 11:37:28 +0000 en-US hourly 1 https://wordpress.org/?v=4.7.5 2004-2008 rob@passionsaving.com (A Rich Life) rob@passionsaving.com (A Rich Life) 1440 http://arichlife.passionsaving.com/wp-content/plugins/podpress/images/powered_by_podpress.jpg A Rich Life http://arichlife.passionsaving.com 144 144 The Old Ideas on Saving & Investing Don't Work -- Here's What Does A Rich Life A Rich Life rob@passionsaving.com no no “The Valuation-Informed Indexer Who Does Not Lower His Stock Allocation When He Nears Retirement in Most Cases Is Facing Less Risk Than His Buy-and-Hold Counterpart Who Does So.” http://arichlife.passionsaving.com/2017/08/16/the-valuation-informed-indexer-who-does-not-lower-his-stock-allocation-when-he-nears-retirement-in-most-cases-is-facing-less-risk-than-his-buy-and-hold-counterpart-who-does-so/ http://arichlife.passionsaving.com/2017/08/16/the-valuation-informed-indexer-who-does-not-lower-his-stock-allocation-when-he-nears-retirement-in-most-cases-is-facing-less-risk-than-his-buy-and-hold-counterpart-who-does-so/#comments Wed, 16 Aug 2017 11:37:28 +0000 http://arichlife.passionsaving.com/?p=13449 Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:

If I divide the stock part by two, which makes no sense, I still have a huge pile of money.

You do understand that older folks shouldn’t have a huge percentage of stocks?

I’m happy for you that you have a huge pile of money, Laugh. I wish that you could take some joy in it and calm down about things a bit. There are lots of other people in the world who would like to have more money and permitting honest posting on the last 36 years of peer-reviewed research at every discussion board and blog would help them to make that dream a reality. That’s what this is all about.

Most Buy-and-Holders recommend that investors lower their stock allocation as they get closer to retirement. This is certainly a good idea for those following a Buy-and-Hold strategy. Following a Buy-and-Hold strategy sends the risk of stock investing off the charts. It would be dangerous for a Buy-and-Holder to go with the same stock allocation that he used when he was young at a time when, if he suffered huge losses, he would not be able to make up for them. So this bit of conventional advice makes sense in the context in which it is usually delivered.

However, it is not entirely necessary for Valuation-Informed Indexers to lower their stock allocations as they get close to retirement. The peer-reviewed research that I co-authored with Wade Pfau shows that an investor who switches from Buy-and-Hold to Valuation-Informed Indexing thereby reduces his risk by nearly 70 percent. The Valuation-Informed Indexer who does not lower his stock allocation when he nears retirement in most cases is facing less risk than his Buy-and-Hold counterpart who does so. The research shows that failing to take valuations into consideration when setting one’s stock allocation is BY FAR the primary contributor to risk. The other factors (like age) are small factors in relative terms.

Say that an investor has turned 60 and the P/E10 level has dropped to 8, half of fair value. The most likely return is 15 percent real. The investor should be trying to tap into as much of those juicy returns as he possibly can while they remain available. By going with a high stock allocation while the returns offered are so great, he can in a short amount of time amass enough capital to not need to invest in stocks at all when prices go higher (Personally, I would remain in stocks at all times, but not everyone feels this way). So an argument could be made that an investor of age 60 might consider a stock allocation of as high as 90 percent when the P/E10 level is 8.

Does that sound too risky? Yes and no. If he loses lots of money, he is in trouble. But how much lower can stock prices go when stocks are already priced at one-half of fair-value? It is certainly possible that the P/E10 level could remain at 8 or thereabouts for a long time. So the investor should not form expectations that prices are going to jump upward anytime soon. But the return is 6.5 percent real when prices remain steady. The investor does not need to see any price jumps at all to enjoy a very good return on his money.

The price level once fell to 5. That would be a big drop. But the P/E10 level did not remain at that insanely low level for long. If the investor cannot psychologically handle a drop to 5, he needs to go with a lower stock allocation for sure. And of course he needs to be careful that he is not fooling himself. But if he truly believes that he can handle a drop to 5 that only remains in place for a few years, he is probably in good shape. If we were to see a drop to 5 that remained in place for over 10 years, we would be seeing something that we have never experienced before. No one can say with certainty that it will not happen. But the likelihood of such an event is very low. It doesn’t make sense to give up the option to tap into years of huge returns because of a possible outcome that is a very low-probability event.

My take is that investors should lower their stock allocations a small bit when they get close to retirement. Even if it does not make logical sense to do so, the reality is that we are humans, not machines, and there is an added psychological fear that is going to arise when losses are suffered close to retirement age. But I don’t think that Valuation-Informed Indexers need to lower their stock allocations as much as Buy-and-Holders in these circumstances given that they have addressed the far bigger risk factor through their willingness to take the last 36 years of peer-reviewed research into consideration.

Please note the tone in your post. The attitude that comes through suggests that an investor who does not accept that he needs to lower his stock allocation when he nears retirement is a fool. But I have never heard you call those investors who do not accept the need to take valuations into consideration when setting their stock allocations fools. It is the Buy-and-Holders who are the bigger fools, Laugh. The peer-reviewed research shows that failing to take valuations into consideration sends investing risk into the stratosphere. Why do something like that? Why not just invest in the sensible, low-risk, high-return way that works best in the long run?

The answer to that one is that the Get Rich Quick urge that resides within all of us causes our brains to go haywire. Buy-and-Holders like counting the cotton-candy returns generated by bull markets as real. Any suggestion that they consider a research-based strategy makes them go mad because acknowledging what the research says means acknowledging that the cotton-candy returns always get blown away in the wind in the long term.

Valuation-Informed Indexing is a new paradigm. It is the first TRUE research-nased investing strategy. We didn’t have the last 36 years of peer-reviewed research available to us when Buy-and-Hold was developed and Bogle’s unwillingness to say the word “I” and “Was” And :Wrong” has held back the Buy-and-Holders from incorporating the most important research into their model for over three decades now. Drop the resistance to looking at what the research says and everything changes. Even in the Valuation-Informed Indexing era it will make sense for investors to lower their stock allocations a bit when they approach retirement. But this is not nearly as big a consideration in an environment in which investors have opened themselves to taking advantage of the power of the “revolutionary” (Shiller’s word) insights developed (but kept hidden from most investors) over the past 36 years.

I hope that helps a bit, my good friend.


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“When Someone Like Jack Bogle Fails to Speak Out About Prison Sentences When That Is the Obviously Appropriate Thing to Do, That Sends a Signal to People That a Field has Become Very Corrupt. People Want to See Leaders Lead. Bogle has Failed to Lead re the Lindauer Matter. That Scares All of Us.” http://arichlife.passionsaving.com/2017/08/15/when-someone-like-jack-bogle-fails-to-speak-out-about-prison-sentences-when-that-is-the-obviously-appropriate-thing-to-do-that-sends-a-signal-to-people-that-a-field-has-become-very-corrupt-people/ http://arichlife.passionsaving.com/2017/08/15/when-someone-like-jack-bogle-fails-to-speak-out-about-prison-sentences-when-that-is-the-obviously-appropriate-thing-to-do-that-sends-a-signal-to-people-that-a-field-has-become-very-corrupt-people/#respond Tue, 15 Aug 2017 11:18:14 +0000 http://arichlife.passionsaving.com/?p=13447 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 must have the power since you are the one bringing up the topic.

No. That’s silly.

I am a journalist. Journalists tell stories. They don’t put people in prison.

Some stories involve prison sentences. In those cases, the journalists have to mention the prison sentences. But all they are doing is telling the story accurately and completely. That’s why I mention the prison sentences — they are part of the story being told here.

Please think where you would be if everyone were talking about your prison sentence, Anonymous. If that were the case, you would have pulled back from the criminal behavior soon after it started. So your prison sentence would have been very short. That would have been a much better outcome for you and for all of us, no?

There is no charity in seeing criminal behavior and failing to speak up about it. People don’t speak up out of cowardice, not charity. Wade Pfau stood up to Mel Lindauer when Lindauer claimed that he had done unethical research. Then he noticed that Jack Bogle was not going to say anything about it. That scared him. That’s what caused him to capitulate to you Goons.

What effect do you think Wade’s capituation had on others who have given thought to doing honest research in this field? It scared them away. When someone like Jack Bogle fails to speak out about prison sentences when that is the obviously appropriate thing to do, that sends a signal to people that a field has become very corrupt. People want to see leaders lead. Bogle has failed to lead re the Lindauer matter. That scares all of us. That causes the problem to get worse, not better. There is zero charity in that.

I am trying to keep your prison sentence as short as possible. That means getting the word out as quickly as possible. Failing to mention your prison sentence would be insane. What possible good could ever come of that? I want to see every discussion board and blog opened to honest posting on safe withdrawal rates and scores of other critically important investment-related topics. What the heck good would it do to fail to talk about the prison sentences? An argument can be made that to fail to speak up about financial fraud that one sees taking place before one’s eyes is to aid that act of financial fraud, which is to commit a crime of one’s own. It is the criminal behavior of you Goons that is keeping Buy-and-Hold alive today. To fail to talk about the criminal behavior (and the prison sentences that inevitably follow from it) would be pure foolishness and irresponsibility.




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Valuation-Informed Indexing #340: It Was the Widespread Belief in Buy-and-Hold Strategies That Caused the Runaway Bull Market http://arichlife.passionsaving.com/2017/08/14/valuation-informed-indexing-340-it-was-the-widespread-belief-in-buy-and-hold-strategies-that-caused-the-runaway-bull-market/ http://arichlife.passionsaving.com/2017/08/14/valuation-informed-indexing-340-it-was-the-widespread-belief-in-buy-and-hold-strategies-that-caused-the-runaway-bull-market/#respond Mon, 14 Aug 2017 11:25:09 +0000 http://arichlife.passionsaving.com/?p=13445 I’ve posted Entry #340 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called It Was the Widespread Belief in Buy-and-Hold Strategies That Caused the Runaway Bull Market.

Juicy Excerpt:  The core point that is being made here — that stock valuations have remained high for a very long time — is 100 percent correct. I prefer to start counting in 1996 since prices were only high but not yet insanely high until then. But even using the later starting date leads to a finding that prices have remained dangerously high for two decades.  If the danger warned of by Valuation-Informed Indexers has not wiped out investors in that amount of time, is it not fair to conclude that the dangers being warned of are not real? I have been crying “wolf!” since 1996. There comes a time when people stop listening to the boy who cries “wolf!” for a long time. Twenty years of false wolf warnings are enough to conclude that no wolf is coming.

Unless there is some explanation for why the wolf has taken longer to arrive this time than he has on any earlier occasion.

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Rob to James Altucher: “I Like It That You Think. For 15 Years I Have Been Pushing an Idea That My Brain Says Is Supported By All the Evidence But That Has Not Caught On Because (In My View) Many People Permit Their Need for Social Approval to Cloud Their Thinking.” http://arichlife.passionsaving.com/2017/08/11/rob-to-james-altucher-i-like-it-that-you-think-for-15-years-i-have-been-pushing-an-idea-that-my-brain-says-is-supported-by-all-the-evidence-but-that-has-not-caught-on-because-in-my-view-many-peo/ http://arichlife.passionsaving.com/2017/08/11/rob-to-james-altucher-i-like-it-that-you-think-for-15-years-i-have-been-pushing-an-idea-that-my-brain-says-is-supported-by-all-the-evidence-but-that-has-not-caught-on-because-in-my-view-many-peo/#comments Fri, 11 Aug 2017 11:04:25 +0000 http://arichlife.passionsaving.com/?p=13443 Set forth below is the text of an e-mail (the heading is “Shiller’s ‘Revolutionary’ Research Findings”) that I sent to James Altucher on May 6, 2017:



This is Rob Bennett. I am the fellow who tried to hand you a brochure at the end of the FinCon Masters Event in New York City last Tuesday night. I said that I liked it that you think. I noticed that because for 15 years I have been pushing an idea that my brain says is supported by all the evidence but that has not caught on because (in my view) many people permit their need for social approval to cloud their thinking.
Shiller showed in 1981 that valuations affect long-term returns. This means that stock prices are primarily determined not by economic factors but by shifts in investor emotions. The implications of this insight are far-reaching and have only rarely been explored in any depth.
One big implication is that long-term returns are highly predictable for those who invest in index funds. I worked with Wade Pfau, who holds a Ph.D. in Economics from Princeton, to produce peer-reviewed research showing that investors can reduce the risk of stock investing by 70 percent by being willing to adjust their stock allocations in response to big shifts in valuations.
Another big implication is that it was the bull market of the late 1990s that served as the primary cause of the economic crisis of 2008. Stocks were overpriced by $12 trillion at the top of the bubble. Shiller’s work shows that this pretend money disappears as valuations work their way downward. As investors lose significant portions of their life savings, they cut spending and businesses fail and workers lose their jobs. Shiller predicted the economic crisis in his book (published in 2000) but his explanation of it was ignored when the crisis came.
It is this latter point that is the most important, in my assessment. Shiller was awarded a Nobel prize, so as a society we appreciate the importance of his work. But we patronize him. Most experts in the field continue to push Buy-and-Hold strategies without even mentioning the 36 years of peer-reviewed research showing that they cannot work. Why? Many investors would like to better understand the implications of Shiller’s work (I know this because of the reactions that I have seen to my own writings). And there is of course a huge amount of money to be made showing people a better way to invest.
Why haven’t Shiller’s “revolutionary” (this is the word used to describe his research in the subtitle of his book) findings caught on in 36 years?
I believe that the Shiller revolution represents such a big advance over the earlier understanding of how stock investing works that we have not yet been able to incorporate frank discussions of it into the public debate. I have been banned at over 20 web sites because I have tried to get discussions started and because about 20 percent of most community members express a desire to participate in such discussions and thereby pose a threat to those promoting the now dominant ideas. Those who believe in and promote the conventional ideas are threatened by an advance that would help them and lots of others if they could open their minds enough to explore it in some depth.
If you have an interest in any of this, please ask any questions that occur to you. I would love to talk it over with you.
I enjoyed your talk, and, as I said, I like your style. You create thought-provoking work.
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“Am I the Bad Guy Or Is It the People Who Are Putting Forward Buy-and-Hold Happy Talk Who Are the Bad Guys? The Vast Majority of People Who Work in This Field Have Noticed That There’s a Lot More Short-Term Money to Be Made Encouraging People to Live in Fantasylands Than There Is in Telling People What the Last 36 Years of Peer-Reviewed Research Shows Us.” http://arichlife.passionsaving.com/2017/08/10/am-i-the-bad-guy-or-is-it-the-people-who-are-putting-forward-buy-and-hold-happy-talk-who-are-the-bad-guys-the-vast-majority-of-people-who-work-in-this-field-have-noticed-that-theres-a-lot-more-sh/ http://arichlife.passionsaving.com/2017/08/10/am-i-the-bad-guy-or-is-it-the-people-who-are-putting-forward-buy-and-hold-happy-talk-who-are-the-bad-guys-the-vast-majority-of-people-who-work-in-this-field-have-noticed-that-theres-a-lot-more-sh/#respond Thu, 10 Aug 2017 11:02:36 +0000 http://arichlife.passionsaving.com/?p=13440 Set forth below is the text of a comment that I posted to the discussion thread for one of my columns at the Value Walk site:

According to you, I am just driving around in my cotton candy car and that my car and that I probably don’t really have a car as it is all make believe.

Please think about what the word “overvalued” means, Sammy. It means “mispriced.” If your stock portfolio is mispriced, then what you say here is so — that wrong number that you are telling yourself is the amount of your life savings is a make-believe number. It’s not just me who is telling you that. Every time you read an article that cites today’s valuation level — the stock market is today priced at two times its fair value — the person saying that is in an indirect way telling you that you need to divide your portfolio value by two to know the amount that you actually have put aside to provide for your old age.

The only thing that I do that is different is that I say it in a direct way. I don’t dance around the topic and put forward all sorts of happy talk. I tell people “if you have barely enough to retire going by how stocks are priced today, you are going to only have half of what you need once prices return to reasonable levels, as they always do.” People HATE when I do that. You are one of those people. You hate me with a burning hate because I have been stating these obvious truths in your presence for 15 years now.

But am I the bad guy or is it the people who are putting forward Buy-and-Hold happy talk who are the bad guys? I believe in planning. You cannot plan effectively if you don’t even get the numbers roughly right. So I believe very strongly that you need to be taking stock valuations into consideration when you develop your investing strategies. Without doing what you need to do to get the numbers right, you are shooting in the dark.

The rarely spoken truth here is that you are not really angry at me. You are angry at yourself. You know on one level of consciousness that you should have been taking valuations into consideration all along. You talked yourself into not doing so because like all humans you possess a Get Rich Quick urge that entices you to ignore common sense and live in a fantasyland and because the vast majority of people who work in this field have noticed that there’s a lot more short-term money to be made encouraging people to live in fantasylands than there is in telling people what the last 36 years of peer-reviewed research shows us.

I am not your enemy, Sammy. Your Get Rich Quick urge is your enemy. Buy-and-Hold is your enemy. You won’t have these feelings of hate toward anyone once you bring your investing beliefs into accord with your common sense. There’s a powerful feeling of peace and confidence that comes with doing that. You are living in a fantasyland today and it doesn’t feel good. But you can give that up and start feeling better about your financial future anytime you want.

That’s my sincere take re these matters in any event, my good friend.


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Valuation-Informed Indexing #341: The Effect That Valuations Have on Long-Term Returns Is Consistent Across the Range of Valuation Levels http://arichlife.passionsaving.com/2017/08/09/valuation-informed-indexing-341-the-effect-that-valuations-have-on-long-term-returns-is-consistent-across-the-range-of-valuation-levels/ http://arichlife.passionsaving.com/2017/08/09/valuation-informed-indexing-341-the-effect-that-valuations-have-on-long-term-returns-is-consistent-across-the-range-of-valuation-levels/#comments Wed, 09 Aug 2017 10:56:44 +0000 http://arichlife.passionsaving.com/?p=13438 I’ve posted Entry #341 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called The Effect that Valuations Have on Long-Term Returns Is Consistent Across the Range of Valuation Levels.

Juicy Excerpt: Valuations affect every aspect of the stock investing experience. Too often discussions of valuations are rooted in a presumption that the purpose is to guess when valuations are going to turn and to profit from the guessing game. That the one thing that Shiiller’s research findings do not help the investor to do; short-term price changes are highly unpredictable. The power of Shiller’s finding that valuations affect long-term returns is that it illuminates every question faced by investors other than the silly guessing-game one that garners so much attention.
Say that you were thinking of buying a car. You obviously would ask the dealer for the price. You don’t do that for a single purpose. Knowing the price serves multiple purposes. It tells you whether you can afford the car or not. It also informs you how you may need to adjust your desires to identify the car that is right for you; by comparing the prices of two cars, you can see how much one feature you like adds to the overall cost and assess whether that feature is worth the cost associated with it. Knowing the price attached to a used car with a specified number of miles on it signals how new of a car you can afford. Knowing the price of a car advances your car purchase project in many ways and the same is true with knowing the valuation level for stocks — identifying the P/E10 level tells you all sorts of things that you need to know to make an intelligent investment decision.

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Wade Pfau (According to a Goon Report): “This Is All Part of Rob’s Vast Mythology in Which He Seeks to Make Himself Into a Super Hero Fighting the Evils of Wall Street. It Isn’t True. Rob Magnified a Very Minor Situation By 10,000x.” http://arichlife.passionsaving.com/2017/08/08/wade-pfau-according-to-a-goon-report-this-is-all-part-of-robs-vast-mythology-in-which-he-seeks-to-make-himself-into-a-super-hero-fighting-the-evils-of-wall-street-it-isnt-true/ http://arichlife.passionsaving.com/2017/08/08/wade-pfau-according-to-a-goon-report-this-is-all-part-of-robs-vast-mythology-in-which-he-seeks-to-make-himself-into-a-super-hero-fighting-the-evils-of-wall-street-it-isnt-true/#respond Tue, 08 Aug 2017 11:14:14 +0000 http://arichlife.passionsaving.com/?p=13435 Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:

Liar. Here’s an old email to me in which Wade explains your hoax about his “academic career being threatened by anonymous internet posters” to an unfortunate fellow who bit on your 30k email jihad you waged against him in an effort to impugn his integrity and besmirch his good name. The only person who threatened Wade was Rob “hocus” Bennett.

“Dear Vivek,

I understand that Rob Bennett has sucked you into his drama. I’m Wade
Pfau, the academic researcher who has allegedly been threatened. In
writing about your tweet at his blog today, Rob even wrote, “(A number
of Buy-and-Holders threatened to send defamatory e-mails to Wade’s
employer in an effort to get him fired from his job for the “crime” of
having published research showing the dangers of Buy-and-Hold
investing strategies and several big names in the field [including
Vanguard Founder John Bogle] failed to take action against those
advancing the threats, thereby implicitly encouraging them [I have
sent Bogle four e-mails asking for his help with the matter])”

I can assure you that this is all part of Rob’s vast mythology in
which he seeks to make himself into a super hero fighting the evils of
Wall Street. It isn’t true. Rob magnified a very minor situation by
10,000x. The entire story he developed is based on the one minor
comment found here at the start of this discussion board thread:


“I hope this doesn’t ruin that guy’s chances for tenure.”

That’s it. He imagined all of the subsequent details.

At any rate, I did indeed publish the studies which Rob claims I am
afraid to publish. There is no issue. The main study is this one:


Rob lives in an imaginary world of death threats and threatened
academic researchers and so on, as you would discover if you waste
time reading what he writes. Just thought I’d let you know, straight
from the horse’s mouth.

Best wishes, Wade”

In ordinary circumstances, I would not post this comment, Long Time. Since you are a Goon, there is obviously a good chance that Wade never sent this e-mail and that you just made it up. If that’s the case, I shouldn’t post the comment.

However, the full reality here is that Wade has cooperated with you Goons on several occasions. I don’t personally believe that the chances that your report is accurate are zero. That’s a shocking statement. But it is the behavior that we have all seen from Wade in the days following the threats that were made against him that makes it seem at least somewhat possible that your report is an accurate one. So I believe that your comment should be posted and added to the record that your jury will review when your trial date arrives.

As always, I wish you all good things.


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Valuation-Informed Indexing #340: The Stock Market Is Cyclical But Not in the Way That You Think http://arichlife.passionsaving.com/2017/08/07/valuation-informed-indexing-340-the-stock-market-is-cyclical-but-not-in-the-way-that-you-think/ http://arichlife.passionsaving.com/2017/08/07/valuation-informed-indexing-340-the-stock-market-is-cyclical-but-not-in-the-way-that-you-think/#respond Mon, 07 Aug 2017 11:34:58 +0000 http://arichlife.passionsaving.com/?p=13432 I’ve posted Entry #340 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called The Stock Market Is Cyclical But Not in the Way That You Think.

Juicy Excerpt: Stock prices do not play out in the pattern of a random walk in the long term. They do that only in the short term. In the long term, they play out in a hill-and-valley pattern. From a long-term perspective, it is not true that stocks go up and stocks go down. From a long-term perspective, high-priced stocks always go down hard and low-priced stocks always rocket upward. It makes perfect sense to ignore the unpredictable short-term price changes. But ignoring the highly predictable -long-term price changes is a dangerous and costly business

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“Shiller Would Be Happy to Tell You All Kinds of Things If You Persuaded Him That It Is Safe to Do So. The Same Is So of Bogle. And of Bernstein. And of Swedroe. And of Pfau. And of Thousands of Others. Ease Up on the Abusive Stuff and You Will Hear Very Different Stories About How Stock Investing works.” http://arichlife.passionsaving.com/2017/08/04/shiller-would-be-happy-to-tell-you-all-kinds-of-things-if-you-persuaded-him-that-it-is-safe-to-do-so-the-same-is-so-of-bogle-and-of-bernstein-and-of-swedroe-and-of-pfau-and-of-thousands-of-othe/ http://arichlife.passionsaving.com/2017/08/04/shiller-would-be-happy-to-tell-you-all-kinds-of-things-if-you-persuaded-him-that-it-is-safe-to-do-so-the-same-is-so-of-bogle-and-of-bernstein-and-of-swedroe-and-of-pfau-and-of-thousands-of-othe/#respond Fri, 04 Aug 2017 10:58:48 +0000 http://arichlife.passionsaving.com/?p=13429 Set forth below is the text of a comment that I recently posted to the discussion thread for one of my columns at the Value Walk site:

In short, you can’t point to even one person, including you, that has ever been successful with VII.

Shiller knows this and that is why he says not to use his work to time the market as well as he recommendation to stay in stocks.

The only way that we will ever all know what Shiller really thinks is when we act as a society to rein in you Goons. Shiller woild be happy to tell you all kinds of things if you persuaded him that it is safe to do so. The same is so of Bogle. And of Bernstein. And of Swedroe. And of Pfau. And of thousands of others.

I didn’t say what I believed about safe withdrawal rates prior to May 13, 2002. It’s not that I didn’t want to share. It’s that I was afraid of what you Goons would do to me. And you weren’t even Goons in those days! You were my friends in those days. But I sensed that bad things would happen if I told you that your stock portfolio was worth one-half of what you had been led to believe it was worth. Eventually, I did work up the courage and then of course bad things did indeed happen.

It’s that fear of seeing bad things happen that holds Shiller and all the others back today. Shiller said very different things in the wake of the 2008 crash from what he says today. Why? Because people were disgusted with Buy-and-Hold at that time and so he felt it would be safe to do so. Then prices got pushed back up and he became more cagey in his statements.

Everyone will be telling you about the dangers of Buy-and-Hold following the next price crash. It will be a safe thing to do then. But a lot of good it will do you! I’m telling you know when you can still take action to protect your assets. I think that’s the way to do it.

Ease up on the abusive stuff and you will hear very different stories about how stock investing works. There’s a sense in which you get what you want when you intimidate people. But you don’t get what you need. You hurt yourself with your abusiveness when you make people afraid to tell you the straight story.

My sincere take.


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Valuation-Informed Indexing #339: Buy-and-Holders Base Their Investing Decisions on Flawed Forecasts, Just Like All Other Investors http://arichlife.passionsaving.com/2017/08/03/valuation-informed-indexing-339-buy-and-holders-base-their-investing-decisions-on-flawed-forecasts-just-like-all-other-investors/ http://arichlife.passionsaving.com/2017/08/03/valuation-informed-indexing-339-buy-and-holders-base-their-investing-decisions-on-flawed-forecasts-just-like-all-other-investors/#comments Thu, 03 Aug 2017 10:51:44 +0000 http://arichlife.passionsaving.com/?p=13427 I’ve posted Entry #339 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Buy-and-Holders Base Their Investing Decisions on Flawed Forecasts, Just Like All Other Investors.

Juicy Excerpt: Why do Buy-and-Holders not identify the return being paid on stocks before buying them? Because they really do make forecasts but they are fantasy forecasts that they do not want to acknowledge even to themselves because they understand that these forecasts would sound silly if spoken aloud. Buy-and-Holders “forecast” that stocks will provide long-term returns at least somewhat close to the average long-term return of 6.5 percent real at all times.

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