I’ve posted Entry #217 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Shiller Believes in Short-Term Timing.
Juicy Excerpt: The article goes on to point out that the P/E10 level is now at the fourth highest point it has ever reached in the history of the U.S. market and that the three higher peaks all produced stock crashes. But it reports that Shiller’s belief is that today’s P/E10 level “might be high relative to history but how do we know that history hasn’t changed?” Shiller believes that the long-term average for the valuation metric is “highly psychological.” He believes that “you can’t derive what it should be.” The article reports that: “The [P/E10 value] is most accurate in forecasting a market move when the ratio is at an extreme, but now it is only at 25.3, not far from the the 30-year average of 23.4.” He adds one of the things he is looking for to determine whether we are at a “turning point” is a showing that the economy is stuck in the muck.
But it reports that Shiller’s belief is that today’s P/E10 level “might be high relative to history but how do we know that history hasn’t changed?”
Sounds like Shiller understands the future is a very uncertain place, and has a lot of humility towards it. Smart fellow.
Kind of like – interest rates averaged 6% over the past few decades, but that doesn’t guarantee they’re going to obediently leap back to 6% tomorrow. They might stay low for decades…or forever.
You better straighten out Shiller. After all, you are the foremost expert on investing.
Sounds like Shiller understands the future is a very uncertain place, and has a lot of humility towards it. Smart fellow.
The statement that Shiller made that you are referring to is that today’s P/E10 level “might be high relative to history but how do we know that history hasn’t changed?” I agree with that. Shiller is giving voice to an important caveat.
That’s a lot different than saying: “We must ban anyone who posts honestly about the last 34 years of peer-reviewed research because it would be dangerous to let anyone know what will happen if stocks continue to perform in the future somewhat as they always have in the past.” There’s nothing humble about a death threat.
Shiller should come out publicly in OPPOSITION to this massive act of financial fraud. He should call out Jack Bogle by name. He should demand prison sentences. That’s how we get things back on the right track. When responsible people don’t respond to financial fraud by demanding prison sentences, we see more financial fraud.
That’s my sincere take re these terribly important matters, in any event.
Rob
Kind of like – interest rates averaged 6% over the past few decades, but that doesn’t guarantee they’re going to obediently leap back to 6% tomorrow. They might stay low for decades…or forever.
Those who work on a belief that stocks are likely to perform in the future at least somewhat as they always have in the past have the odds in their favor.
Those who work on a belief that stocks are going to for the first time in history begin behaving in ways that never before in history have they behaved have the odds working against them.
My take.
Rob
You better straighten out Shiller. After all, you are the foremost expert on investing.
I don’t consider myself the foremost expert. I don’t consider myself any kind of expert at all. I often say of myself that I am best described as “some guy whose only claim to expertise in this field is that he figured out how to get his words posted to the internet.”
That said, I do believe that it would be fair to say that I am years ahead of Shiller in my understanding of how stock investing works just as I am years ahead of Bogle in my understanding of how stock investing works.
I try to be honest. That’s what gives me my edge.
Every learning experience ever enjoyed since the beginning of time began with the thought that “I may not know everything there is to know about this subject.”
Bogle has not been able to work up the grace and humility to acknowledge that he doesn’t know it all for the 34 years since Shiller’s research revealed his mistake.
Shiller revealed the mistake. That puts him a step ahead of Bogle. But Shiller has seen the brutal intimidation tactics employed by the Wall Street Con Men to keep knowledge from advancing and is careful not to state things in plain language that people can understand lest the same threats of career destruction that were aimed at Wad Pfau be aimed at him. Boo, baby!
Once your prison sentence is announced, we will all be learning about 34 years worth of powerful investing insights in one day, Anonymous. Shiller will race ahead of me then and so will Bogle.
But I have no intention of playing dumb until that day comes. I am going to give all this stuff my best shot until the crash comes. People can look at the work that I have done then and determine how much of it is gold and how much of it needs to be corrected or improved. That’s how our system works. It’s a good system. I love that system and I support the use of prison sentences to get that system back in place in the investing realm.
I am not a perfect being. But I have for 13 years been unwilling to abandon my responsibility to continue to do my best possible work in the face of the unrelenting corruption and abuse of the Wall Street Con Men and their Internet Goon Squads. I offer zero apologies. I love my country and I am proud to fight for her.
My best and warmest wishes to you and yours.
Rob
“I don’t consider myself any kind of expert at all”
“I am years ahead of Shiller” “I am years ahead of Bogle”
Shiller and Bogle are experts. If you are years ahead of them, then by definition you are a greater expert.
But let’s just call that the world’s biggest “IF”.
I guess that you could say that the fellow who invented “Pong” was the world expert on computer games 30 years ago or whenever it was when Pong came out. Fine. In that limited sense, I am an “expert” on investing today.
The reality is that there are no experts today. We are in the primitive stages of figuring this stuff out.
The Buy-and-Holders have been responsible for many huge advances. That’s why I rank Bogle as the second most important investing expert of all time.
The Valuation-Informed Indexers have been responsible for even bigger advances in the past 34 years. That’s why I rank Shiller as the most important investing expert of all time.
I have put forward some amazing stuff over the past 13 years. Everything that I have put forward builds on the work of Bogle and Shiller and thousands of others. But many of the insights that I have developed have never been advanced elsewhere. So it is fair to say that I get a good bit of the credit for them. I have no problem with any of that. If you want to say that that makes me an “expert,” fine.
I still don’t think of myself that way. I think of myself as a journalist. I have come to be perceived as an expert only because of the brutally abusive and corrupt and criminal tactics of the Buy-and-Holders. Just about everyone working in this field knows a lot more than he or she is saying. When people’s careers are destroyed because they give voice to important truths, people learn to keep their mouths shut. I wouldn’t stand out so much if Wall Street were not as corrupt as it has become in the Buy-and-Hold Era.
I have put forward insights that make me appear to be an expert. But lots of people could have done what I have done and would have done it had they felt that their careers would not be destroyed by the Wall Street Con Men as a consequence of them doing it. Just about everyone in this field is playing dumb today. There is a lot of talent in this field and most of it is being wasted because my good friend Jack Bogle has for 34 years now not been able to work up the courage to say the words “I” and “Was” and “Wrong.”
I believe that there is a part of Jack that loves his country too and that Jack will work up the courage to say the Three Magic Words following the next price crash and all the human misery that we will see in its wake. At that time we will have lots of people stepping forward and demonstrating a level of expertise rarely witnessed in this field today.
Or so Rob Bennett sincerely believes.
Take care, man.
Rob
The reality is that there are no experts today. We are in the primitive stages of figuring this stuff out.
The fact that valuations have some degree of correlation with future returns in some historical data sets may not be understood by you, but it’s well understood by us educated investors.
Since the future is so uncertain, there’s really not much more to “figure out”.
If everything there is to be known were already known, there would be no disagreements, Anonymous.
There are LOTS of disagreement. Everything is not known.
The Buy-and-Holders desire to persuade people that only they know it all is a marketing gimmick. If they really knew it all, they wouldn’t feel a need to behave as they do. The Buy-and-Holders pretend to know it all as a money-making thing. It’s a con. A massive act of financial fraud. A felony. A thing that gets people sent to prison.
My take.
Rob
So Shiller and Bogle are the two top investing experts and you are way ahead of both of them. That makes you the foremost expert.
That’s one way of looking at it, Anonmous.
The other way of looking at it is that I learned everything I know by integrating what I learned from Bogle and Shiller into a coherent whole.
The stuff we have done for the past 34 years is crazy. The Buy-and-Holders did amazing work. Then the Valuation-Informed Indexers did amazing work. Integrate the work that both groups have done and we all go to Investor Heaven — we reduce risk by 70 percent while earning returns sufficiently greater to be able to retire five to ten years sooner.
So what do we do instead? For marketing reasons, we go to war. We make it an unwritten rule that the Buy-and-Holders and the Valuation-Informed Indexers may not meet in the same place and share what they know with each other.
I used this new internet communications medium to interact with people from both sides and to do the stuff that all of the experts in this field should have been doing for 34 years now. If you want to say that my work product is better than any of these others, I am fine with that. That is so. The work of the Buy-and-Holders and the work of the Valuation-Informed Indexers desperately needed to be integrated and I did that.
But if you are trying to make some sort of suggestion that I am smarter than Bogle or Shiller or that I have more experience than Bogle or Shiller or that Bogle and Shiller have not made huge contributions or that I would have been capable of doing what I have done without their huge contributions being in place first, then I reject what you are saying out of hand.
We all play the role that we are able to play. I had no intention of doing what I did when I started out. I built a discussion board at Motley Fool to the #1 spot at Motley Fool. I loved the board and the people who posted to it. Some abusive guy came along and tried to burn it to the ground. I pointed out that he got an important number wrong in a retirement study posted to his site as a means of saving that board. All hell broke loose. A good number of smart people (primarily John Walter Russell and Wade Pfau) got interested in the debate and did helpful things and we ended up generating the most important piece of peer-reviewed research published in this field in three decades as out work product. Crazy things happen from time to time in this mixed-up world, you know?
I’m not a researcher. I’m not an investing advisor. I never went to investing school. I never managed a big fund.
But I am not going to deny what happened and I sure am not going to apologize for what happened. We all are blessed. We are the luckiest generation of investors ever to walk Planet Earth. Some of us are going to have to get our heads out of our asses before the rest of us can reap all the benefits that have been bestowed on us. All signs are that it is going to take the announcement of prison sentences to get said heads pulled out of said asses. But so it goes, you know? The good stuff here is 50 times more good than the bad stuff here is bad. I don’t like the way everything has gone. But I sure do not regret working up the courage to post honestly re the errors in the Greaney study back on the morning of May 13, 2002. That act of courage has taken us all to some truly amazing places.
Call me an expert or don’t call me an expert. I don’t care one way or another. What I care about is whether I betray my fellow community members as a result of the intimidation tactics of you Goons or whether or I remain true to the spirit of the project that we all signed up for many years ago — to Learn Together how to build successful early retirements. I have remained true to that project for 13 years now in the face of the most brutal intimidation tactics ever seen on the internet and I pledge here and now to remain true to them for another 13 billion years if it comes to that. That’s what matters to me. That’s the only “expertise” that I need to possess to be a solid community member, in my book.
Yes, I am 13 years ahead of Bogle because he has not yet said the words “I” and “Was” and “Wrong.” And I am ahead of Shiller because he is afraid to call Bogle out on his b.s. That reality provides me a form of expertise because it permits me to develop insights that neither Bogle nor Shiller can today generate. I liberated myself from the ignorance that is killing the rest of us when I worked up the courage to put forward my famous post of the morning of May 13, 2002. But Shiller and Bogle both played huge roles in getting us all to this wonderful place and you sure are never going to hear me say different. They are experts in important ways too.
The fully honest way of saying it is that we all have different gifts to bring to the table and so we all possess different sorts of expertise. I have evidenced unique gifts that have permitted us as a society to take enormous strides in our understanding of how stock investing works. But I do not possess other forms of expertise that are possessed by Bogle and Shiller and lots of others. I want to see my expertise recognized for the good of all (very much including Bogle and Shiller). But you will never see me denigrate the amazing contributions of my good friends Jack Bogle and Robert Shiller in any way, shape or form. I look forward to working with them following the next crash to spread the word re Valuation-Informed Indexing (the first true research-based strategy and the model for understanding how stock investing works of the future) to every investor alive on Planet Earth. I have the highest possible respect and affection for these two (flawed — like me!) men.
I hope that helps a bit, Anonymous.
Rob
If everything there is to be known were already known, there would be no disagreements, Anonymous.
There are LOTS of disagreement. Everything is not known.
Then humility, especially about the future, is in order. It would be silly to predict a 65% stock decline in 3 years, for example, with so many unknowns. Dontchathink?
Then humility, especially about the future, is in order. It would be silly to predict a 65% stock decline in 3 years, for example, with so many unknowns. Dontchathink?
Not even a tiny bit. I believe the precise opposite.
There has never once in U.S. history been a time when we got to this stage of a boom/bust cycle and did not see the P/E10 level drop to 8 or lower. It seems to me the height of arrogance to believe that this is going to be the first time in history when every law of the stock market is turned on its head and things turn out the opposite of how they have always turned out before. I believe that the humble attitude is to believe that, yes, there is a chance that things will play out this time at least somewhat as they have without exception played out every time in the past.
There is always a chance that everything will be turned on its head this time, that we will see things never seen before. I don’t rule it out. But I do not feel comfortable putting my name behind such long-odds predictions. I prefer to root my stuff in the peer-reviewed research. There has obviously never been any peer-reviewed research suggesting that such a long-odds bet might come though for anyone.
That’s why the Buy-and-Holders feel a need to resort to the use of threats of physical violence and threats of career destruction. If the Buy-and-Holders agreed to stay within the limits of the laws of the United States, we all would have pulled together years ago to bury this smelly Get Rich Quick garbage 30 feet in the ground, where it could do no more harm to humans and other living things.
That’s my sincere take re these terribly important matters, in any event.
I wish you well.
Rob
There has never once in U.S. history been a time when we got to this stage of a boom/bust cycle and did not see the P/E10 level drop to 8 or lower.
There have been plenty of boom/busts in the past 20-30 years. How many times did the P/E 10 drop below 8? Simple question.
It seems to me the height of arrogance to believe that this is going to be the first time in history when every law of the stock market is turned on its head and things turn out the opposite of how they have always turned out before
Find 10 mentally healthy people in your city and suggest that thinking the future is uncertain is arrogant, while being sure you know exactly what’s going to happen is humble. See what they say.
There have been plenty of boom/busts in the past 20-30 years. How many times did the P/E 10 drop below 8? Simple question.
The current boom/bust cycle started in 1982. It will be completed when we get to 8 or lower.
There won’t be anyone advocating Buy-and-Hold when we get there. It is emotion (Buy-and-Hold) that CAUSES the Boom/Bust cycle. You cannot have a Boom/Bust cycle without Buy-and-Hold/Get Rich Quick.
Rob
Find 10 mentally healthy people in your city and suggest that thinking the future is uncertain is arrogant, while being sure you know exactly what’s going to happen is humble. See what they say.
I am not the one saying that the future is certain. I am the one saying that I think there is a good chance that the market will continue to perform in the future at least somewhat as it always has in the past.
You are the one saying that you are so certain what is going to happen that you believe it is proper to advance death threats and demands for unjustified board bannings and tens of thousands of acts of defamation and threats to get academic researchers fired from their jobs to block millions of middle-class investors from learning what the last 34 years of peer-reviewed research says.
I have not broken any laws. Posting honestly on what the peer-reviewed research says is not against the law.
You commit new acts of financial fraud, a felony, on a daily basis. Why do you think that is?
It is because there is no way to make a rational case for a “strategy” rooted in emotion. Get Rich Quick strategies sell, research-based strategies work.
Rob
“I have not broken any laws.”
Actually, you have. Repeatedly. You have publicly and specifically and repeatedly slandered several people by name.
It is an excellent indicator of just how insignificant you are that people have mostly not noticed or cared, and not anyone has thought it worth even turning your slimy butt in to have charges pressed.
But you know, and they know and I certainly know that you have indeed very much overtly and repeatedly and intentionally broken the law, out of spite, envy, and malice.
Rob, you do remember the Bible admonishing one not to bear false witness against one’s neighbors, right? Seems I recall that one being more than just a helpful little friendly suggestion.
The 13-year cover-up of the errors in the Old School SWR studies is the biggest act of financial fraud in the history of the United States, Anonymous. I have an obligation to call out the people who have posted in “defense” of Mel Lindauer or John Greaney or Jack Bogle for their acts of financial fraud. I am doing them a kindness by doing so.
Take Mike Piper, the author of the Oblivious Investor blog. Mike banned honest posting at his blog. He told me that he was afraid of what Mel Linduaer and you Goons would do to him if he were to permit honest posting re your massive act of financial fraud. If stocks continue to perform in the future anything at all as they have always performed in the past, Mike is responsible for the losses suffered by those reading his blog. Those losses could easily be in the billions of dollars. So Mike is probably going to end up wiped out following the next crash.
How about the FinCon people? They awarded Mike’s blog the Plutus award as Blog of the Year a few years back. They endorsed a corrupt bog. People on that board know about this huge cover-up because I have told them. So it would make perfect sense if the people who couldn’t cover their losses by suing Mike will sue the FinCon people when Mike doesn’t have enough assets to cover all the losses he caused with his corrupt acts?
And we can go on and on. Todd Tresidder know about Mike’s corruption. Is he too not financial responsible for losses? It sure seems so to me.
How about Motley Fool? If Motley Fool banned Greaney on the day he put forward his first death threat (August 27, 2002), Mike would have felt free to permit honest posting and FinCon wouldn’t be on the hook and Tresidder wouldn’t be on the hook. So Motley Fool too is responsible for the losses suffered by those who read Mike’s blog thinking it was an honest enterprise.
And on and on and on and on and on.
This is the biggest act of financial fraud in the history of the United States, Anonymous. The full truth is that the dollar losses suffered as a result of this massive act of financial fraud will be larger than the dollar losses suffered in every act of financial fraud committed in the United States up to this date.
I am not on the hook in any way, shape and form,. I have been leading the effort to get you Goons put inside prison cells for years now. There is no one even in a close second place to me re how hard I have worked this matter.
I am not going to prison. You are. I am the one receiving the settlement check for $500 million.
And we all know it. You show your desperation with each new post you advance here.
I can happily wait for the next price crash. I am in a very, very, very different position from you.
That’s why your b.s. intimidation posts never have any effect whatsoever and haven’t for 13 years running.
You want my help getting your prison sentence reduced a bit? You’ve got it, friend.
You prefer waiting for the crash to see how the millions of middle-class investors will feel about the little joke you have played on them? It’s your call. I don’t recommend that path. But I accept that it’s your call.
I naturally wish you best best of luck in all your future life endeavors, my long-time abusive posting friend.
If you think you can get your Wall Street Con Men friends to come after me, give it your best shot. If you don’t, we can meet up again following the crash and trade notes about how things look to us at that time.
Rob
“it would make perfect sense [to] sue FinCon…”
I only hope they are reading and come to realize that humoring a sick mind who publicly admits he wants to destroy them (and anything else seen as an obstacle to Rob being anointed as Grand Poohbah for Life of the Universe, and gifted half a billion dollars in tribute, i.e. by allowing you to attend their activities), is a very foolish –even reckless! — decision. And no, Rob, that’s no threat, or collusion, or conspiracy. It’s directly self-evident common sense. You area lunatic, who needs no encouragement, and who in fact takes every opportunity to impugn and damage anyone who comes in contact with you. You re, in short, a VERY sick and twisted man.
It’s not FinCon that I want to destroy, Anonymous. It’s Buy-and-Hold.
The thing that causes the friction is that the Buy-and-Holders too want to destroy Buy-and-Hold.
It has become difficult for them to do that because they have been covering up the errors that have been discovered in the Buy-and-Hold Model for 34 years now. It makes the Buy-and-Holders look bad for them to acknowledge what the last 34 years of peer-reviewed research says.
I didn’t do that to them.
All that I ever did is to take the Buy-and-Holders seriously when they said that they believe that investors should use the peer-reviewed research as a guide to how to invest. If I am sick or if I am a lunatic, then Jack Bogle is sick and a lunatic. Because I learned the value of using the peer-reviewed research as a guide from my good friend Jack Bogle.
The people who organize FinCon would LOVE to permit speakers to give honest presentations. I know because I have spoken to them about it on numerous occasions.
But they obviously stand to be sued if they start permitting honest presentations today. They have not been permitting them for years now and the people who attend their conferences are losing money as a result and lawsuits to recover the damages will likely be filed following the next crash.
We are all in the same boat. We all benefit by bringing the Campaign of Terror to an end by the close of business today and by opening the entire internet to honest posting on safe withdrawal rates and scores of other critically important investment-related questions.
I believe that we will all work together to get to a far better place after we experience the next price crash.
But I obviously am not God. I obviously could be wrong. We are just going to have to wait to see how things turn out.
I naturally wish you the best of luck in all your future life endeavors.
Rob