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:
Despite the fact that you have repeating the same stuff in this article thousands of times over and over, Shiller has repeated said not to u his work for timing……PERIOD. Saying that he implied it for long no term timing would be lying as his words were clear.
Besides, it has nothing to do with your financial failure. You should have continued to work past the age of 43 instead of wasting your time as an internet troll.
You’re wrong about this, Sammy. At least that’s my sincere take.
You are correct that Shiller has said that P/E10 cannot be used for market timing. That much really is so and it is important too. So I certainly do not object to you letting people know that that’s so. People need to know that.
You are 100 percent wrong re the “Period” part. Shiller’s statements re timing are HIGHLY ambiguous and HIGHLY unclear and HIGHLY uncertain. If there is one thing that should never be said about them, it is that he placed some sort of “Period” at the end of his claim that P/E10 should not be used for timing. That is a false claim and a dangerous claim and an irresponsible claim. I would not feel comfortable putting my name to that one.
Shiller has devoted his entire life’s work to showing why one form of timing, long-term timing, ALWAYS works and is ALWAYS 100 percent required. He has been awarded a Nobel prize for research that he published in 1981 showing that valuations affect long-term returns. If that’s so, then risk is not static but variable and it is not possible for investors not willing to exercise price discipline (that is, to practice long-term TIMING) to maintain a stable risk profile.
Shiller believes that his life’s work has value. If he didn’t, he would not be continuing with that work today. Shiller does not believe what you say he believes.
Why, then, did he say that investors should not use P/E10 to engage in timing? My guess is that he was using the word “timing” to refer to “short-term timing.” Short-term timing really doesn’t work. There is a mountain of research showing that. And it is common practice in this field to use the word “timing” to refer to “short-term timing.” Bogle does it all the time. So do hundreds of others. Given that so many in this field employ this shorthand and given that assuming that Shiller is using this shorthand permits us to make sense of his statement, I think it would be fair to assume that Shiller was indeed using this unfortunate shorthand.
In fact, Shiller has OPENLY ADVOCATED long-term timing on more than one occasion. I recorded a podcast back in 2009 when he did so. And he was advocating long-term timing when he gave testimony to the Federal Reserve saying that investors who retained their high stock allocations in 1996 would live to regret it within 10 years. I am certain that he gave a great deal of thought to that statement advocating long-term timing, a lot more than he gave to the single off-hand ambiguous statement that you refer to when he said that “timing” does not work.
You are engaging in deception here. It is shameful behavior given the importance of the question being addressed. And you of course are well aware of Shiller’s LONG advocacy of long-term timing. We have met up at scores of discussion boards and blogs at which you have engaged in insanely abusive posting practices aimed at shutting me down and shutting down other posters who see the value of long-term timing and the dangers of Buy-and-Hold investing strategies. Yucko, Sammy. This is low stuff. You need to get over whatever pain you experience when your investing beliefs are challenged by the peer-reviewed research in this field and rise above this sort of behavior.
All that said, you are raising a very important question. Those of us who have looked at these matters with reasonably open minds know that Shiller believes in long-term timing. WHY DOESN”T HE SAY SO IN CLEAR AND FIRM AND BOLD AND CERTAIN LANGUAGE THAT WOULD BRING THIS “CONTROVERSY’ TO A FULL AND COMPLETE STOP? He makes his living helping people to understand how stock investing works. All of the confusion of recent years, confusion that caused an economic crisis, came about because the “experts” in this field have failed to make this distinction between long-term timing — which always works and is always 100 percent required — and short-term timing — which really does not work — clear to millions of middle-class investors. Why doesn’t Shiller just step to the plate and say what needs to be said?
He doesn’t do it because he knows from experience that the advocacy of Buy-and-Hold has caused millions of investors to become as hyper-sensitive to hearing about the implications of his “revolutionary” (Shiller’s word) as you are, Sammy. We all kept our mouths shut until valuations reached a point where telling the truth about these matters would have caused the destruction of millions of middle-class lives and so today we hold back from saying what needs to be said because we cannot bear to face the abuse that we know will be visited on us for doing so when we finally work up the courage to do the right thing.
Doing the right thing doesn’t get easier by putting it off. It gets harder. Shiller will be speaking more clearly about these matters following the next price crash, just as he hesitantly started down that road in the early days of the last one. It will be harder for him then. His friends should be encouraging him to step forward today and thereby to put that hard piece of important business behind him. Once we have a major figure speaking out clearly re this mater, it frees all the rest of us to speak out honestly about what the last 35 years of peer-reviewed research teaches us about how stock investing works in the real world.
We are all sooner or later going to get to the point where we feel a need to speak up. It gets harder the longer we put it off. So why not just work up the courage to do it today and thereby put the nasty stuff behind us and bring on all the wonderful stuff that follows once we all feel free to speak honestly and accurately and clearly? That’s certainly my take re this terribly important matter.
I wish you all the best that this life has to offer a person in any event, my old friend.
Rob
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