Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
“Nobody here has ever missed a meal”
That’s great, but frankly it’s not saying much. Even homeless people get regular meals. The real question is whether your family truly agrees with your course of action. I don’t recall you saying that they do, or that you ever even asked.
I’ve certainly asked. There have been lots of conversations about it. And I have written here about my wife’s feelings about the matter on more than one occasion.
My wife accepts that my work has great importance. She knows that I am honest. She knows about the things that John Walter Russell and Wade Pfau and Rob Arnott and hundreds of others have said about my work. And she knows what an internet Goon is. So she gets the basic picture and we are in agreement that far.
The fact that money has not been coming in for 15 years scares her. I think it would be fair to say that we do not see eye to eye re that one.
I see her reaction as being similar to the reactions of lots of others. Wade Pfau’s reaction is similar in many respects. He gets it that the Buy-and-Hold retirement studies are dangerous; they do not tell the people planning retirements what they need to know. Wade has said that on many occasions. He even wrote to the authors of the Trinity study asking that they correct their study. So Wade gets it.
But then again he doesn’t. Wade is no longer contacting the authors of Buy-and-Hold retirement studies seeking corrections. He is not even asking that the Bogleheads Forum be opened to honest posting. He is not seeking to get the research paper that he co-authored with me written up on the front page of the New York Times. So — Wade DOESN’T get it.
He gets it and he doesn’t get it. At the same time! The same person! That’s where we are today, Anonymous.
That’s my wife. She gets it and she doesn’t get it. At the same time. The same person. That’s where we are as a people.
I spoke with an acquaintance of mine about these general issues a week or two ago. He has every reason to take my side and he certainly did not want to endorse the behavior of you Goons. At one point, I mentioned something you Goons did and his face had a look of intense distaste. So he is not biased against me, he is if anything biased for me. But his conclusion was: “The stock market goes up and the stock market goes down — it always has!”
That’s what you might call a philosophical attitude. Does this fellow get it? Or does he not get it?
It is my view that he does NOT get it. It certainly is true that the market has always gone up and down. But what he is missing is that the downs cause us bigger problems today because millions of middle-class people need to finance their own retirements and the downs throw all their numbers wildly off when it is too late in their lives to make up for the losses. So the huge losses that have been typical in the market in the past are no longer acceptable.
Fortunately, Shiller’s research shows us how to avoid both the ups and the downs. But we cannot talk about Shiller’s research because the Buy-and-Holders didn’t know about it when they developed their strategy (he hadn’t published it yet!) and it makes them feel bad to acknowledge not always having known everything there is to know about the subject. So each day we drift closer to the edge of the waterfalls and all of us who see what is happening keep it to ourselves if we know what is good for us.
This guy thinks he gets it. And he is a smart fellow and a nice fellow and an unbiased fellow. Yet he does not get an important part of the story. He intellectually is capable of getting it. But emotionally he cannot accept what has happened. It is an incredible story. What I am saying is that most of the biggest-name experts in the field — good and smart people — are giving dangerous advice and aren’t even aware that they are doing it. This fellow tunes this out and just retreats to his philosophical stance — the market goes up and down, it always has and it always will.
That’s what I am up against. That’s a different version of my wife’s take. She knows me. So she knows that there is merit to much of what I am saying. But there are elements to this story that are hard to swallow. There’s a thing called “cognitive dissonance.” When a story is too hard for the humans to swallow, this cognitive dissonance thing kicks in.
I believe that the next price crash is going to bring the cognitive dissonance to an end. It is one thing to read peer-reviewed research showing that the continued promotion of Buy-and-Hold is going to put us in the Second Great Depression. It is something else to see with your own eyes the human misery that that entails. I believe that the next price crash will shock the cognitive dissonance away. I don’t have much choice. If I didn’t believe that, I couldn’t get out of bed in the morning.
Maybe I will be proven wrong. I am not God. I have gotten things wrong before. I cannot say with certainty that it is not in the process of happening again.
But what would you have me do? Every piece of evidence that we have seen for 15 years now has supported the peer-reviewed research of the last 36 years. Shiller says that investing is a highly emotional activity and the Buy-and-Holders have let their emotions run wild to the point of threatening to get academic researchers fired from their jobs if they continue to produce honest research. I have developed a funny feeling over the years that this Shiller fellow might be on to something. And you don’t need to have an I.Q. of 140 to see that, if this Shiller fellow is on to something, continued promotion of Buy-and-Hold is going to leave us all in a very, very, very scary place.
So I do what I have to do, Anonymous. You make it sound like a father’s ONLY responsibility is to bring in the bucks. That’s one important responsibility and I have honored it well for 25 years of marriage now. But that is not my only responsibility. If I wake up in the middle of the night and see that the house is on fire, I have a responsibility to bring my family members to safety. I cannot just lay in bed and tell myself “Hey! I bring in a steady paycheck! Let someone else handle the darn fire problem!”
Our economic system is on fire. Things have reached a point where the fire is beginning to spread to our political system. I have responsibilities in that regard too. So I am doing what I can. We have to find a means to work around you Goons and get honest and accurate reports of what the last 36 years of peer-reviewed research tells us about how stock investing works to the millions of middle-class investors who very much want it and need it. That’s my job. I have been elected to carry out the task. So I intend to carry it out to completion.
That’s the deal, Anonymous. I talk to my wife about it frequently. We are not in complete agreement. That makes it harder to do the job. But the job must be done successfully all the same. The survival of our economic and political systems is no small thing. SOMEONE sure has to do this job? Do you see anyone else stepping up to the plate? No, me neither. That’s why I am leading the charge.
I hope that works for you.
Rob
“Every piece of evidence that we have seen for 15 years now has supported the peer-reviewed research of the last 36 years”
This would be the same evidence that lead you to predict a 60% stock drop by the end of 2015, correct? And, did the results support the “evidence”?
And there was the night when the Phillies were ahead by three runs in the seventh inning and I predicted that they would win but their relief pitchers blew it.
These things happen, Anonymous. No one gets every prediction right whether they follow Buy-and-Hold strategies or Valuation-Informed Indexing strategies. That reality doesn’t reflect on the respective merits of the strategies.
Every piece of evidence we have seen supports Valuation-Informed Indexing. Fama posited that investors are 100 percent rational. Shiller posited that investors are strongly emotional. Which claim would you say is supported by the behavior of the Buy-and-Holders over the past 15 years.
Investing is a highly emotional endeavor. P/E10 permits us to quantify investor emotion. Both Buy-and-Hold and Valuation-Informed Indexing are numbers-based strategies. One of them takes the numbers that relate to investor emotion into account and the other does not. Which strategy do you think it is that gets the numbers right?
If there is one thing that we have seen demonstrated over and over and over again over the past 15 years, it is that investing is a highly emotional endeavor. Neither strategy permits one to get all predictions right because that just cannot be done. But it is the strategy that gives consideration to the numbers relating to investor emotion that is far more likely to get the numbers right.
This is my sincere take re these terribly important matters, in any event.
I naturally wish you all good things.
Rob the Poor Predictor
“Which strategy do you think it is that gets the numbers right?”
I think the markets for bonds, cars, apples, houses, and everything else is rational. Assets are priced based on their value to people, and that value may fluctuate.
When the price of apples change, I don’t ascribe that to grocery store emotion. Not do I look for patterns in the past 140 years of apple prices and assume they must repeat. I assume there’s a rational, economic reason for the price change. Maybe more people are eating fruit. Maybe there was a drought. What am I missing?
I agreed with most of what you said in that comment but not quite with 100 percent of what you said, Anonymous.
I agree when you say that “assets are priced based on their value to people and that value may fluctuate.” I don’t agree when you say that “the markets for bonds, cars, apples, houses and everything else is rational.” Prices definitely fluctuate. But not all price changes are rooted in rational causes. Say that you like beanie babies. And the price of a beanie baby is $3. You make it a practice to buy one every month and you are happy with that purchase. But then the price starts heading upward. The price goes to $6. You enjoy your beanie baby habit. So you continue buying at $6. But then the price goes to $12 and then $24 and then $48 and then $96. Should you just say “oh, well, I know that the price for beanie babies must be rational, so I am just going to keep buying”? Should you say: “If the price for a beanie baby goes to $500, I’ll pay $500. I like buying beanie babies. The people who make a living selling beanie babies have said that beanie babies are a great buy at any possible price. So I am just going to ignore price and continue buying”?
For markets to remain rational, there must be some rationality applied to purchasing decisions. I think that you are right that prices are GENERALLY set by a rational process. So, if weather conditions cause apples to become more scarce, the price goes up and the market thereby addresses the scarcity problem. Or, if apples become plentiful, prices go down. I think that what is going on here is that Buy-and-Holders are looking at these rational processes that really do exist and are becoming impressed by them and jumping to the hasty conclusion that prices are ALWAYS rational. That’s the thing that is not so. Prices CAN be rational and markets serve a great purpose in facilitating the process by which rationality is reflected in prices. But prices can also go nuts for emotional reasons. In those cases, great harm can be done unless steps are taken that permit rationality to reassert itself.
You need to go a step beyond just saying “oh, prices are usually rational, there’s nothing to worry about here.” You need to ask yourself WHY prices are usually rational. How is it that the prices of apples and other things are set properly and effectively? It happens through the exchange of information. The price of the apple is marked at the grocery store. Consumers make a mental calculation as to whether apples are “worth it” or not and then decide whether to make a purchase or not. Prices that are set improperly will not stand because the market will punish the owners of stores that set arbitrary prices. The people buying apples act in their own self-interest. They purchase apples when it makes sense to do so and they refrain from purchasing apples when it does not make sense to do so.
For people to act in their self-interest, they need access to information about the purchase they are making. In January 2000, the most likely 10-year annualized return for stocks was a negative 1 percent real. The guaranteed return for TIPS was 4 percent real. Investors who were acting in their self-interest would have lowered their stock allocation and increased their TIPS allocation. Millions of transactions of that nature would have caused the return on TIPS to drop and the return on stocks to increase. So eventually prices would again have been rational and the market would have been working effectively.
But we had a Ban on Honest Posting in effect that kept the market from working as we want it to work. Magazines could have made a lot of money by telling their readers how they could retire so much sooner by taking the simple step of moving a portion of their money from the poor-value-proposition stock class to the strong-value-proposition TIPS class. But the Buy-and-Holders had become insanely emotional by this time (as evidenced in the P/E10 level that caused that negative 1 percent long-term return!). The Buy-and-Holders were going to punish any magazine that published articles helping out the millions of middle-class people seeking to choose what asset class to invest in to finance their retirements.
There were little newsletters that published that sort of information. Shiller published his book in March 2000. But the big magazines stayed away from telling people how they could increase their return by 5 full percentage points real per year for 10 years running. Buy-and-Holders would have been threatening to destroy the careers of any editors who permitted articles helping their readers to run in their publications. Most editors picked up on the vibes, which were not exactly well hidden, and did not what would have helped their readers but what spared their own careers. They ran headlines screaming “Buy-and-Hold!” They pushed more of the Get Rich Quick garbage that caused the problem in the first place rather than the how-to-act-in-your-own-self-interest stuff that we all need if we are to invest effectively and if the market is to price things rationally.
Markets are usually rational. You could say that markets want to be rational. But rationality must never be ASSUMED. For rationality to apply, market participants need access to the information they require to act in their self-interest. Take that information away and you take rationality away. The Buy-and-Holders have taken rationality out of the stock market by ASSUMING that it will always be present and using that assumption to justify engaging in outrageous behavior aimed at insuring that investors do not have access to the information they need to invest effectively. Investors need to know the true safe withdrawal rate at each valuation level. This is essential information. We have seen thousands of our fellow community members express a desire to have access to this information. But the Buy-and-Holders have shut down all efforts to transmit such information widely. So the market has become more and more irrational as the Buy-and-Hold Era has continued.
If it were not for the Ban on Honest Posting, stock market prices would be set rationally. But that’s not the world we live in. We live in a world of death threats and demands for unjustified board bannings and tens of thousands of acts of defamation and demands that academic researchers who do honest work on safe withdrawal rates be fired from their jobs. We live in a world in which Buy-and-Hold has become the dominant investing strategy. We do not live in a rational world in the investing realm today. And so the market is not able to serve its purpose of setting prices rationally at this point in time.
I don’t look for patterns in the past 140 years of stock prices for the purpose of making predictions as to whether they will repeat or not. I look for patterns to determine HOW THE STOCK MARKET WORKS. There are two schools of thought in the academic literature in this field re that question. One is rooted in a premise that the market is efficient. One is rooted in a premise that investor emotion is the dominant factor in the setting of stock prices. The two schools lead to very different strategic recommendations.
If you believe that the market is efficient, Buy-and-Hold is the ideal strategy. If you believe that investor emotion is the dominant factor, Buy-and-Hold is the most dangerous strategy ever concocted by the human mind. I look to the 145 years of historical return data to figure out which school is the correct one. If the market were efficient, we should see prices falling in the pattern of a random walk both in the short term and in the long term. If investor emotion is the dominant factor, we should be seeing a random walk only in the short term and a strong, repeating hill-and-valley pattern in the long run. What we see is a random walk in the short term and a strong, repeating hill-and-valley pattern in the long run. So I subscribe to the Valuation-Informed Indexing school of academic thought.
That’s what I think you are missing, Anonymous. I think you are ASSUMING rationality rather than checking to see if it is really there. I think that’s a dangerous way to proceed. It is investors who impose rationality on the market through their millions of daily investing choices. We keep the emotion of the market to a minimum by acting rationally over and over and over again. To do that, we need to check things out. We need to look at research. We need to talk things over calmly with others looking at research. We need to quantify things. We need to challenge conventional wisdom. We need to put investing experts on the hot seat to determine whether their ideas really hold water or not. We need to question, question, question, question and question some more.
The Buy-and-Holders don’t do that. The Buy-and-Holders ASSUME. They HATE questioning. They want everyone to invest blindly based on research that was published over 50 years ago and to ignore the 36 years of research discrediting those earlier findings. That’s not me. I question. I don’t always get them right. I don’t claim to. But I do aim to always question. That’s my “crime” in the eyes of the Buy-and-Holders.
I was once one of them because I heard some rhetoric in which the Buy-and-Holders CLAIMED to be open to the scientific process for discovering truth and that’s what I believe in and so I went that way. I stopped believing in Buy-and-Hold on the evening (August 27, 2002) when Greaney put forward his first death threat and 200 of my fellow community members endorsed it (50 endorsed a post condemning the death threats). Death threats are not part of the scientific process. Most Buy-and-Holders no longer possess confidence that their ideas re how stock investing works can prevail if they are exposed to the questioning that is a critical part of the scientific process. So I am no longer a Buy-and-Holder. I believe in Valuation-Informed Indexing, the investing strategy for those who still believe in the things that the Buy-and-Holders once believed in but no longer do now that Shiller’s “revolutionary” (his word) research has been awarded a Nobel prize in Economics.
Rationality is not automatic. Rationality has to be provided by the humans. Humans need access to information, preferably in the form of peer-reviewed research, to behave rationally. The Ban on Honest Posting, which has been enforced so brutally by our Buy-and-Hold friends for 15 years running now, is killing us all.
My sincere take.
Rob
“No one gets every prediction right”
You haven’t gotten ANY right. You were making 65% crash predictions way back in 2010, only stopping last year out of embarrassment.
Now you will only say that the market will crash “someday”. Everyone knows that. Even Bogle. That’s like predicting it will rain someday. Worthless. You call yourself a market timer, without providing any timing.
I’ve gotten lots of things right, Anonymous. I said on the morning of May 13, 2002, that the retirement study posted at John Greaney’s web site did not contain an adjustment for the valuation level that applies on the day the retirement begins. A group of Buy-and-Holders said that I must have forgotten to take my meds. There were hundreds of my fellow community members who said that the discussion that followed was the most exciting one ever held at that board. But that group of Buy-and-Hold Goons was pretty darn insistent that I had gotten it wrong. They burned the entire board to the ground. We have now had big-name experts like Wade Pfau and Bill Bernstein and Rob Arnott look at the matter and not one of them has been able to find a valuations adjustment in that study (or in any Buy-and-Hold retirement study for that matter). So I think it would be fair to say that my “prediction” that no one would ever be able to find a valuations adjustment in Greaney’s study has proven out. That’s the prediction that matters. That one affects millions of middle-class lives. It’s pretty darn important that we get that one right.
There was certainly a chance that stock prices would fall by 65 percent back in 2010. Shiller was telling people in 2009 to keep to a zero percent stock allocation until the P/E10 level dropped below 10. That would have been a drop of roughly 65 percent for the entire time-period from late 2009 forward. So I was not saying anything new or exciting or controversial (at least not in an entirely sane world!) in saying that we would see a 65 percent price crash.
If you were capable of complete honesty, you would add that I was always careful to say that the peer-reviewed research in this field shows that short-term timing never works and that I did not want anyone else to have any more confidence in my predictions than I have in them myself — which is something close to zero confidence. Short-term predictions don’t work, Anonymous. I haven’t written those words one or two times, I have written them tens of thousands of times. perhaps hundreds of thousands of times. I think it would be fair to say that that one is pretty much established at this point in the proceedings.
But I sure do favor long-term timing. Long-term timing is price discipline. Are you saying that investors should stick with the same stock allocation, even when prices change dramatically? Huh? Are you aware that there is 36 years of peer-reviewed research showing that valuations affect long-term returns? How do you justify following a Buy-and-Hold strategy?
Wade Pfau spent months searching the literature trying to find one study supporting the insanely dangerous recommendation of the Buy-and-Holders that it is not necessary for investors to practice long-term timing (price discipline). He never found a single study. I think it would be fair to say that it was because he announced those findings publicly at the Bogleheads Forum that you Goons threatened to send defamatory e-mails to his employer in an effort to get him fired from his job if he continued to do honest work in this field. Am I close to the mark re that one?
We should be permitting honest posting re safe withdrawal rates and scores of other critically important topics at every investing discussion board and blog on the internet. Nothing could be more clear. I am 100 percent sure.
Valuations really do affect long-term returns. Buy-and-Hold is a marketing gimmick. I mean, come on.
Rob
“I think you are ASSUMING rationality rather than checking to see if it is really there. ”
I don’t know how to do that, but you seem to, so help me out: The price if a bitcoin was $1 a couple of years ago, now it’s $2,600. Is that rational behavior or emotion?
I wouldn’t assume rationality. I wouldn’t bet my retirement on a belief that that $2,600 price is legitimate.
We don’t have 145 years of historical date to look at with bitcoins. We have that for the U.S. stock market. That’s a good thing. You can use that history to inform your decisions when buying stocks.
There’s no law that says you have to. You can invest your entire retirement account in bitcoins or comic books or lottery tickets or in whatever you please. I learned from Jack Bogle that it makes sense to go with U.S. stocks because we have years of peer-reviewed research to guide us when it comes to U.S. stocks. So that’s what I do.
The only problem that I have with Bogle is that he lost interest in the peer-reviewed research in 1981, when Nobel-prize-winning research was published showing that he had made a mistake re one very important issue. I think that Bogle should have quickly acknowledged the mistake and moved on to better things. Sometimes the humans don’t do what is best for them. Whachagonnado?
Rob
“I wouldn’t assume rationality. I wouldn’t be my retirement on a belief that that $2,600 price is legitimate.”
But you really have no idea. Nor does anyone else. With hindsight, of course, it will be obvious. Just like Beanie Babies, stocks in 2000, etc.
Take away the hindsight – like when you made that 3 year stock return guess a few years ago – and you quickly learn just how predictable markets actually are.
The stock market is highly unpredictable in the short term. Fama showed that. And the stock market is highly predictable in the long term. Shiller showed that.”
Buy-and-Hold is the investing strategy you get when you take the pre-1981 peer-reviewed research into consideration. Valuation-Informed Indexing is what you get when you take both the pre-1981 peer-reviewed research and the post-1981 peer-reviewed research into consideration.
You are free to conclude that the post-1981 research is not legitimate research.
I am free to conclude that the post-1981 research is legitimate.
I am going to continue to post my sincere views on safe withdrawal rates and scores of other critically important investment-related topics.
I hope that works for you, my long-time abusive-posting Buy-and-Hold-defending friend.
Rob
Schiller did not show high predictability. He showed mediocre predictability in the mid term and poor predictability in the near and long term.
We don’t agree, Laugh.
Predictability in the short term is poor. I certainly can sign on to that one.
In the long term, predictability is high but it is not valuations that drive things.
I would say that predictability in what you are calling “the-mid term” (10 years out, 15 years out, 20 years out) is high. It is true that there are many people who would say that returns are only somewhat predictable in the mod-term. I think that that perception is the result of a misunderstanding of how investor emotion determines stock returns. Every time-period has a mix of the short-term and the long-term to it. To test the extent to which valuations affect mid-term returns, you need to exclude consideration of the randomness that is the product of the short-term unpredictability. Leave that out and mid-term predictability is actually much greater than even many Valuation-Informed Indexers realize.
This is the sort of issue that we should be talking about at every discussion board and blog on the internet. We learn by talking things over. You are not fully informed re predictability issues because you limit what can be said about them and by doing that you of course have limited what you hear about these issues. We will all be learning a lot more about how all this stuff works in coming days.
It is my view that Shiller shows no predictability in the short-term, high non-valuations-based predictability in the long term and strong but not complete predictability in the mid-term. This finding is truly “revolutionary,” just as Shiller has said. It changes every strategic calculation in dramatic fashion. The difference between the safe withdrawal rate always being 4 percent and the safe withdrawal rate being a number that goes as low as 1.6 percent and as high as 9 percent is all the difference in the world. We live in a different world today from the one we lived in during the pre-1981 Buy-and-Hold years. We need to open the entire internet to honest posting re the past 36 years of peer-reviewed research so that we can get the word out to millions of investors.
My best and warmest wishes to you and yours.
Rob
r^2 value of around .5 is mediocre. Further, CAPE does not adjust for accounting changes, buy backs, etc etc etc. So a CAPE of one period is not the same as the CAPE of another.
I think your weakness in math has made you try to gravitate to the ‘one easy metric’ and you are unable to see how you might be wrong – because your math skills are extremely poor. Thus a vicious loop has ensued that has consumed and wasted a huge chunk of your life. It is very unfortunate.
Your comment is saturated in bias, Laugh.
If Shiller had not shown something of great importance, he would not have been awarded a Nobel prize. If the numbers in Greaney’s retirement study are even a little bit off, they should have been corrected within 24 hours. People were using that study to determine when to hand in resignations from high-paying corporate jobs. It’s not that he said that the safe withdrawal rate is 1.7 percent at a time when it was really 1.6 percent. He was saying 4.0 percent at a time when the correct number was 1.6 percent. He destroyed thousands of people’s lives. And he did not apologize for the error when it was brought to his attention. He threatened to kill family members of any poster who posted honestly. And a few years later he threatened to send defamatory e-mails to the employer of an academic researcher who did honest work in this field. That’s criminal behavior, criminal behavior that will likely earn him a prison sentence a lot longer than the one dished out to Bernie Madoff. I want no part of it.
There are many interesting things that can be said from both sides of the table re the question of how strong the correlation is between valuations and long-term returns. I look forward to engaging in those conversations with lots of good people, both Buy-and-Holders and Valuation-Informed Indexers. But the sick, abusive, criminal stuff is not my particular cup of tea. I would be truly grateful if you would try to find someone else re that smelly garbage. It’s not my particular cup of tea.
Please take good care.
Rob
But now we see that it wasn’t 1.7 or 1.6. The empirical evidence has basically arrived and you are on the wrong side of it.
Because you are using a metric with at best .5 r-squared!
Also, Schiller won the Nobel prize but that is very poor reasoning to blindly apply some of the work he did in ways he didn’t recommend. It is an interesting situation.
1. You blindly follow one thing he did
2. You blindly reject his advice on how to properly use it
3. All the while you don’t understand any of the underlying math so you latch on to the bits and pieces of sound bites you can comprehend.
But now we see that it wasn’t 1.7 or 1.6. The empirical evidence has basically arrived and you are on the wrong side of it.
The safe withdrawal rate for those who retired in January 2000 with an 80 percent stock allocation was 1.6 percent, Laugh. It’s a mathematical calculation.
Greaney would have obtained the same number had he included a valuations adjustment in his study, as is required by the last 36 years of peer-reviewed research.
Financial fraud is a crime in the United States. Bernie Madoff is in prison today for commission of this crime. I enjoy my freedom. I am not freakin’ interested.
I wish you all good things. But come on.
Rob
Also, Schiller won the Nobel prize but that is very poor reasoning to blindly apply some of the work he did in ways he didn’t recommend. It is an interesting situation.
1. You blindly follow one thing he did
2. You blindly reject his advice on how to properly use it
3. All the while you don’t understand any of the underlying math so you latch on to the bits and pieces of sound bites you can comprehend.
I believe that valuations affect long-term returns. That was Shiller’s “revolutionary” finding. That changed our understanding of how stock investing works in a fundamental and far-reaching way. It showed that there is precisely zero chance that a Buy-and-Hold strategy could ever work for even a single long-term investor and that the continued promotion of Buy-and-Hold strategies would cause an economic crisis (Shiller predicted that we would see an economic crisis late in the first decade of the new Century in a book published in March 2000). It showed that any safe withdrawal rate study that did not include a valuations adjustment would put people who used the study to plan a retirement at grave risk of suffering a failed retirement down the road a bit.
Everything that I say about stock investing incorporates Shiller’s revolutionary finding into the analysis. Everything that I say also incorporates the hundreds of powerful insights that were contributed by Jack Bogle and our other Buy-and-Hold friends in the years prior to 1981.
We have no means of knowing today what Shiller or Bogle or anyone else truly believes because we have not yet announced prison terms for those who have posted in “defense” of Mel Linduaer and John Greaney. The reason why we made financial fraud a felony is that as a society we recognize the great harm that this crime can do to millions of people. There is no place for death threats in discussions of stock investing. There is no place for demands for unjustified board bannings in discussions of stock investing,. There is no place for tens of thousands of acts of defamation in discussions of stock investing. There is no place for threats to get academic researchers fired from their jobs in discussions of stock investing.
I think that it would be more than fair to say that people like Robert Shiller and Jack Bogle and Wade Pfau and scores and scores of others will be far more forthright in their statements as to what they believe the last 36 years of peer-reviewed research tells us about how stock investing works following the announcement of your prison term, Laugh. The laws against financial fraud are good laws. We need to see them enforced so that we can all move forward to a much better place than the place where we stand today as we try to live through this economic crisis.
I naturally wish you the best of luck in all your future life endeavors.
Rob
“Your comment is saturated in bias”
And yours is saturated with incoherent delusional rage. Laugh calmly raised a logical criticism of CAPE. One based on data, one that been raised by others. Having no rational response, you launch into your tirade against Greaney. No one here but you gives a rat’s ass about Greaney.
If you had any self-awareness at all, you would realize how destructive this behavior is. No crash is gonna fix your reputation.
You are right that there are good, non-Goon, rational, intelligent, kind people who do not feel as strongly as I do about the benefits of using P/E10 in informing one’s investing strategies. The substantive point that was raised by the earlier comment — How strong is the correlation between valuations and long-term returns — is an important one that we all should be discussing. I am happy to give voice to my honest beliefs re the matter. The reason why I bring up the Goon stuff (the Greaney stuff) is that we cannot today engage in the discussion that we need to engage in to resolve the matter successfully without first addressing the Goon problem (the Greaney problem).
I can offer my views in comments that I post to this site. But we need to hear the views of a lot of people other than Rob Bennett to come to a successful resolution of the matter. We need to hear from Bogle. And from Shiller. And from Pfau. And from Bernstein. And from Swedroe. And from Richards. And from Arnott. And on and on and on and on and on.
Those people have made it clear that they are not willing to participate in honest discussions until you Goons (Greaney followers) have been placed in prison cells, where you belong. People quite naturally don’t want to see their honest comments answered with death threats. Or with demands for unjustified board bannings. Or with tens of thousands of acts of defamation. Or with threats to get academic researchers fired from their jobs. You say that you don’t give a rat’s ass about Greaney. But your behavior shows that you DO give a rat’s ass about your own prison term. So the problem continues. Anyone who has posted in “defense” of Greaney is now at risk of going to prison in the days following the next crash. That’s a lot of people! Those people don’t want to see honest discussions being held anywhere on the internet. You Goons today have a veto power over what the people of the United States can say re the last 36 years of peer-reviewed research in this field. That’s a problem.
We all would like to turn our focus to the hundreds of fascinating substantive discussions that we have been denying ourselves for 36 years now. But we need to address the Greaney matter (the Goon matter) before we can get to the wonderful place to which we all deep in our hearts want to go. The laws against financial fraud are good laws, Anonymous. We need to enforce them. That’s the way forward. There is no other way.
If you truly give a rat’s ass about the many fascinating substantive discussions that we all want to have, then you need to try to give a rat’s add about the Greaney/Goon issue too. It’s the Greaney/Goon problem that has been holding up progress on hundreds of fascinating substantive issues for 15 years now. The only way to put discussions of Greaney and you Goons to a full and complete stop is to put Greaney and you Goons in prison so that the rest of us can engage in the discussions that we have wanted to engage in all along.
Does all of that not make perfect sense?
Rob
“Does all of that not make perfect sense?”
No, it all seems made up.
Okay, Anonymous.
Please take good care.
Rob