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 have indicated that some Wall Street con men are going to pay you $500 million. There are hundreds of thousands that work for Wall Street banks. Which ones are going to pay you? How is that determined?
Anyone who wants to can chip in, you know? It’s not for me to say. They are smart people. Let them work it out among themselves.
You consistently seem to miss the point that we are all in this together, that we all want the same things. That reality is core to all of this. You can’t leave that part out and get to a reasonable place.
The Wall Street Con Men are not our enemies. They want to do good work. They want to help people. How can they get to a place where they are able to do that again?
They get to that place through the national debate that we need to have. That’s how these sorts of transitions are achieved. The Wall Street Con Men already talk about the national debate among themselves. They talk about it publicly because they don’t want to get their heads chopped off. But they obviously want to put their human energies to a good purpose. Why wouldn’t they?
The $500 million helps smooth the transition. It puts us all in a place where we can talk to each other like friends. I love Bogle. My work makes Bogle’s work shine in a way that it has never shined before. So in ordinary circumstances Bogle would love me. But Bogle is trapped in a corner. How do we get him out? It helps for him to contribute to the $500 million payment. That makes a statement. That permits him to get all the nasty stuff behind him and to direct his energies to all the groovy, research-based, life-affirming, non-fraudulent stuff.
I would imagine that Bogle would ask around to find out who wanted to be involved. Bogle knows people. And most of the people that Bogle knows know other people. This sort of thing is not a tiny bit hard to pull off.
There is one element that is hard. Bogle needs to work up the courage to say the words “I” and “Was” and “Wrong.” After that, everything is easy for everybody. It has over time become very, very, very hard for the man to say those words. He should have said them in 1981. It would have been easy then. Now it is very, very, very hard. I wish it were not so. But that is the reality we are facing today.
All of the rest will just flow naturally. Bogle needs to work up the courage to say the three magic words. That’s the entire ball of wax re this matter.
Rob
Max Friedman says
Hi Rob,
I was wondering now with the PE 10 at 30 , would you wait out the market or buy in for 20% stocks. I have spent 3 weeks studying on your site, thank you very much for doing this it all makes sense, and I am the average middle income investor
Also by the way your other email function on the site does not work.
Rob says
Thanks for stopping by, Max.
The value proposition for stocks is not strong at today’s prices. But my vote is for 20 percent stocks (unless you are in very unusual circumstances).
Please understand that the focus of Valuation-Informed Indexing is getting your emotions right. Yes, it is a numbers-based strategy. But the focus is not the numbers. The idea is to use the numbers to guide the emotions. It is the emotions that have been largely overlooked in this field. What Shiller really showed is that emotions matter more than we realized before he came along. Get the emotions right and the rest of stock investing is easy.
Stock prices could double over the next 12 months. That’s an extreme long shot. I very much doubt that that will happen. But the constant message of the historical return data is that you never know for sure. So you want to be covered for that possibility, as unlikely as it is. Say that prices fall 50 percent in a crash. If you go with 20 percent stocks, your portfolio will be down 10 percent. That is a worst case scenario and it is not too bad a case especially when you consider that you will have lots of money to move into stocks with prices down 50 percent from where they are today.
Please also understand that good arguments can be made the other way. A big factor is your personal profile. If you have studied the market for a long time and would be able to live through a doubling of prices and not be emotionally affected by it, going with a zero stock allocation at these prices might not be such a bad idea. For the typical investor, I think it is best to avoid extremes and a zero percent stock allocation is certainly extreme.
I hope that helps a small bit, my new friend.
Rob
Curious Carl says
Hey, Rob!
Your name was brought up over on a reddit board for FIRE-minded folks and it ignited quite the firestorm! Some people were wondering if you’d be willing to go over there for an AMA (Ask Me Anything). Are you familiar with that format? The board is located here: https://www.reddit.com/r/financialindependence/
Rob says
Your name was brought up over on a reddit board for FIRE-minded folks and it ignited quite the firestorm! Some people were wondering if you’d be willing to go over there for an AMA (Ask Me Anything). Are you familiar with that format? The board is located here: https://www.reddit.com/r/financialindependence/
I’d be thrilled to do an “Ask Me Anything” at Reddit. Are you able to say who the best person would be for me to contact to make this happen?
Rob