I’ve posted Entry #367 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called The Shiller Revolution Summed Up in Two Sentences.
Juicy Excerpt: Sometimes when I am ready to leave for an appointment five minutes before I need to leave, I will pull Irrational Exuberance off the bookshelf and turn to a random page and see what I find there. I did that the other day and these are the words that jumped out at me off of Page 254: “The U.S. stock market ups and downs over the last century have made virtually no sense ex post. It is curious how little known this simple fact is.”
Um — Okay. What do we do with that?
John says
Those of us who remained gainfully employed (family first!) in the almost 20 years since that book came out, and invested in a simple buy, hold and rebalance index fund portfolio are now very wealthy.
It’s not just that the stock market ignored Shiller and doubled, it’s that we were able to buy shares at such low prices with new savings during the recession. Our kids do get to go to Disneyland. Disneyland Europe, Disneyland Japan…
Meanwhile, of course, we’ve reallocated to bonds. I have more FI now than my whole portfolio was worth 10 years ago.
Rob says
I certainly wish you the best of luck with it, John. If Buy-and-Hold works for you, Buy-and-Hold works for you.
Buy-and-Hold does not work for me. I believe that the last 36 years of peer-reviewed research in this field is legitimate research. There must be something in the set of my life experiences that causes that research to click for me. So that’s what I go with and that’s what I argue for and that’s what I recommend to others.
We don’t agree, you know? We just don’t. It’s a common phenomenon in this world that two people look at the same situation and come to different conclusions about it. I think it would be fair to say that it has happened once again re you and me and this stock investing matter. We are going to have to accept the reality that we disagree and make the best of it.
The best that I can think of to do with it is to always state my views honestly while doing what I can to remain open to the possibility that I might be wrong and to listen to the points made by my Buy-and-Hold friends with as much openness as I can muster and to always appreciate that they present a different point of view to me because they believe in that point of view as much as I believe in mine and because they are trying to share what they believe because they think it can help me and others as much as they believe it helps them.
That’s where I am coming from re this matter in any event, my good friend John.
Rob